A strong sense of unease infiltrated the forex markets during trading on Friday with investors staying clear of riskier assets after reports were released that the U.S military launched an airstrike on Syria.
The possible threat of geopolitical tensions heightening from the airstrikes has created a risk-off trading atmosphere which left Asian shares mixed.
The lack of upside momentum from Asian forex markets has already contaminated European equities with the diminishing appetite for risk potentially limiting gains on Wall Street this afternoon.
It must be kept in mind that participants were already jittery ahead of the Trump-Xi summit and this fresh development may compound to the horrible cocktail of uncertainty.
Trump-Xi summit round 2
Although the Trump-Xi summit has been somewhat overshadowed by the US strike on Syria, investors may still pay very close attention to how the meeting between these two world leaders progresses.
While Donald Trump has said that he has developed a friendship with Chinese President Xi Jinping, this may be tested today as the two leaders discuss trade, North Korea, and other important forex market moving issues.
A situation where the outcome of the meeting seems unfavorable and unsuccessful could intensify the risk aversion ultimately boosting Gold.
NFP in the spotlight
The solid ADP report and hawkish Fed minutes this week have allowed the Greenback to regain its attitude with the Dollar Index trading around 100.78 as of writing.
With short-term bulls simply looking beyond the Trump uncertainties and focusing on positive economic data, the Dollar could be poised for further upside.
Forex investors may direct their attention towards the pending NFP report this afternoon which could offer some insight to how the US labor force fared in March.
A blockbuster NFP figure that exceeds expectations coupled with a surprise rise in average hourly earnings could boost the Dollar further. From a technical standpoint, the breakout above 100.75 could open a path higher towards 102.00.
Gold breaks above $1260
Gold charged to a fresh 5 month high at $1269 during early trading on Friday after reports were released that the U.S military launched an airstrike on Syria soured risk appetite.
With risk aversion set to heighten as markets ponder over the ramifications of the U.S airstrike, Gold and other safe-haven assets may receive a solid boost. While there is a possibility of a positive NFP report pressuring Gold prices, the downside shocks may be limited by the jitters.
From a technical standpoint, bulls need a solid daily close above $1260 for a further incline higher towards $1300.