Published: Sun, August 13, 2017
Money | By Armando Alvarado

Dollar at eight-week low vs yen as North Korea tensions simmer

Dollar at eight-week low vs yen as North Korea tensions simmer

LONDON, Aug 11 (Reuters) - The dollar was pinned close to an eight-week low against the yen on Friday as escalating tension over North Korea dominated currency markets thinned out by the summer holidays in Europe and the United States.

The tentative gains "suggest that the headline shock value pertaining to the US-North Korea standoff is starting to dissipate, which is to say actual action will now speak much louder than words", said Briefing.com analyst Patrick O'Hare.

The CBOE Volatility Index - a measure of investors' expectations for swings in the S&P 500 over the next 30 days - surged Thursday to its highest level since U.S. Election Day.

Aside from geopolitical concerns, gold-focused investors are awaiting United States inflation data set to be released on Friday (August 8).

Dow e-minis were down 56 points, or 0.25 percent, with 29,071 contracts changing hands at 8:36 a.m. ET (1236 GMT).

The index was also dragged lower after Beijing ordered probes into three major Chinese social networking platforms over outlawed content. Eastern time. The Dow Jones industrial average slid 69 points, or 0.3 percent, to 22,016.

The Nasdaq Composite was up 34.61 points, or 0.56 percent, at 6,251.48.

Smaller-company stocks also fell sharply.

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The recovery fit a recent pattern of investors using dips to put more money in stocks.

Federal-funds futures, used by investors to place bets on the Fed's rate-policy outlook, on Friday showed a roughly 36% chance of a rate increase by the end of the year, down from 47% Thursday and 54% a month ago, according to CME Group data. But for the week the S&P 500 lost 1.3 percent, its worst weekly showing since March.

An Associated Press report that the USA and North Korea have been engaged in back channel talks (https://apnews.com/686ac7c761694b28b67793a1d8297145?link=mktw) for several months even as they exchange incendiary threats may also help to soothe jitters. The slide deepened after Trump's remarks on North Korea.

US President Donald Trump's warning to North Korea has given gold momentum; investors are also awaiting US inflation data.

A day earlier, the Standard & Poor's 500 index posted its biggest single-day drop in almost three months following Trump's warning to unleash "fire and fury" if Pyongyang continued its nuclear weapons expansion.

A spokesman for the Korean People's Army said in a statement that it was "carefully examining" plans for a missile attack on the U.S. Pacific territory, which has a large American military base.

Still, there were fewer signs of anxiousness in the markets Friday.

"This week's beneficiaries have been oil, the Swiss franc and the Japanese yen, and quality government bonds". It's still the highest it's been since May. The market was waiting f or USA consumer inflation data on Friday that would offer more clues about future Fed decisions.

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