Markets were stunned last week when US President Trump came out and declared he would be imposing further tariffs on China. It looks like they are equally surprised today as China has attempted to sure up its economy by significantly devaluing the Yuan.

In early Monday trade, the Yuan dropped beyond the key 7-per-dollar level for the first time in more than a decade. The move has not only stoked worries around the trade wars but also highlighted the currency wars that many countries are attempting to play at the moment.

Of course, a lower currency is a significant boost for local exporters as it adds value. This is a way for China to reduce the impact of further tariffs and buy them more time at the negotiating table. Or even as many have suggested, buying them time to see out the first term of the Trump administration in the hope he will lose the next election.

Across the board today, we’ve been seeing a rise in risk-off plays including GOLD and the USD/JPY, while the key risk-on assets such as the AUD/USD have been badly sold down.

The calendar today looks like it will be overshadowed by the Chinese trade war response, but there is Services PMI out of the UK that will impact the GBP/USD.

Forex Signal Update

The FX Leaders Team finished the weak relatively square after some wild volatility and surprise announcements kept traders on their toes. 

NZD/USD – Pending Signal

The NZD/USD has been in-play today as risk is well and truly off the table. We are currently trading around the 0.6500 level and the only real play at the moment is to look for opportunities to short today.

Gold – Pending Signal

GOLD has been one of the big movers in the Asian session. Now that the $1450 level has been taken out the door is well and truly open for another leg higher. We are looking for a long position, but be wary of the volatility today.

Cryptocurrency Update

With all the action in today’s Asian session, BTC has been forgotten about at the moment, but we really do need to take note of what is going on.

After breaking out last week, price is back hitting into new highs and reclaiming more levels. So far today, Bitcoin is up 5% and closing in on $12,000.

Again, the risk-off feel might have something to do with it this morning, however, from a technical perspective price continues to look strong. While it keeps holding levels, the only real bias we have is to the long side. And so far it hasn’t put a foot wrong.