Morning Wrap 23 August 2017

Good morning everyone!
 
Markets switched to ‘risk on’ with the US Dollar making a small recovery, and the USD index rallying up to the Daily Turning line at 93.54, where some resistance should be found. Equities rallied, with the S & P 500 rallying up to Standard Line resistance at 2454.
 
Conversely, gold, the JPY and US bond prices weakened, with the proximate cause being a sense of ‘some level of restraint’ on North Korea’s part according to Rex Tillerson, the US Secretary of State. Additionally, comments made by House Majority leader Mitch McConnell that there was ‘zero chance’ of Congress failing to raise the debt ceiling helped inject a touch of positive animal spirits into US equities, which were beginning to question the likelihood of meaningful tax reform. The debt-ceiling debate will sharpen until mid-October.
 
The XAUUSD retreated from the Turning Line resistance at US$1642 yesterday, after a decent close, and short term price action suggests a move towards A$1609 and A$1604. XAUUSD has nearby support at US$1281, and then Standard Line support at US$1268.
 
In addition to the CME positioning data mentioned yesterday, it is worth noting that Open Interest grew by around 2.09 million Tozs in the CME December contract between Wednesday and Friday of last week with a Volume-Weighted-Average Price of around US$1291. Given price action, that looks like a decent increase in overall length, which might get ejected on stop–losses if we see further weakness. All of the above are hostages to North Korean and Presidential tweeting of course.
 
Good luck today.