Senior Trader Update 21.04.2017

Good morning everyone,
 
A jobbers / range traders market in Gold/AUD at present as AUD 1690 & 1710/15 continue to remain the demarcation lines.
 
While the situation in North Korea remains firmly on the radar (a subject we will return to in the moment), of more pressing concern will be the outcome of the first round of the French Presidential elections on Sunday and (all things being equal) the markets are likely to remain in a holding pattern ahead of the outcome.
 
In ‘The Art of War’, Sun Tzu stated that “All warfare is based on deception. Hence, when we are able to attack, we must seem unable; when using our forces, we must appear inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near.” I bring this up because if this is the playbook the US military is following in relation to North Korea, then they managed a masterful execution of this principle by convincing the world last week that the navy’s Carl Vinson strike group was moving from Singapore to the Korean peninsula, when in fact the aircraft carrier Carl Vinson was 3,500 miles away and headed in the opposite direction at the time!
 
Courtesy of Stratfor:

This small matter of “miscommunication” (as the US military claims) notwithstanding, the war of words (thankfully still words) continues unabated with some particularly fruity statements being made over the past 48 hours.
 
From North Korea, a warning to Washington was as follows; “In the case of our super-mighty pre-emptive strike being launched, it will completely and immediately wipe out not only US imperialists’ invasion forces in South Korea and its surrounding areas, but the US mainland and reduce them to ashes,” - Rodong Sinmun (the official newspaper of the North’s ruling Workers’ Party).
 
This was in response to comments from US Secretary of State Tillerson that “We’re reviewing all the status of North Korea, both in terms of state sponsorship of terrorism as well as the other ways in which we can bring pressure on the regime in Pyongyang to re-engage with us, but re-engage with us on a different footing than past talks have been held,” and from US Vice President Pence of an “overwhelming and effective” response to any potential attacks from Pyongyang, and that the “sword stands ready”.
 
If not for the seriousness of the situation and the unpredictability of the leaders of both nations, the cynic in me would be tempted to say that all these threats are starting to sound like handbags at ten paces.
 
Technically, the AUD 1690 – 1710/15 range should continue to be respected but a break on the downside would likely open the way to some mean reversion back towards AUD 1670 and a breakout through the topside should see the way clear through to the Nov 8th high last year at AUD 1760. In Gold/USD terms, the longer the market is contained by the major trendline resistance (which commenced in September 2011) and fails to take out the psychological USD 1300 ‘big figure’, the greater the probability of ‘stale’ long liquidation in which case a decampment to the USD 1245 – 1265 region might provide gold with a better base from which to have a crack at taking out USD 1300.00 eventually.
 
Have a great weekend!
 
Regards,
Andre