Dollar hits 8-week low vs yen on intensifying N.Korea tensions
Investor flight to safety has also seen the Swiss Franc gain against the dollar this week
US president Donald Trump, flanked by vice president Mike Pence (R), speaks to reporters after a security briefing at his golf estate in Bedminster, New Jersey. Photograph:Jonathan Ernst/Reuters
The dollar last changed hands at 108.96 yen, down 0.2 per cent. Trading was thinner than usual, with Japanese markets closed for a public holiday.
Earlier, the dollar slipped as low as 108.91 yen, its weakest level since June 14th, when the greenback fell as low as 108.81 yen.
Below that level lies another key technical chart support level for the dollar at 108.13 yen, a trough the US currency k plumbed in mid-April.
“Particularly that 108.10/108.00 level, a break below those levels would really set up a rapid move to the downside,” he said.
Both the Swiss franc and the yen have climbed against the dollar this week, after US President Donald Trump warned North Korea that it would face “fire and fury” if it threatened the United States.
Trump ratcheted up his rhetoric against North Korea and its leader on Thursday, warning Pyongyang against attacking Guam or US allies after it disclosed plans to fire missiles over Japan to land near the US Pacific territory.
The Swiss franc has gained about 1.3 per cent against the dollar so far this week, while the yen has advanced around 1.5 per cent in the same period.
The Swiss franc and Japanese yen are often sought in times of geopolitical tension or global financial stress, partly because both countries have big current account surpluses.
Japan is the world’s biggest creditor nation and there is an assumption Japanese investors may repatriate their foreign holdings in times of heightened global uncertainty.
Some market participants say the paring of bearish bets against the Japanese yen has probably added to its gains this week.
“Although we’re seeing some flight to safe havens, it seems that it’s more of a risk consolidation. Profit-taking as opposed to a deeper retreat,” said Stephen Innes, head of trading in Asia-Pacific for OANDA in Singapore.
Data from the US Commodity Futures Trading Commission released last week showed that currency speculators still held a large net short position in the yen during the week ended August 1st, although somewhat smaller than the levels seen a couple of weeks earlier, when their bearish bets against the yen grew to the largest since January 2014.
Later on Friday, investors will look to US July consumer price data for hints on the Federal Reserve’s policy outlook and near-term moves in the dollar.
Subdued US inflation has stirred doubts about the chances of another Fed interest rate hike this year, which have weighed on the dollar.
The euro held steady at $1.1776. Against the yen, the euro last traded at 128.29 yen, down 0.2 per cent. The euro touched a one-month low of 128.19 yen earlier on Friday.