The volatility index fired up by 6.5% overnight naturally as the North Korean Foreign Minister was aggressive in his reply to Donald Trump’s address to the UN.
As a result, GOLD which always benefits at times of geopolitical tension, rose more than 1% to $1312 from $1292. Stock markets also have reacted negatively to this news especially after Angela Markel despite having won a 4th term will have to build a coalition to form a government.
Yesterday, sentiment on the euro obviously turned less positive after the German election even as the impact on other markets was modest.
A risk-off correction also weighed more on the euro than on the dollar. Eco data probably won’t be decisive for FX trading today. If EUR/USD drops below 1.1823, the recent correction might have further to go. The risk-off triggered a simultaneous decline of USD/JPY, EUR/USD and EUR/JPY. USD/JPY finished the session at 111.73. EUR/USD close the day at 1.1848. A real test of the 1.1823 has just occurred now.
Brent crude oil has risen above $59 a barrel to its highest in more than two years,
lifted by fast-growing demand and a threat to Iraqi Kurdistan’s crude exports as the autonomous region holds a referendum on independence.
The Sterling was quite restrained in daily range to start this week as the USD strengthened
up a bit against most of the major FX pairs. The downgrade of UK on Friday hurt the GBP generally, in relation to their Brexit process, but the main catalyst in the GBPUSD being Offered, was the USD strength and the Theresa May speech in Europe on Friday evening, hurting sentiment & outlook. A minor recovery off lows in GBPUSD around 1.3510 occurred, but very tight trading range so far, this week.
Today’s calendar contains US New Home sales, consumer confidence and the Richmond Fed survey.
Focus will though be on geopolitical issues, and on the manifold Fed and ECB speakers.