Topic of the day: Big disconnection between Gold vs Yen
Topic of the day: Big disconnection between Gold vs Yen.
Both well known as safe haven are displaying strong negative correlation today while Gold drop more than -1.16% during Asia morning session and Yen is seen resilent against this drop.
Isolating Dollar strength as we had flat dollar currently (96.751) aid to conclude that mentioned above is not a result of escape from safe haven.
Looking deeper into Metals shows us that it is the commodity sector that is being hit at this moment. (Not just gold but also its peers: platinum, palladium, copper, zince, aluminium)
Going microscopic:
Japan data release moments ago shows large drop in international trade balance (jul) mainly result from higher imports vs weaker exports.
Japan's top 3 exporting partners are China, US, S.Korea clearly reflect the trade war effect spreading across the globe and reflective on its trading partners. (transfer of cost from tariff blah blah blah..)
With slowing growth and demand from producing countries like China, demand for raw material will drop and chain effect will slowly spillover towards currencies.
Next, this will cause a spiral effect depending on the expension of the economies. Ie. Lower input cost with higher demand will translate to higher production and higher net profit margin and so on...
Million dollar question is... which country will benefit and which will suffer?
*Share your thoughts
Both well known as safe haven are displaying strong negative correlation today while Gold drop more than -1.16% during Asia morning session and Yen is seen resilent against this drop.
Isolating Dollar strength as we had flat dollar currently (96.751) aid to conclude that mentioned above is not a result of escape from safe haven.
Looking deeper into Metals shows us that it is the commodity sector that is being hit at this moment. (Not just gold but also its peers: platinum, palladium, copper, zince, aluminium)
Going microscopic:
Japan data release moments ago shows large drop in international trade balance (jul) mainly result from higher imports vs weaker exports.
Japan's top 3 exporting partners are China, US, S.Korea clearly reflect the trade war effect spreading across the globe and reflective on its trading partners. (transfer of cost from tariff blah blah blah..)
With slowing growth and demand from producing countries like China, demand for raw material will drop and chain effect will slowly spillover towards currencies.
Next, this will cause a spiral effect depending on the expension of the economies. Ie. Lower input cost with higher demand will translate to higher production and higher net profit margin and so on...
Million dollar question is... which country will benefit and which will suffer?
*Share your thoughts