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Dollar and South Korean Won Slip Amid North Korea Tensions

12 Août 2017

On Thursday, New York Federal Reserve President William Dudley said he expects sluggish United States inflation to rise over the next several months while the hot labor market gets even hotter. Two weeks ago it saw its biggest weakly fall against the euro since the start of 2015. North Korea threatened a missile strike at USA territory Guam. Retailer Office Depot shares fell almost 26% after it posted a quarterly profit that missed expectations. This is up from a 0.1% rate in the first quarter. 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.

Europe share prices were generally lower.

Sterling was last trading at US$1.3005, up 0.12 per cent on the day.

The markets may benefit from bargain hunting, as some traders look to pick up stocks at reduced levels following the pullback seen over the past few sessions.

United States gold futures added 0.3% to $1,293. The dollar also slipped against the yen.

Trump was responding to North Korea's claim it was completing plans to fire four intermediate-range missiles over Japan to land near the U.S. Pacific territory of Guam. President Trump has warned that an attack by North Korea would mean "things will happen to them like they never thought possible".

The positive data also bolstered the greenback against the euro and the pound Wednesday.

Nikkei 225 futures were last up 0.20% at 19770 suggesting a stronger opening at Tokyo on Thursday.

But while investors appeared to favor safe-haven assets, some bargain seekers helped Wall Street's three major indexes pare losses. The Footsie has come under pressure amid tension between North Korea and the USA, as President Donald Trump said that Pyongyang's threats would be met with "fire and fury".

On the USA economic front, a report released by the Labor Department showed a modest uptick in consumer prices in the U.S.in the month of July.

"Heightened geopolitical risks overnight have seen the markets flip from risk-on to risk-off and we have to wait and see how long this move runs before adding some positions", said Viraj Patel, an FX strategist at ING in London.

The Standard & Poor's 500 index fell 7 points, or 0.3 percent, to 2,467. Wharf shares rose 14%.

Yields on core government debt fell.

South Korea's KOSPI fell 1.4 percent, taking its losses this week to almost 3 percent.

Elsewhere in commodities, the September crude contract advanced 20 cents to US$49.76 per barrel and the September natural gas contract was up seven cents to US$2.95 per mmBTU.

About 7.5 billion shares changed hands on US exchanges, well above the 6.25 billion average for the last 20 days.

On Friday basic resource stocks dropped 2.6 percent to a month low as Chinese base metal prices collapsed as political pressures took their toll. Brent crude, used to price global oils, rose 20 cents to $52.10 a barrel in London.

Mattis said North Korea must stop isolating itself and "stand down" in its pursuit of nuclear weapons, and Pyongyang "should cease any consideration of actions that would lead to the end of its regime and the destruction of its people". While the major USA indices were down as of midday Thursday, following overnight drops in the Asian and European markets, more granular metrics of risk assessment offered a more nuanced picture.

Chip maker Nvidia, which is expected to report earnings after the close, fell 3.2% and was one of the biggest decliners in the S&P 500 tech sector.

Dollar and South Korean Won Slip Amid North Korea Tensions