- Risk-off rules as North Korea spooks markets – Moltke-Leth
- Yen up after Japan election call & North Korea worries – Hardy
- EURUSD pushing on downside pivots below 1.1850
- Brent breaks the band on momentum and supply concerns – Hansen
- Brent now aiming at the psychologically-important $60/b mark – Hansen
- Gold returns to relative safety above $1,300/oz – Hansen
By Clare MacCarthy
Markets are starting the European trading day in a risk-off mood after North Korea escalated its war of words with the White House saying that Donald Trump's latest rebuttal was tantamount to a declaration of war.
"There's a pretty clear risk-off mood across markets and this has generally affected the euro the most on the downside in the wake of the Germany election, on the upside we're seeing the Japanese yen and the Swiss franc," says John J Hardy, Saxo's head of forex strategy. That the yen should be gaining despite its geographical proximity to North Korean missiles is explained by yesterday's decision by prime minister Shinzo Abe to call a snap election. The euro, on the other hand, is being pushed lower by the European Central Bank's apparent confidence that ending QE will be a painless exercise.
Meanwhile, the ongoing rally in crude oil continues to cause surprise, says Ole Hansen, Saxo's head of commodities strategy. "The rally is stoking additional demand with shorts being covered and new longs being initiated." One new factor behind the rally is yesterday's developments in Kurdistan which threaten to block off the region's access to its export markets via Turkish pipelines and hence endanger supply.
Backwardation is attracting buyers to Brent
Clare MacCarthy is an editor at TradingFloor.com