Risk Aversion Seen As US, North Korean Tensions Escalate
Craig Erlam | Aug 09, 2017 08:18AM ET
We’re seeing significant risk aversion in the markets on Wednesday, with the escalation in tensions between the US and North Korea triggering moves into safe haven assets.h3 Gold, Yen and Swiss Franc Benefit From Safe Haven Flows/h3
Equity markets in Europe are down more than 1% in most cases and Wall Street is also facing a negative open, as investors turn away from perceived riskier instruments in favour of the traditional safe havens. Gold – the ultimate safe haven instrument – is up around 0.6% so far on the day and could extend these gains if investor sentiment continues to deteriorate.
The yen, despite Japan being in the thick of it, is also seeing plenty of safe haven flows although it’s the Swiss franc which is proving to be the biggest winner in all of this, trading around 1% higher against the US dollar, euro and pound. It will be interesting to see if the yen maintains its safe haven status should this continue to escalate into something far more serious than just the war of words it currently is.
h3 EIA Data Could Trigger Next Upside Move in Oil/h3Oil is trading a little higher again on the day, possibly spurred on a little by the latest verbal sparring between Donald Trump and North Korea. Still, it continues to trade a little off the highs of the last week or so, with $53 still proving a strong barrier to the upside in brent and $50 doing likewise in WTI. EIA may provide the necessary catalyst for a test of this later on in the day, especially if we see a number in line with last night’s API report.
US data is looking a little light once again, although as we saw on Tuesday, even numbers that aren’t typically associated with big market moves can take their toll. The JOLTS number further highlighted the diminishing slack in the US labour market that should drive higher wages in the not too distant future, although it’s worth noting that this is something the Fed has been expecting for some time as the unemployment number has continued to decline.
Today’s numbers from the US come in the form of non-farm productivity and unit labour costs, both of which should theoretically, at least, be a key indicator of future wage and inflation trend. More good numbers here could trigger similar moves to those we saw yesterday, particularly with the dollar continuing to look very oversold.
Get The News You Want
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.