More often than not, markets have looked through North Korean missile tests. The risks of taking defensive action have not stacked up. This morning could be different

The latest North Korean missile has been launched over Japan and follows escalating rhetoric between Pyongyang and Washington. Traders are likely to take defensive action while the world waits on Washington’s response.

There has already been support for gold and the Japanese Yen this morning. The stock market is also likely to be weak when it opens later this morning

Chart levels can help guage the extent of market concern in these circumstances. Key levels include the April low of 108.13 in USDJPY; the 78.6% Fibonacci retracement level at $1321 in gold and the 5650 support zone for the Australia 200 index. A clear move through these levels will suggest significant market concern.

This morning’s risk off moves in Yen and gold are fuelling momentum that developed after the central banks’ Jackson Hole conference.  This led to short covering in the Euro and weakness in $US that in turn drove support for gold

Energy stocks will not be assisted by overnight weakness in the oil price as traders wait for an assessment on the extent and duration of refinery closures caused by Hurricane Harvey.