Forex Signals Brief for September 5th: Safe Havens Holding Strong
Rowan Crosby • 3 min read
Good morning traders
The last few times we’ve seen a show of force from North Korea, markets have quickly reacted with a spike, only to retrace within a day or two. This time around the safe havens appear to be holding up a little stronger.
In times of crisis, money flows into assets like gold or bonds, or currencies such as the Swiss Franc and Japanese Yen. After North Korea tested a hydrogen bomb over the weekend, those assets and currencies all strengthened.
However, the retrace hasn’t come. We have to remember that the US was on the Labor Day holiday long weekend on Monday. That means that there was a huge portion of the market that wasn’t fully present. When they come back into action today (Tuesday), we’ll get a better picture of how they are feeling about North Korea and the continued fallout from last week's jobs report.
Top Economic Events Today
CHF – GDP and CPI
There are some key numbers from Switzerland today. GDP and CPI are due for release at 5:45 GMT and 7:15 GMT respectively with analysts predicting GDP to be in line with last month and CPI seeing a slight improvement. Both numbers have a large impact on the CHF and could give an additional spark to markets given the North Korean backdrop.
GBP – Services PMI
Services PMI is due out at 8:30 GMT and analysts are predicting a slightly lower reading than last month at 53.5. PMI is a good indicator of economic activity and a number above 50 is considered positive.
EUR – PMI, Retail Sales
There’s a string of second tier data out across the Eurozone today focused on PMI and Retail Sales. When we have a range of releases like this it can create choppy, stop-start price action. Keep that in mind and look out for all the releases.
EUR/USD – US Traders Get Their Chance
The Euro didn’t really get a chance to break away from the range it was stuck in yesterday as the US was on holiday. There’s a string of data that is coming out today and if we get some weakness then it will present an opportunity to go long.
EUR/USD – 240 min Chart
EUR//USD – Trading Plan
In the same fashion as yesterday, I’m still looking to go long and ride the uptrend that we’ve seen over a number of months. With the US away we didn’t quite get the range we were looking for in the Euro yesterday, but, with today's full calendar, there is a chance that we might be able to work a good price on an order.
Below 1.1850 I’m looking to go long. I’m not prepared to buy in higher just yet as it’s still unclear how the USD is going to react. Now that traders from the US are returning after Labor Day, there is potential for some added volatility. I want to use that to try and secure a better entry.
Gold – Daily Chart
Gold – Closing the Gap
It might feel like deja-vu, but that’s because I’m still waiting on gold to potentially sell off. We haven’t been able to break above the key resistance level of 1338 that we gapped into yesterday, however now that the US is back this may be in the cards.
Gold – Trading Plan
Assuming tensions don’t increase, I think we are still able to close the gap in gold and see it retrace to 1326. That is if no more news hits the wires out of North Korea or sanctions aren’t imposed. Until that point, I’m happy to be short below 1338.
Today is set to be an active one, with a big data day out of Europe and the return of US traders for the week.
Let’s make it a big one! Good luck traders.