FX FUNDAMENTAL ANALYSIS
Chart 3. Gold peaked. Swiss Franc strong against the dollar
their ability to get their hands on the hard currency. Whether these measures are enough to put an end to Kim Jong- un’s nuclear aspirations supported the demand for the Cryptocurrency Bitcoin. Nonetheless, the U.N. decided to vote in favour of stepping up the sanctions on the country. Although, the approved sanctions by the U.N were toned down versions of what was discussed before.
North Korea took no time to show its reaction to the new sanctions imposed on the country by the U.N. It was largely expected that North Korea would take that path. North Korea fired a missile which passed over northern Japan and fell into the sea. Te typical risk-off trade did come into play once again. Te dollar dropped and investors shiſted their focus towards gold.
Te gold price continued its bull run on the back of heightened geopolitical tensions as the typical safe haven money not only continued flowing in. Te fear barometer from Credit Suisse
36 FX TRADER MAGAZINE October - December 2017
also peaked as the price of gold did. Te Swiss Franc which is also a typical safe haven trade also had its climax at the same time as the gold price. A clear confirmation for traders is that the risk- off trade was in full swing.
However, traders are getting more used to these sorts of provocations. One could say that the geopolitical tensions have eased off and are no longer at the boiling point given that there have been no more missile tests from North Korea. Although, I would argue that these threats should not be taken light-heartedly. Tey can get out of hand much quicker than anyone can anticipate, and if appropriate risk measures are not in place, the situation would look immensely vile.
President Trump used the recent gathering of the U.N. in New York to push his agenda further. In his Speech on the 19th September, he used the U.N. platform to send a clear threat to North Korea for a war and to completely destroy it if the country
attacked first. At the same time, he also escalated the tensions further by going against the Iranian nuclear deal (which all other major powers also agreed on). Te French Prime minister Mr Macron replied later by saying that the Iranian nuclear deal is the best deal. Tis has set the platform of a further riſt in Trump’s vision of the U.N. and how other nations view the U.N. If president Trump would up the ante on Iran, not only he would have two countries to deal with (which would make the ground more fertile for a risk-off trade) but also more growing conflict with countries like France.
Terefore, it would be a mistake
in our opinion to undermine the geopolitical tensions. Tis situation is like an elastic band which is being stretched on both ends and if it continues like this, it would be only a matter of time before it breaks.
Naeem Aslam
Chief Market Analyst TinkMarkets
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70
