Geopolitical Tensions

The Forex market spiked during last Friday’s Asian session, when news came through that the United States had conducted a military strike against one of the Syrian government’s airfields. The justification given by President Trump for the strike was the belief held by his administration that an attack on civilians using chemical weapons had been conducted from that airfield a few days earlier. The attack marked the first ever direct military engagement between the United States and Syria. Syria has been a close ally of Russia (and the former Soviet Union) for decades, who supply the Syrian government with their air force equipment and most of their other military equipment too.

 

The news caused an immediate spike in the Japanese Yen and precious metals, all of which have recently been behaving as key “safe-haven” assets. As it became clearer that the strike was limited and was not necessarily going to trigger a wider conflict or widening of the Syrian Civil War, the spike fell off.

Russia is unhappy and has promised there will be unspecified consequences, while the United States asserts it may act again if it feels it must. Recent hours have seen attention shift away from Syria as the United States sends a Naval strike group towards the Korean peninsula, where they could be used to strike North Korea, or shoot down missiles fired by North Korea. The group has the capability to intercept ballistic missiles outside the earth’s atmosphere, and if it were used to shoot down a North Korean ballistic missile test, it would be the first time the technology had ever been used in a non-test situation. If successful, it would be a spectacular demonstration of American capability, and would have strong implications as to the military effectiveness of the ballistic capabilities of countries such as China as well as North Korea.

The Korean development did not become news until after the markets closed for the weekend. It might be that when they open for the week, prices of “safe-havens” might have spiked up again. The case of the Japanese Yen is interesting as it is both a safe-haven and adjacent to North Korea.

These news items overshadowed Friday’s Non-Farm Payrolls data release, which showed that the United States added a much lesser amount of jobs last month than had been expected by the market consensus.

Russia Syria

 

Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.