A mixed trading day for U.S. stocks on Wednesday failed to provide direction to Asian equities today. While China, Hong Kong, and Korea led MSCI Asia ex-Japan to its highest levels since mid-2015, Japanese equities are unable to gain traction despite machinery orders rising 6.7% MoM in December and the Yen dropping slightly. A price action as such indicates that stocks are moving on specific corporate news rather than a global macro driven story, and with no tier one economic data on the calendar this indecisive performance is likely to resume into Europe trade.

The greenback traded slightly higher against a basket of currencies today, but remained within a very tight range. For the past three months, sentiments driven by expected fiscal and monetary policies drove the U.S. currency to its highest level in 14-years but the rally stalled as of late as these policies seem now to require more time than previously anticipated to come into force, and several comments from the White House weighed on the dollar. This is becoming more complicated now, as rising political uncertainty in Europe supports the U.S. currency, meanwhile on the other side, falling treasury yields plays an opposite role.

Concerns over the future of France, Germany and the Netherlands dragged the euro in the past couple of days, but the more exciting story developing now is in a much smaller country. Greece which has been ignored recently is back in the headlines as the IMF clashes with the Eurozone over the future of the heavy indebted country. Greece’s debt to GDP which already stands at 176% and unemployment above 23% is required to achieve a primary surplus of 3.5% by next year. For some economists, this looks as mission impossible, and for Greece to survive, a haircut on its debt should be taken. However, with elections looming in Germany there’s very little chance of this happening, and without a third bailout aid, Greece will be out of cash in July.

The pound continued to show resilience after British MPs voted to begin the Brexit process. After all this was widely anticipated and we don’t expect to see any significant moves until article 50 is triggered and the formal negotiations begin.  

With all these stories developing, investors are finding the yellow metal as the safest investment. Investors continued to increase their holdings in GLD as SPDR holdings rose for a sixth consecutive day. The more political tensions intensify, the more GLD is likely to attract investors, and the higher prices will go.         

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