We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bullish
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The price of #gold may continue to exhibit a bullish behavior in June as the pullback from the yearly high ($1765) reverses ahead of the May low ($1670). Get your Gold market update from @DavidJSong here: https://t.co/OeaYtCpcIo https://t.co/UQVPIVCTCP
  • The $USD breakdown has taken the index into confluence support at the objective yearly open. Get your USD technical analysis from @MBForex here: https://t.co/A16XEv6n4d https://t.co/GzEp3gCAe5
  • US equities continue to run higher with the Nasdaq 100 setting a fresh all-time-high, not even three months after giving back almost a third of its value in about a month. Get your #Nasdaq technical analysis from @JStanleyFX here: https://t.co/1LI54uvI8x https://t.co/e9FvSLqfaA
  • The US Dollar may be at risk to losses against some of its #ASEAN counterparts. USD/SGD, USD/PHP, USD/MYR and USD/IDR have recently broken to the downside. Will losses continue? Find out from @ddubrovskyFX here: https://t.co/0RTlj6maTT https://t.co/UyQ4i0AihI
  • The British Pound technical outlook still seems to favor the downside. GBP/CAD may pressure key rising support from August as GBP/AUD could prolong its downtrend. GBP/CHF may fall. Get your $GBP market update from @ddubrovskyFX here: https://t.co/hBOpDKXmfW https://t.co/AJlT2YKeCu
  • USD/JPY is approaching medium-term uptrend resistance and while the outlook remains constructive, the advance may be vulnerable near-term while below confluence resistance. Get your $USDJPY technical analysis from @MBForex here: https://t.co/93D7AyhHtG https://t.co/KQcLLrkMP3
  • AUD/USD has had the most impressive show of trend over the past couple of months with the pair gaining almost 1500 pips from the March low. Get your $AUDUSD technical analysis from @JStanleyFX here: https://t.co/vLz4Rpln3u https://t.co/AOwnJja5V8
  • Has the #Euro been saved? Find out from @CVecchioFX here: https://t.co/eiXfOTyGa6 https://t.co/AyRiYpb4cN
  • U.S. Market Analyst at https://t.co/JsVsSmefgR, Shain Vernier covers - ✔️ Safe haven assets in volatile markets ✔️ Central banks and governments ✔️ How will commodities trade in a recession Only on Trading Global Markets Decoded #podcast. Tune in here: https://t.co/1UmEzEbwiy https://t.co/ygwjGNvS61
  • The $USD, Euro, British Pound and Australian Dollar will all be at the mercy of political developments in Asia, Europe and North America this week. An avalanche of PMI data will set the backdrop. Find out from @ZabelinDimitri here: https://t.co/L8cfAgVx94 https://t.co/THWhPAS6AM
What are the Best Safe Havens on North Korea Escalation

What are the Best Safe Havens on North Korea Escalation

2017-08-12 05:33:00
John Kicklighter, Chief Strategist
Share:

Talking Points:

  • An escalation of heated language between the United States and North Korea has led to global concerns over financial stability
  • Strong correlation across markets reflects a market-wide shift in risk trends, but conviction is still open to the winds
  • Should full-tilt fear seize the financial system what makes the better safe haven: Bitcoin; Yen; Dollar; Treasuries or Other?

How will risk trends develop moving forward and what measures should we monitor to track its progress? Join the Fundamental Trading webinar Monday to find out. Have trading, market or strategy questions? Ask them at Tuesday's Q&A. Sign up on the DailyFX webinar calendar.

If the markets start to melt down on an escalation of the tensions between North Korea and the United States - or really any serious catalyst - where should traders and investors seek refuge? That is not as clear an answer as some would think. Not all havens are equally poised to benefit in a flight from risk - especially following years of speculative excess that has substantially warped the financial norms. We have seen massive stimulus programs turn some of the stalwarts of the system (like sovereign debt) into outright speculative assets. The rise of new financial products have given access to what were once simple barometers (volatility gauges like the VIX) or inaccessible corners of the market previously only navigated by the most experienced and highly capitalized (emerging markets).

On the risky side of the equation, the at-risk assets seem to be relatively straightforward. As the saying goes when sentiment collapses, correlations go to one. It is impossible to escape the gravity of absolute risk aversion that sees investors divest in all assets dependent on quiet and reach for yield. Despite the reach though, there are those that are due to suffer more. Those markets that have leaned in one direction through the past months and years and have utilized leverage in one form or another to gain altitude stand to lose the most ground. Among the most over bought of the assets on the standard spectrum are equities. The US equity indexes in particular - including the S&P 500 and Dow Jones Industrial Average - have climbed exceptionally high over the years. How those assets on the opposite end of the spectrum react after years of exceptional quiet and escalating exposure depends on the motivation and scale of the slump. The threat of North Korea and/or the US launching an attack possess a distinct threat to the world as growth, stability and liquidity come into immediate focus. What ultimately turns the market to the event horizon of a market collapse are the conditions that have eroded from underneath the speculative reach - not the catalyst itself.

How intense a collapse in sentiment becomes is crucial for escalating certain markets from casual trade target to full-fledged haven. Having grown exceptionally popular these past months, Bitcoin would be among the more dubious outlets for safety. While it may be able to avoid capital controls and stimulus recharge that would follow a financial crisis, it is exceptionally volatile. This speculative trait alone will undermine a sense of stability when it is most necessary. Equally dubious in its role at the safety end of the spectrum is the Japanese Yen. Very early carry trade has helped to sink the Yen (lifting crosses) which would in turn necessitate a reversal of trend as sentiment faltered. The more traditional understand of the Dollar as a haven would need to be put against the currency's appeal as the lead carry owing to the Fed's early policy reversal. In an absolute liquidity seizure, there are no questions asked before capital flees to the Greenback's harbor. In more restrained risk aversion, it is unclear whether the Dollar retreats as its carry advantage bleeds off. The same dichotomy would apply to Treasuries bolstered by the Fed and other targeted policy efforts. Despite the skews behind the system and over-leveraged exposure, Gold and the Swiss Franc could prove the ideal interim safe outlet. We discuss the important consideration of full risk aversion with its ideal outlets of safety in this weekend Strategy Video.

What are the Best Safe Havens on North Korea EscalationWhat are the Best Safe Havens on North Korea EscalationWhat are the Best Safe Havens on North Korea Escalation

To receive John’s analysis directly via email, please SIGN UP HERE

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.