Geopolitical Risk eases ever so slightly

Asian markets kicked off the week with gains on Monday as concerns over North Korea eased and a killer hurricane struck Florida with less force than feared.

Traders breathed a sigh of relief that Pyongyang did not fire another missile on Saturday, choosing instead to mark its foundation day with a parade.

The news provided some much-needed cheer for markets after last week’s sell-off sparked by Kim Jong-Un’s nuclear test, with safe-haven assets such as the yen and gold retreating on Monday and the dollar picking up.

The greenback had already come in for a pounding in recent weeks on waning expectations for further Federal Reserve interest rate hikes and doubts about Donald Trump’s chances of pushing through his market-friendly economic policies.

However, it bounced back on Monday, surging back above 108 yen from Friday’s 10-month lows, while it also clawed back against the euro.

“The dollar is on a slightly better footing in early trade as the as North Korea headline risk has cooled a bit from last week’s fevered pitch,” said Stephen Innes, head of Asia-Pacific trading at OANDA.

“With little lack of geopolitical headline escalation over the weekend, traders are nimbly unwinding some NK over hedges in early trade but are still on headline watch.”

Yahoo News via AFP

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes