Geopolitical Risk and UncertaintyAugust 08, 2014 Posted by: Joe O'Leary
Geopolitical risk and uncertainty control the FX markets as of late. The US President Obama authorized overnight air strikes against IS militants should they approach Kurdistan’s capital, Erbil, while also authorizing US military airdrop of humanitarian supplies to minorities fleeing IS militants in northern Iraq. The initial reaction saw global stocks fall alongside a rally in bonds and the USD. The Japanese yen and Swiss franc also strengthened on the Obama’s authorization, adding to the allure of haven assets amid conflicts in Ukraine and the Middle East. Canada’s dollar fell after Statistics Canada said employment increased by 200 jobs, versus a projected 20,000 gain by economists surveyed by Bloomberg News. The unemployment rate fell to 7 percent, from 7.1 percent, as people left the labor market. In Russia, the ruble gained slightly as the nation said it’s making efforts to de-escalate the conflict in Ukraine.
• The US June wholesale sales grew 0.2% (median 0.7%), while inventories grew 0.3%.
• The Canadian employment rose a tepid 0.2k in July, undershooting projections for a pronounced rebound (median +20.0k) from the 9.4k drop in June.
• China’s trade surplus surged $47B in July, Exports up 14.4%, year on year.
• UK trade deficit widened again in June. The U.K. posted a visible trade deficit of GBP 9.4 bln in June, after a deficit of GBP 9.2 bln in the previous month.
• Germany posted a trade surplus of EUR 16.3 bln in June, down from 18.8 bln in the previous month.
• NYMEX crude is up 24 cents at $97.58/bbl after touching $98.45 highs after the close on Thursday.
08/10 RUB: Russian Trade Balance (June)
08/11 CAD: Housing Starts(July)
08/11 JPY: Japan PPI(July)
08/11 USD: US Mortgage Delinquencies(Q2)
08/11 EUR: Wholesale Price Index(Jul)
08/12 GBP: UK GDP(2Q)
08/12 JPY: Japan GDP(2Q)
08/12 EUR: CPI Numbers(July)
08/13 GBP: UK Jobless Claims(July)
CAD 1.0978Read More