Amid growing tensions between the US and North Korea, investors fled on Thursday to the safety of the Japanese yen, gold and Treasuries.
Earlier this week, US president Donald Trump had promised to lay “fire and fury” on North Korea should any attempt be made by the rogue nation to harm the US.
Not one to back down, North Korea responded to Trump’s “fury” by describing on state media yesterday a plan to fire missiles at the island of Guam – a US territory 3,400km (2100 miles) from the North Korean border.
Needless to say, Trump responded in kind.
In an exchange with reporters at his New Jersey golf course, the President said yesterday that his earlier remarks may not have been “tough enough.” He added that “North Korea better get their act together or they are going to be in trouble like few nations have ever been in trouble.”
This back and forth between the US and North Korea has done little for investor nerves this week and the inevitable rush into the yen (the FX world’s premier safe haven) has sent all yen crosses significantly lower in recent days.
Against the dollar, yen strength forced a moved below ¥109 in Friday’s Asia session. As of writing shortly after 06:00 GMT, USD/JPY stands at an eight-week low (a yen high) of 108.96.
Against the Australian dollar and Canadian dollar, the yen rose to six-week highs of ¥85.48 and ¥85.52 respectively.
Among the majors, the hardest hit against the yen is certainly the New Zealand dollar, which this morning took its total weekly loss against Japan’s currency to 3.3%. NZD/JPY fell to an eight-week low of ¥79.08.
The New Zealand dollar has fallen steadily since the Reserve Bank of New Zealand lowered its inflation projections yesterday morning and left its previous forecast for interest rates unchanged – a forecast which shows no hike in New Zealand rates until the third quarter of 2019.
The yen also gained elsewhere. One noteworthy exchange rate is KRW/JPY which fell in the Asia session to the key psychological level of ¥0.095. The fall in mid-April to this level prompted an explosive one-month rally to ¥0.102.
Singapore’s Economy Outperforms, GDP Still Volatile
The Singapore dollar got a boost on Friday morning (although not against the Japanese yen) after the latest GDP numbers showed Singapore’s economy growing much faster than analysts had expected. Today’s data did, however, highlight once again the significant volatility in Singapore GDP.
Singapore’s Ministry of Trade and Industry said today that GDP grew a whopping 2.2% in the second quarter, far above the Reuters median estimate of just 0.5% and a vast improvement on the first quarter, during which Singapore’s economy shrank by 2.1%. Singapore’s economy has spent the last eighteen months swinging between quarterly periods of expansion and contraction.
This morning’s quarterly figure takes annualized growth to 2.9%, up from 2.5% three months ago.
The Singapore dollar rose marginally against the US dollar in the hours following GDP but, as of writing, remains unchanged on the day at $0.7328. SGD/USD remains high by recent standards.
Against the Australian dollar, SGD rose to a three-week high of A$0.935.
Against the New Zealand dollar, SGD rose to a two-month high of N$1.006.
Against the British pound, Singapore’s currency remains close to strong resistance at £0.565. Holders of Singapore dollars will be hoping for a breach of that level before sentiment turns.
Against the yen, the Singapore dollar’s fate was no different to that of any other; it fell to a seven-week low of ¥79.91.
Readers can change money into foreign currency at exchange rates far better than those available at the local Bureau de Change by using BER’s online comparison calculators for travel money and foreign currency transfers.
Author: Joel Wright
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