FXStreet (Delhi) – Jane Foley, Research Analyst at Rabobank, suggests that the diplomatic strains between Saudi Arabia and Iran appears to have brought a fresh burst of geopolitics risk for investors this month.
Key Quotes
“Oil prices have advanced on the fear that further strain between the two countries could result in greater volatility across the whole region and, reflecting a surge of demand for safe havens, the JPY and CHF are the best performing G10 currencies on a 1 day view. The latest news from the Middle East serves to highlight the deep rooted, pre-existing divides between Saudi and Iran on a range of issues ranging from Yemen to Syria.
Unfortunately, it is not the only piece of bad news with a familiar feel. Two separate publications of Chinese PMI over the past few days have guaranteed that concerns over Chinese growth will continue to dominate the attention of markets into 2016. Another common thread for global investors will be the discussion over the pace of policy tightening by the Federal Reserve which could be furthered by the release of the December FOMC minutes in the middle of the week.
For European investors specifically another of last year’s issues looks set to be a prime focus for the New Year. In 2016, Europe will have to continue to strive for some resolution on the dual issues of the terrorism the migrant crises. These issues have already cast shadows on free movement within the region. There is talk that as a result of these problems greater rifts could develop within the European Union in 2016, with the UK’s forthcoming referendum on EU entry providing the backlighting for Europe’s current troubles.”
(Market News Provided by FXstreet)