Trades off temporary relief of North Korean missile tests and debt ceiling extension

I’m still in the process of catching up to recent events. Here’s a follow-up to what I see with the situation in North Korea and also the debt ceiling.

The US markets were up as North Korea did not test-fire missiles this weekend or make any outrageous threats to launch an ICBM. However, North Korea is still hit with new United Nations sanctions possibly disappointing Trump as it does not appear to be as severe as he would’ve wanted it. North Korea is banned from importing all natural gas liquids and condensates, but caps crude oil imports at levels of the past 12 months. Import of refined petroleum products are limited to two million barrels per year while all textile exports are banned as well. Countries are also prohibited from authorizing new work permits for North Korean workers.

I would still conclude that North Korea will continue to find the resources for continue its missile and nuclear programs. Just because it’s currently a de-escalation of risk, the risk is undoubtedly still present. We can observe the confidence in the soaring USDJPY, but I will still be monitoring potential short entry levels.

The debt ceiling is also another interesting Congress decision that’s worthy monitoring. Hopefully my interpretation of it still remains on point. In my last post, I mentioned that consideration should be given in light of recent events, first Harvey and now Irma. As reported last Friday, President Donald Trump signed a measure tying emergency funding for hurricane relief with measures that would raise the debt ceiling, which was approved for a three-month extension. Markets should remain optimistic, but only temporarily since I view this much as a band-aid solution to a bigger debt problem.

Here are a few trade setups I am looking at for some short term outlooks:

usdjpy1
USDJPY 4-Hour

The faint dashed line represents a relative low on the daily timeframe and thus remains a daily level. Looking at the 4-hour timeframe, it provides us with the indication of breaking out of previous highs, but currently retracing to the original level. If this level holds up, I would maintain a bullish US dollar outlook. This pair should be able to play well with the technicals as there are no expected Bank of Japan releases this week.

Screen Shot 2017-09-11 at 10.41.23 PM
GBPNZD 1-Day

This is another trade I entered straight from a technical approach. With monetary policy two days away, this trade is a play off the daily level that appears to be held supported with price having traded lower, but ultimately stayed supported. I expect this pair to continue to remain bullish provided this level holds up.

These are the two trades I’m currently in, stay tuned for more.

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