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We mentioned in the noteworthy news yesterday that it would be worth monitoring the Syria situation, although he did not implicitly mention military action, I did get the impression that President Trump was backed into a corner.
If there was any doubt as to what kind of leader President Trump will be when the tough decisions needed making, they were made last night in a decisive manner. The US Navy fired more than 50 Tomahawk missiles onto an airfield in Syria, the same airfield where the chemical attack was launched. Trump was also critical on Russia, the Russians were tasked in securing chemical weapons from Syria in 2013 – so much for the “bromance” between Trump and Putin. Despite the negativity surrounding President Trump, last night he showed that he puts America first and is prepared to take action when required.
Dean's Daily FX Update – 07 April 2017
Recap
There are still a lot of potential implications that could unfold:
- What will Syria do?
- What will ISIS do?
- Will the US allies support the US?
- Will we see more strikes?
The biggest question mark centres around what the response of Russia will be. This morning it would seem as though Russia are not taking too kindly to the attack, calling it an act of aggression and that it would negatively affect US-Russian ties. Both Australia and the UK have supported the US, this has the potential to be a long and drawn out conflict.
We are more concerned as to how this sort of thing affects the financial markets and looking at the hourly chart it is clear to see:
- Gold will bounce
- Oil will bounce
- US Indices will fall
- The USDJPY will fall
- The USDCHF will fall
- AUDUSD and NZDUSD will fall
- USDCAD is a lottery
All these actions represent the markets flight to safety. Gold, the JPY, and the CHF are all seen as safe havens and so naturally the market will move investment there, as well as into US Treasuries. Oil will find support as it becomes important in the event of conflict, and so the CAD can sometimes bounce with the oil price. There will be a migration from “riskier” assets like equities and commodity currencies such as the AUD and NZD.
Monitoring the hourly chart, all these events unfolded immediately after the strike early this morning, whilst there has been a small recovery this morning we will have to wait to determine what the market decides to do once the London session gets underway. Will those initial moves this morning, re-establish or will the market decide this is blown out of proportion?
Oh yes – throw in the NFP data release today and the start of planned meetings between President Trump and President Xi of China (who have a frosty relationship already), and we have a recipe for some possible volatility today.
There will be no daily ranges today as the technical ranges are generally not valid on a day like today.
Important Economic Data out today
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