The Japanese yen, gold and sovereign bonds all rose early on Monday as North Korea’s latest nuclear test provoked the usual knee-jerk shift to safe havens, while futures pointed to a difficult day for global equities.
SYDNEY (Reuters) – The Japanese yen, gold and sovereign bonds all rose early on Monday as North Korea’s latest nuclear test provoked the usual knee-jerk shift to safe havens, while futures pointed to a difficult day for global equities.
The dollar was marked down as deep as 109.22 JPY= yen at the opening, off a whole yen from late on Friday, but there was no follow-through selling and it was last at 109.76.
Japan is the world’s largest creditor nation and traders tend to assume Japanese investors would repatriate funds at times of crisis, thus pushing up the yen. Many wonder, however, if Japanese assets would really remain in favor if an actual shooting war broke out in Asia.
Nikkei futures NKc1, for instance, pointed to an opening drop of around 0.7 percent for Japanese stocks.
North Korea on Sunday conducted its sixth and most powerful nuclear test, which it said was of an advanced hydrogen bomb for a long-range missile, prompting the threat of a “massive” military response from the United States if it or its allies were threatened.
Speaking outside the White House after meeting with President Donald Trump and his national security team, U. S. Defense Secretary Jim Mattis said Trump asked to be briefed on all available military options.
“Markets continue to treat each North Korean escalation as being the same as the previous instance, buying the yen, Swiss franc, treasuries and gold while selling the Aussie dollar – but not on a large scale, ” said Sean Callow, a senior forex strategist at Westpac.
