Risk tone: well, so far so good, just another attack on Syria, market moves on . . .


Well, either we are all alone or the market has shrugged off the coordinated strikes on Syria from over the weekend - the Yen is lower at the start of the week and AUD/JPY is with a small gap higher 83.32 to 46.

There were three targets hit over the weekend, in a decision lead by the US president, Donald Trump, with backing from the UK and France. More than 100 missiles were fired against what they say were Syrian chemical weapons facilities. This came in response to a chemical weapons attack in a Damascus suburb a week ago. However, the move has proved globally divisive. 

Many have condemned the move as provocative and unacceptable and one may have thought that the week would have kicked off with gaps on the charts. The consequences of such action, are of course widespread on the geopolitical front where the US is butting heads with not only Russia over this, but Iran as well, the staunch allies of the Syrian president, Bashar al-Assad, who both have a military presence on the ground in Syria.

What are the world leaders saying?

  • Putin said that the attack had a “destructive influence on the entire system of international relations”. 
  • Iran’s supreme leader, Ayatollah Ali Khamenei, called the US-led strikes on Syria a “military crime”. 
  • China’s foreign ministry called any military action that bypasses the UN security council a violation of international law.
  • Israel spokesman: “Last year, President Trump made clear that the use of chemical weapons crosses a red line. Tonight, under American leadership, the United States, France and the United Kingdom enforced that line.”
  • Iraq: “Such action could have dangerous consequences, threatening the security and stability of the region and giving terrorism another opportunity to expand after it was ousted from Iraq and forced into Syria to retreat to a large extent.” 
  • UN secretary-general, António Guterres: “I urge all member states to show restraint in these dangerous circumstances and to avoid any acts that could escalate the situation and worsen the suffering of the Syrian people.” 

What are markets concentrated on instead?

The main focus there was whether or not Russia would respond vocally and provocatively, but so far there seems to be very little to concern us, and instead, markets have digested it and moved on, (too much time has passed and it was a one-off strike). For the week ahead, its back with eyes on the Fed with plenty of Fed speak coming up. There will also be eyes on Washington, starting with Comey's interview on ABC today at 10.PM EST, 0200 GMT, (this could be one to watch with ABC saying he said things that "left people in the room stunned," where Comey was reportedly comparing Trump to a mob boss).  Also, eyes on trade. The Wall Street Journal came with a weekend piece where it seems that the White House wasn't to re-join negotiations on the Trans-Pacific Partnership - last week, Trump instructed advisors to look into such a move. 

 

 

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