Haven currencies like the Japanese yen gained on Tuesday as tensions across the globe pushed investors to assets perceived as safe.
On Tuesday, Turkey’s president asserted that the killing of journalist Jamal Khashoggi was premeditated by the Saudi Arabian government, market participants are also awaiting a decision by the European Union on Italy’s budget.
A mix of developments has further added to an uneasy atmosphere in global markets.
The haven Japanese yen USDJPY, -0.64% strengthened early Tuesday, as one dollar slipped to ¥112.31, from ¥112.82 late Monday in New York.
The U.S. dollar, measured by the popular ICE U.S. Dollar Index DXY, -0.09% was muted, little changed at 96.019.
Currencies more sensitive to global risk appetite, like the Australian dollar AUDUSD, -0.2683% were in the red. The Aussie last bought $0.7070, down 0.2%.
In the U.K., anxiety about Brexit, in-fighting in the Conservative Party and the question whether Theresa May will stay Prime Minister for much longer pushed the British pound USDGBP, -0.2593% to a fresh three-week low earlier in the session. Sterling has recovered again since then, last buying $1.2980, up from $1.2966.
“These threats to PM May are quite frequent, but they usually fail to come to anything, for one reason: it takes 48 votes to trigger a no-confidence motion, but 158 to win it. And if they don’t win it, then the rules say you can’t have another vote for a year,” said Marshall Gittler, chief strategist at ACLS Global.
“So it doesn’t matter if the same people get angrier and angrier at May, what needs to happen is that more people need to get angrier at her, and apparently that isn’t happening.”
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Meanwhile, the European Commission is expected to make a decision on Italy’s 2019 budget, which violated EU guidelines and could create a political spat between Brussels and the eurozone’s third-largest economy. The euro EURUSD, -0.0523% was slightly weaker at $1.1457.
In emerging markets, the Turkish lira USDTRY, +2.0696% is back in focus after President Recep Tayyip Erdogan made comments about the killing of journalist Jamal Khashoggi who died following an altercation inside the Saudi Arabian consulate in Istanbul earlier this month.
Erdogan claimed he had evidence in the killing of journalist Jamal Khashoggi, which he described as a “vicious, violent, murder,” and threatened to reveal the naked truth, though he failed to offer specifics. The developments around Khashoggi’s death have injected some volatility into oil futures US:CLX8
Meanwhile the coalition partner of Erdogan’s ruling AKP, Justice and Development party — the MHP, or nationalist Movement Party — said it wouldn’t ally with its partner for upcoming local elections.
The Turkish lira weakened against the dollar in the face of these developments and one dollar last bought 5.7698 lira, up 1.8% from Monday, but down from a session high of 5.8692 earlier, which represented a six-day high, according to FactSet.
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