Morning Wrap 22 August 2017

Good morning everyone,
 
Overnight US equities tested lower once again in thin conditions, as the S & P 500 tested both trend line support and support from the Daily Cloud, before recovering to close at 2,428. North Korea continues to spit warnings at the US, with ‘merciless revenge’ on the menu if the US, South Korea and Australia continue with the snappily titled ‘Ulchi Freedom Guardian’ annual war games. Despite the tensions, the USD index sank lower to trade this morning at 93.10 with the JPY remaining strong, although unable to break higher. US Treasuries continue to be well bid with yields closing at 2.19 per cent for the generic 10 year bond. This week has some major speeches from ECB President Mario Draghi and Fed Chair Janet Yellen as Jackson Hole gets underway the day after tomorrow, with Unemployment gains (expected to be 237 k) and Core Durable goods (expected to be 0.40 %) ahead on Thursday and Friday respectively.
 
The XAUAUD continues in a very narrow A$1610-1640 range although the possibility of AUD weakness back to 77.72 and a strengthening USD gold inclines towards a more bullish resolution, with resistance at A$1642 and support at A$1604 and A$1598.  The USD gold price needs to break above US$1309 to really encourage further bullishness.
 
As of August the 15th Gold CME Managed Money long position rose by 3.061 million to 19.543 million, with shorts declining by almost a million to a vestigial 1.888 million, the smallest managed money short position since…mid-March 2014, which was one of the last times the North Koreans launched a pair of ballistic missiles from land in the direction of Japan.
 
Good luck today!
 
Nick