The Euro has climbed over $1.20 for the first time since January 2015.
The cause of the surge in the European common currency is believed to have been caused by investor fears over a war in the Pacific. North Korea fired a missile over Japan, heightening the tension in the region. Donald Trump responded to this act of aggression by saying that “all options were on the table.” Investors view the Euro as a safe currency compared to the Dollar and the Yen.
The Sterling also fell against the Euro, reaching an eight year low. The British currency lost 0.37%, matching a low that was witnessed in 2009 in the midst of the financial crisis. As Brexit talks are still ongoing, a weak Sterling against the Euro may cause nerves for investors. However, the British export market will look positively on this news as a weak Sterling will help their cause.
The Euro has been performing well this summer as economic growth projections for France and Germany have looked healthy. Compared to the uncertainty experienced in the United States following the election of Donald Trump, the European economy has been performing well. Tensions remain high in the Pacific region given the geography of a potential conflict. Several major world economies could be dragged into a tense situation, should there be more saber-rattling.