It’s a Mad ,Mad, Mad, Mad ,World

It’s a Mad, Mad, Mad, Mad, World

The markets are unsettled this morning with traders dwelling on the questionable North Korea headline about testing a long-range missile soon. With Columbus day and the anniversary of the founding of the North Korean communist party in sight,  the market is back on headline watch, However, dealers will probably need some actionable convincing that geopolitical risk is on the rise again.


Turkish -US relations took a turn for the worse over the weekend. The US is reportedly suspending non-immigrant visa services at its diplomatic facilities in Turkey following the arrest of a consulate employee, prompting Turkey to halt visa services in the U.S.

This latest escalation adds more fuel to the fire after tension was nearing a boil the over US support for Syrian Kurdish militants in the war against ISIS, who  Turkey views as a terrorist group.

USDTRY is off  3.0 % in early trade exacerbated by weak liquidity conditions at the open and what was available as it was priced at unwarranted premiums. All too typical on Interbank electronic FX platforms these days. However, as Asia l volumes come into the fray, TRY liquidity is returning to normal and turn over is very high.

New Zealand 

NZ election is back on investors radar screens when special votes were counted on Saturday. At the crux of the issue: opposition party wants to remould the RBNZ to include more independent private sector business types in policy decision process. Whichever way you want to read into that, it does imply a level of uncertainty regarding the future course of monetary policy, but as we all know what business person is every in favour of paying higher interest rates on loans. So by extension, I view the other side of the flow even more dovish than the New Acting Governor Spencer who is a carbon copy of Wheeler and cut from the same cloth.

The UK and  Continent 

May’s calamitous Conservative party conference speech continues to weigh like a nightmare on the Pound. While the frenzied calls for her resignation have tempered, political risks and the lack of Brexit headway are most significant negatives underlying GBP. UK politics is a mess and unlikely to get any cleaner.

EU political risk continues to simmer over the Catalan independence debate. The market may be underpriced large on this risk event so  EURUSD should remain on offer until cooler heads prevail

US Dollar 
US CPI is the focal point of this week early. After August CPI surprise, the worm may be turning as markets look for convincing from this weeks headline.

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.

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