- North Korean leader declared over the weekend his country will suspend nuclear and missile tests immediately
- US is unlikely to make any substantial concessions in the aftermath
- Japanese yen trades slightly lower along with Asian stock markets
The news coming from North Korea stole the show over the weekend as the country’s leader Kim Jong Un declared that he would suspend nuclear and missile tests immediately (starting Saturday) as well as shut down a nuclear test site which served to conducting the previous six nuclear tests. The state news agency KCNA added “to guarantee suspension of nuclear tests in a transparent manner, the republic’s northern nuclear test site will be abolished”. This announcement came in less than a week before scheduled meeting between South and North Korea leaders. The meeting is seen as a precursor to a historic summit between Kim Jong Un and Donald Trump set to begin at the end of May or early June.
US President Trump tweeted after a while when the announcement came up and wrote “this is very good news for North Korea and the World – big progress! Look forward to our Summit”. Even as it could look like tensions and frictions between the two countries might ease off in the nearest time do notice that Kim did not declare his country is going to give up the program altogether. He was also quoted by the state KCNA news agency as saying “we no longer need any nuclear test or test launches of intermediate and intercontinental range ballistic missiles, and because of this the northern nuclear test site has finished its mission”. Although Trump hailed the step taken by North Korea he seems to be a long way off from any substantial concessions for the time being at least, according to unnamed senior Trump administration official who spoke on condition of anonymity. He also suggested that lifting sanctions looks unlikely until North Korea has substantially dismantled its nuclear programs.
Despite a promising stance presented by North Korea investors did not rush to buy riskier assets, and as a result the Japanese current did not lose too much. Looking at the chart above one may notice the pair keeps trading below its crucial supply zone placed slightly above 108, and it looks that it’s underpinned by an upper boundary of an upward channel. Asian stock markets have also barely responded to positive developments on the Korean Peninsula as most of them are set to close lower excepts the Australian stock market which managed to add 0.35%. Meanwhile, the SP500 futures (US500 on xStation5) are trading 0.3% higher pointing to a green opening when US traders come online. Notice that Monday’s session could be outstandingly important for bulls given the Friday’s decline which dragged US indices back to their pivotal technical support.
After drawing a bearish engulfing the NASDAQ (US100) got back to its relevant support being localized nearby 6640 points. Today’s session could be conclusive where it may go from here. Source: xStation5