Geopolitical risks likely to make mark in 2018 - Rabobank

According to Jane Foley, Senior FX Strategist at Rabobank, geopolitical risks are also likely to make their mark in 2018. That said, given the reassurances of strong growth and the attraction of yield, market have become far less sensitive to geopolitical news in recent months, she further adds. 

Key Quotes 

“N. Korean news is no longer a strong source of support for the JPY, though this raises the risk that investors have become complacent to the news.  It remains our view that the JPY will be a favoured buy on any significant rise in risk aversion.  The CHF is also likely to perform well in these circumstances and the EUR may also display some safe haven tendencies.”

“Although the legacy of the EUR is too short and its recent history too pockmarked for it to be a true safe haven, its huge current account surplus and the geographical position of the Eurozone suggests the EUR could outperform the USD on any significant rise in N. Korean related tensions next year.”