Trump and Kim need each other – short opportunity on

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Donald Trump has the Russia investigation and the legislation failures on his head. Kim Jung-un of North Korea is a dictator that needs to divert his people’s attention from their miserable lives. The current war of words seems to serve both leaders quite well. It diverts attention from the real troubles.

The talk of “fire and fury” from Trump, followed up by “maybe fire and fury weren’t enough”, was echoed nicely in Pyongyang with threats to attack Guam and a show of readiness.

And speaking of reality, is there a real risk that the war of words could deteriorate into a real war?

Markets seem to fear, with slides and a flow into safe haven assets. USD/JPY dipped its feet under 109. The Swiss franc is also on the rise and some talk about Bitcoin emerging as a safe-haven asset as well.

But is the danger real? Sure, all the brash talk could turn into exchanges of fire. It could happen on purpose or more likely, inadvertently. There is a real danger, sure.

But how likely is it? Cooler minds usually prevail. US Secretary of Defence James Mattis stepped up as the “adult in the room” by suggesting that the US seeks a diplomatic solution. The Chinese are probably working behind the scenes to calm things down.

All in all, the fear trade seems like an opportunity to go against the trade: selling the yen or the franc.

The problem is that the US dollar is not the optimal currency to buy at the moment. After a 6-day comeback, the greenback is losing steam. The weak PPI took the momentum out of the dollar’s rise. The euro looks more attractive, both against the franc (the SNB would like to see EUR/CHF rise) and also against the yen (EUR/JPY seems to trend higher).

What do you think?

More: EUR/CHF: 2 Reasons For Further Upside Towards 1.20 – Danske

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About Author

Yohay Elam – Founder, Writer and Editor
I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me.

Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

  • Joseph Brook

    unfortunately i think it be dangerous to second quess the powers that be. Especially the powers that move and dictate the markets.

  • Joseph Brook

    i have had my fingers burned before with such like behaviour and yet still find myself sticking my hand in the the fire looking for a niche. Weird isnt it .

    • Weird stuff indeed. These dramas provide opportunities but also risks.