FX & North Korea

What do we expect in the upcoming week in the FX market. Well alot depends on tensions in the Korean peninsular. Last week was dominated by rhetoric from our favourite POTUS, which was around brute force and intimidation - ""Fire and Fury like the world has never seen before".

If the issues with Nth Korea escalate further then we should see more safe haven buying - yen, gold, suissy. US yields also told a story. On the other hand if things settle then USD may have a reprieve against the yen. Gold broke a significant trendline last week and it should continue north even if deescalation in Nth Korea given the benign inflation outlook in the US which still persists.

Euro is still showing resilience with dip buying occuring down around 117 but the key here was the CPI data released on Friday which saw the euro spike around 70-80 pips and closed the week at 11823 (50pips up on the previous weeks close). Look out for FOMC minutes being released to give a better picture on what members are thinking on importance of 2% inflation target and also there should be a clearer picture on what EZ are also thinking in terms of QE tapering.

Its August so trading could be thin this week so not expecting huge moves (Nth Korea excluded) so becareful of any whippy action. Out on alimb here but see euro trading between 119 and 11776 this week. Good luck to all.

Posted in Euro, USD, USDJPY and tagged .

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