Risk Appetite Returns After North Korean Holiday

Safe Havens Under Pressure as Geopolitical Risk Eases a Little

Risk appetite looks to have returned on Monday, with traders relieved at the inactivity in North Korea over the weekend after reports suggested the country could engage in more provocative testing.

The rogue state celebrated its 69th founding anniversary on Saturday and there had been speculation over the week leading up to it that further tests could be planned. Last year, the occasion was used to carry out its fifth nuclear test and given the ramp up in testing in recent months, it was feared the same would happen again.

Irma Gusts Topple Oil as Gold Flakes

Given the market response in recent weeks to such actions, traders were understandably cautious throughout the week but with the day having passed without drama, we’re seeing a move away from the safe havens. Strong gains in Asia overnight are looking to be replicated when the European week gets underway, with indices currently seen around 0.5% higher.

Gold Off its Highs but Remains Elevated

The traditional safe havens are coming under some pressure this morning, a partial unwinding of the sizeable flows seen in recent weeks. Gold has come off its highest levels in more than a year this morning, gapping lower on the open in a sign of relief for traders, but still remains a very elevated levels which is representative of the risk environment we still find ourselves in.

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The yen is another safe haven that is seeing some of the recent flows unwound this morning. The dollar is trading back above 108 against the yen this morning, having fallen to its lowest in almost 10 months on Friday, not helped by the greenbacks own difficulties. A combination of political risk, a less hawkish Fed and more hawkish central banks elsewhere has driven the dollar to its lowest since the start of 2015 and the slide doesn’t appear to be easing up yet.

Difficult FX Trading Conditions

UK Data and Central Bank in Focus This Week

This week the UK will be primarily in focus, with the Bank of England monetary policy decision due on Thursday and coming after jobs and inflation data earlier in the week. Monday is looking a little quieter though, which barring any surprise events could offer some reprieve for markets.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.