United States

Following an early shaky start, which saw the Hang Seng tumble as much as 1.6% driven by weakness in financials and real estate names following the latest warning by PBOC governor Zhou about "sudden, complex, hidden, contagious, hazardous" risks In markets and a decline in local real estate prices, and pressure global risk, US equity futures have recouped all losses and are back to unchanged on monday morning, as President Trump continues on his first official trip to Asia.

While the Fed may still be confused by the lack of inflation, if only in the "real economy", if not in financial assets, increasingly more analysts have realized that what the Fed has done is tantamount to blowing an roaring inflationary bubble, if largely confined to the realm of asset prices. And while we used a Goldman chart to demonstrate this divergence a little over a month ago...

... now it's JPMorgan's turn to undergo the proverbial epiphany.

With President Donald Trump arriving in Japan today to kick off a 10-day Asia tour, the Washington Post is reporting that the only way to locate and secure all of North Korea’s nuclear weapons sites “with complete certainty” would be a ground invasion, and in the event of conflict, Pyongyang could use biological and chemical weapons, the Pentagon told lawmakers in a newly released assessment of what war on the Korean Peninsula might look like.

Submitted by Shant Movsesian and Rajan Dhall MSTA fxdailyterminal.com

In recent weeks, we have continued to look to further gains in the USD, initially led by a belief that the bearish scenario had been exhausted, but later on improving data.  Time frame is a key factor in our metrics for where we see currencies finding value, and given that we have seen some strong gains against the CAD and JPY in recent weeks, we may be close to congestion levels, which these days tend to develop into significant tops.  

Ahead of Trump's visit to Asia, there were understandable concerns that a diplomatic snafu was imminent. Those concerns were partially justified following a report from Japan Times, according to which Trump said Japan should have shot down the North Korean missiles that flew over the country before landing in the Pacific Ocean earlier this year.