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Safe Haven Trades Dominate The Markets

By:
Barry Norman

The inevitable happened in the skies over Turkey on Tuesday leaving investors running for cover. As NATO and partners stepped up bombing runs against ISIS

Safe Haven Trades Dominate The Markets

Safe Haven Trades Dominate The Markets
Safe Haven Trades Dominate The Markets
The inevitable happened in the skies over Turkey on Tuesday leaving investors running for cover. As NATO and partners stepped up bombing runs against ISIS in Syria an accident was bound to happen. The Turkish air force shot down a Russia fighter on as it accidentally violated Turkish airspace. Fortunately the pilots ejected and there were no deaths, but the rhetoric between the West and Russia heated up.

Wall Street closed slightly higher Tuesday, buoyed by a jump in oil prices after Turkey’s downing of a Russian warplane raised concerns over the possibility of disruptions to energy output in the region.

Gains by both the Dow and the S&P 500 were concentrated in the energy and materials sectors, as a 2.7% jump in crude prices the largest one-day gain in three weeks, led to a 2.2% jump in energy shares, which helped lift broader markets. Earlier in the day, all indexes were in the red, as investors took in a flurry of mixed U.S. economic data amid fresh global tensions after Turkey shot down a Russian warplane near the Syrian border.

As Europe remains on edge after the terrorist violence in Paris just a week before and the ongoing emergency state in Belgium markets remain on edge.

usdjpy

Traders moved quickly in safe havens pushing the Japanese yen and the Swiss Franc upward and European equities into the red. Investors sought shelter in traditional safe haven currencies after Turkey shot down a Russian jet fighter, raising fears of a confrontation between the two countries.

The US Dollar was recently down 0.2% against the Swiss franc at 1.0165, while losing 0.3% versus the Japanese yen to ¥122.50. Turkish F-16s shot down a Russian jet fighter along the Syrian border on Tuesday, the first time since 1952 that a North Atlantic Treaty Organization member has shot down a Russian plane. The news pushed investors to take profit in recent dollar gains and shift funds into currencies like the yen and Swiss franc, which some market participants believe will outperform other assets in times of geopolitical or financial uncertainty.

us dollar

The Japanese yen continued to strength on Wednesday morning adding 20 points to 122.32 while the greenback gave up 22 points to 99.47. The market focus was on minutes from the Bank of Japan’s October meeting. At the meeting on October 30, the BOJ pushed back the timing of meeting its 2 percent target by six months to the second half of fiscal 2016 due to weak oil prices. Two board members dissented from the bank’s baseline scenario that inflation would reach 2 percent by 2017, exposing a rift between policy board members.

The Aussie and the kiwi were able to benefit from the declines in the greenback, with the AUD gaining 16 points to 0.7272 and the kiwi adding 25 points to 0.6580.

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