Inspectors hit the ground in late September in Syria. Now there is a second team on the ground. These two teams are working to destroy the chemical weapons Syria holds. These teams are working based on the agreement Syria made with the U.N. and USA to allow the weapons to be destroyed. All news points to cooperation with the destruction completed by June 2014. For FX this is at least steadying news, with little impact.
FX News Listens to the Talks
Given the quick jump into safe havens when the USA announced it would strike Syria for the chemical weapons release, it is reassuring to FX investors that Syria seems to be holding to their agreement. Russia weighed in saying the USA was too quick to make judgement and that Syria has certainly kept its end of the deal. Of course it is just the beginning phases, so doubt still remains in some areas of the U.N. including the USA side that Syria is being completely cooperative. For the moment trouble seems to be held in check regarding the weapons and they may be destroyed.
There is always going to be doubt that Syria has hidden a cache of them, but rather than increasing tensions these thoughts are held in check. Obama has his hands busy anyway dealing with the crisis on his home turf between two parties that cannot seem to stop the blame game and come to an actual helpful decision regarding the debt-ceiling. In fact FX is full of the shutdown more than the Syrian troubles of a month ago. The tide changes quickly from an almost air strike and world focus to an in country focus.
For those looking on, it seems like the USA is not in a good position and could possibly see worse times ahead that will have a global effect. Many worry and wonder if this is not the aim of certain factions- to have the USA divided and distracted for worse issues. Whether that is the case or just over-worry at least the tensions in Syria are abating for now. The teams on the ground are not as hopeful that the June 2014 deadline can be met since it is a big job due to the amount of weapons. More help might be required in the future to ensure the deadline is met. At least for FX safe havens are not as dire to investors.
FX Safe Havens not Sought?
It is funny how the threat of an air strike with Syria had numerous investors run into safe havens like the CHF and Yen; however, the partial shutdown seems to have the opposite effect. Instead of running towards these safe havens most are trading long on major currencies and selling the USD.
Profits are still being made on investment funds. Wall Street is starting to feel the pressure and worry, but not quite as significantly as one might have expected. It makes for interesting FX trades and comparisons given the Syrian reaction in September.