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Dollar hits 8-week low vs yen on intensifying N.Korea tensions

13 August 2017

"We've had some competing forces play out over the past 12 hours - the usa dollar was stronger off economic data, but that was quickly reversed with President Trump's comments about North Korea earlier today (Wednesday)", said ANZ analyst Daniel Hynes. "You're less than 2 per cent off the high for the S&P heading into a weekend where uncertainty with North Korea still lingers".

US Defence Secretary Jim Mattis told Pyongyang it should stop any actions that would lead to the "end of its regime and the destruction of its people".

"Although we're seeing some flight to safe havens, it seems that it's more of a risk consolidation". "We have no choice but to acknowledge the risks, and to report that financial markets are reacting to them". The Russell 2000 index of smaller-company stocks picked up 1.69 points, or 0.1 percent, to 1,374.23.

The CAC 40 in Paris ended down 1.1%, while the DAX 30 in Frankfurt ended marginally lower.

The pan-European FTSEurofirst 300 index lost 0.75 per cent and MSCI's gauge of stocks across the globe shed 0.33 per cent.

"Obviously we are looking at the increased tensions between the USA and North Korea", said Brad Bechtel, managing director FX at Jefferies in NY.

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"Amid tensions in the global arena, it's hard to seek higher prices ahead of three days of holidays", Kawaguchi said. -North Korea tensions as market participants bought the yen as a safe haven.

South Korean shares, which have been among the strongest performers in the world so far this year, fell 1 percent, while the won sank around 0.6 percent to 1,134.5 to the dollar.

The dollar index was modestly up during Asian trading to last trade at 93.48, linked to the weaker euro.

South Korea's KOSPI fell 1.8 percent to an 11-1/2-week low, taking its losses this week to 3.2 percent.

Sterling was last trading at $1.3009, up 0.27 percent on the day.

"Although Japan is close to the epicentre of the crisis, the JPY typically strengthens during North Korean tensions as Japan is a creditor nation and local investors typically "bring money home" when they face a crisis", explains Thomas Harr, Global Head of FICC Research at Danske Bank.

As North Korea-US tensions brew, safe-haven currencies rise
A separate report from the Labor Department showed an unexpected uptick in initial jobless claims in the week ended August 5th. In the United Kingdom , gold mining stocks Randgold Resource and Fresnillo were among the few to gain - up 2.8% and 4.9%.

The pan-European FTSEurofirst 300 index lost 1.19 per cent. The Swiss currency was also on track for its biggest daily gain against the euro since last year's Brexit vote.

As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2 basis points at 2.192 percent. Odds of a Fed rate rise during the December meeting now stand at around 40% according to the CME Group's 30-day Fed Fund futures prices.

In addition to the rising tensions between the United States and North Korea, markets were also responding-negatively-to some disappointing economic data points from the U.S. Labor Department on Thursday morning.

Crude oil prices extended their slide as exports from key OPEC producers rose, despite news of lower crude shipments from Saudi Arabia. October Brent crude fell $0.80, or 1.5%, to $51.90 a barrel.

Spot gold XAU= was up 0.2 percent at $1,287.91 an ounce by 2:03 p.m. EDT (1803 GMT), and set for its biggest weekly gain since mid-April.

Silver futures gained 0.202 dollar or 1.2 percent to close at USD 17.07 per troy ounce at the COMEX.

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Dollar hits 8-week low vs yen on intensifying N.Korea tensions