Tuesday, 29 August 2017

What’s next? – USDJPY 29.08.17

Posted by Valentine at 03:28 Labels:

USDJPY

The dollar/yen was down 0.72 percent as of 09:10 GMT on Tuesday to trade at 108.44, as the Japanese currency rose sharply following a new missile test by North Korea.

Pyongyang launched a ballistic missile that crossed Japan and fell into the Pacific Ocean. The missile flew for about 15 minutes, covering a total distance of 2,700 kilometers.

In reaction to this act of provocation, Japan PM Shinzo Abe called for an emergency meeting of the UN Security Council later in the day to strengthen measures against North Korea.

The pair touched a four-month low in the wake of this developments in the Korean peninsula, where tensions between the US-led coalition and North Korea increase by the hour.

The dollar reached a bottom at the 108.33 level in early trading in Asia. The missile was fired at 05:00 local time in Pyongyang (GMT+08:30).

Markets were initially surprised by the yen’s upwards reaction to the news. The yen is one of the most popular safe-haven assets out there, that’s why it strengthened so quickly.

Investors looked for shelter as political experts said a new stage in this conflict was reached. Risk-averse mood rapidly spread across equity markets, weighing on key regional indexes.

The dollar continues to be under pressure as Federal Reserve Chairwoman Janet Yellen offered no clues about future plans for monetary policy at the Jackson Hole symposium, pushing expectations for a third rate hike by December below 40 percent.

Also, the greenback lost ground in the light of heavy flooding in the Gulf Coast, caused by the hurricane Harvey and which paralyzed some of the country’s most important oil refineries.

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