North Korea Test Drives Safe Haven Demand

04 September 2017 12:56:03 PM

The US Dollar edged lower against safe haven currencies, specifically the Swiss Franc and the Japanese yen, after the latest nuclear test from North Korea prompted investors toward safe havens. Despite the drive, FX traders kept moves in safe haven pairs within “normal” ranges as they appear to have assessed a low probability threshold on a full scale break-out. One currency strategist in Switzerland believes that the reaction will remain relatively muted unless there is an escalation of the conflict. The US government has warned North Korea that a “massive” military response would be forthcoming if a real threat is perceived.

As reported at 11:21 am (BST) in London, the USD/CHF was trading at 0.95805 Swiss Francs, down 0.627%; the pair earlier hit a trough of 0.95519 Swiss Francs while the session peak stands at 0.96447. The USD/JPY is down 0.54% and trading at 109.663 Japanese Yen, off the session low of 109.181 Yen.

EUR/USD Higher Despite Data

In the Eurozone, the EUR/USD had been under some pressure as investors ponder the likely outcome of this week’s policy meeting at the European Central Bank. Despite mixed data the Euro managed to push higher, and is currently trading at $1.1903 against the Dollar, a gain of 0.40%. Sentix reported that investor confidence had hit a reading of 28.2, against expectations of a fall to 27.4. Producer price inflation fell unexpectedly in July, while June figures were revised downward. That inflation news may have pushed some investors to believe that the ECB might stay the course on a rate hike.

Barbara Zigah is a freelance journalist living in Ghana, who specializes in Forex-related content; her online work has appeared in the IB Times, NASDAQ, Benzinga, and Seeking Alpha.

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