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Risk-off slightly abates, oil loses ground again

It was stormy Tuesday across financial markets which was made by North Korea. Even though a risk-off mode has abated to some extent, the European equity markets have marked massive declines. After the bleak opening, buyers have hardly managed to recoup their losses. As a result, the German DAX (DE30 on xStation5) lost 1.43% (it broke a critical support as well), drops were limited in France and the UK though as they slipped more or less 0.8%. On top of that, Wall Street has opened almost flat shrugging off possible ramifications stemming from frictions between the US and North Korea.

The EURUSD has already broken through 1.20 handle and could be on the rise in the nearest future. Having said that, the ECB’s meeting scheduled for September could be a big event given a sharp increase seen in the common currency so far. Keep in mind that the speculative positioning stays on its highs, hence a possible pullback could be mighty.

As far as commodities are concerned, gold’s glow has subsided as the price has reversed from ca. $1325 to under $1320. Otherwise, WTI prices have lost more than 1.5% marking a second dismal session in a row (a consequence of the hurricane Harvey). Grains have been quite muted, nonetheless a broader outlook looks still dubiously. We got fairly upbeat prints regarding export inspections for corn in particular which suggest a beginning of a seasonal bounce for maize from abroad. So, a seasonal rebound in grains’ prices could be in on the cards.

In terms of the macroeconomic data, there was a reading of consumer confidence released by Conference Board. The index climbed to 122.9 pts. in August from 121.1 pts. in July despite expectations for a dip to 120.3 pts. This means that while hopes for economic stimulus in the US have faded consumers remained upbeat. Conference Board also confirmed (as indicated by a flash release of the University of Michigan index) that a summer dip in confidence was only temporary.

There is nothing new that the JAP225 is inversely correlated with the USDJPY currency pair. It stems mostly from the fact that more capital flows out rather than into the country. In short, Japanese investors own more foreign assets than foreign investors own of Japanese assets. Furthermore, the yen is treated as a so-called safe haven asset, hence it tends to gain when stocks decline all around the world.

Moves across the cryptocurrency market tend to be huge, hence a yesterday’s spike seen on Ripple couldn’t have been surprising. The fourth-largest digital currency in terms of capitalization surged yesterday evening from under $0.2 to above $0.24. That amazing increase could have been attributed to rumors which came in at the same time. Those concerned that Ripple would enter the Chinese market. Even as they were not official, it was sufficient to exert hefty upward pressure on the price.

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