If you took the time to watch our round table discussion from New York earlier this month you might remember one of the issues I raised in my feeble defense of the dollar was “known unknowns” like European sovereign debt becoming a major issues for the markets again. That one turned out to be on target.
I also mentioned “unknown unknowns”, those exogenous events that come seemingly out of nowhere. North Korean provocation does not come completely out of left field (it’s not as though Switzerland had gone rogue) but it is hard to time, so we’ll chalk that prognostication up as accurate, in a vague Nostradamus sort of way…
Risk aversion is in full flower this morning and the dollar is the main beneficiary. The JPY weakened initially on the Korean news but it has recovered as EUR/JPY is sold on risk aversion.
The net area of support for EUR/USD is the 1.3445/60 area with 1.3435 a key support just below that area, the 50% retracement of the August/November rally.
