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Rising geopolitical tensions among the world’s major military forces sent traders into the arms of low-yielding bets. Oil bucked the trend, however, thanks to a one-two punch of news updates.

  • U.S. NFIB small business index slips from 105.3 to 104.7
  • JOLTS U.S. jobs openings clocks in at 5.74M vs. 5.59M expected, 5.63M previous

Major Events:

Rising geopolitical tensions weigh on equities – With no major economic data on the docket, U.S. session traders turned their focus on rising geopolitical tensions.

Yesterday U.S. Secretary of State Rex Tillerson practically gave Russia an ultimatum, saying that “We want to create a future for Syria that is stable and secure,” adding that “Russia can be part of that future and play an important role or Russia can maintain its alliance with this group which we believe is not going to serve Russia’s interest longer term.

Putin wasn’t impressed, however. In a presser, he said that “We’ve seen all this before,” adding that “Syria and Russia provide a common enemy, a very good platform for consolidation” between the US and its western allies.

Putin said that they’re “ready to be patient” and hope that all these will end up on “some kind of a positive trend.” Tillerson is currently in Russia and is expected to meet with Russian officials and maybe even Putin today. Buckle up.

Meanwhile, Trump tweetedNorth Korea is looking for trouble. If China decides to help, that would be great. If not, we will solve the problem without them! U.S.A.” yesterday.

It looks like China is listening, as more and more civilian reports point to deployment of more Chinese troops to the North Korean border.

The rising tensions among the major global players was enough to spook U.S. session traders.

The CBOE Volatility Index (VIX), a widely-known fear barometer, closed at 15.07, its first close above 15 since the Presidential election jitters in November.

  • NASDAQ closed with a 0.24% loss to 5,866.77;
  • S&P 500 closed 0.06% lower to 2,353.79; and
  • DJIA closed 0.03% lower to 20,651.30

Higher oil prices – The Black Crack escaped the overall risk aversion thanks to a one-two punch of favorable stockpiles data and rumors of Saudi Arabia favoring an extension of OPEC’s production cuts deal.

Data from the American Petroleum Institute (API) showed U.S. crude oil inventories falling by 1.3 million barrels last week after dropping by 1.8 million barrels in its previous release.

The commodity was further boosted by a Wall Street Journal report printing that Saudi Arabia has approached OPEC officials and wants to extend the cartel’s production cut deal by another six months in May.

Brent crude oil jumped by 0.50% to $56.23 per barrel and marked its seventh consecutive day of gains while U.S. crude oil prices also popped up by 0.6% to $53.40.

Major Market Movers:

JPY – Overall risk aversion and a bit of anti-dollar sentiment sent forex traders into the arms of the low-yielding yen.

USD/JPY dropped below the closely-watched 110.00 level to trade at 109.70 while EUR/JPY fell by 105 pips (-0.89%) to 116.35. GBP/JPY also saw a 53-pip decline (-0.39%) to 137.01 while AUD/JPY plummeted by 81 pips (-0.98%) to 82.23.

USD – Geopolitical concerns weighed just a bit more against the dollar during the trading session and pulled it lower against its major counterparts.

GBP/USD shot up by 51 pips (+0.41%) to 1.2489, NZD/USD popped up by 9 pips (+0.13%) to .6954, and EUR/USD hit a high of 1.0631 before slipping back down to 1.0605.

Watch Out For:

  • 11:50 pm GMT: Japan’s annualized bank lending (2.9% expected, 2.8% previous)
  • 11:50 pm GMT: Japan’s core machinery orders (3.9% expected, -3.2% previous)
  • 11:50 pm GMT: Japan’s annualized PPI (1.5% expected, 1.0% previous)
  • 12:30 am GMT: AU Westpac consumer sentiment
  • 1:30 am GMT: China’s CPI (y/y) (1.1% expected, 0.8% previous)
  • 1:30 am GMT: China’s PPI (y/y) (7.4% expected, 7.8% previous)

See also:

London Session Recap
Asian Session Recap

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