Early on Tuesday, the US Dollar slumped to a four-month low against the Yen after North Korea fired a missile that passed over northern Japan, the latest act of provocation by Pyongyang that has ramped up tensions in the region over the past month.
The news sent the Yen higher as investors repatriate their overseas investments on fear of market and exchange rate volatility. In the meantime, Japan’s chief spokesman Suga said that while North Korea has made multiple threats and missile launches since last year, a missile flying over Japanese territory is unprecedented, a grave and serious threat to the nation’s safety.
Yesterday as well, Gold prices rose for a third day to its highest since November as mounting geopolitical tensions over a new North Korean missile launch stoked demand for Safe-Haven assets and weighed heavily on the Dollar and Equities.
The Bullion has rallied 14% this year as investors bet the Federal Reserve will be hard-pressed to follow up with additional US interest-rate increases given lackluster inflation. US nonfarm payrolls data, due for release on Friday, likely remain the key indicator for the Gold market, although the geopolitics are very much playing in the background.
Since Monday, the Mexican Peso fell 1.2%, leading losses against major currencies on after Donald Trump tweeted that both Mexico and Canada were being “difficult” during the current renegotiation of the North American Free Trade Agreement.
While Trump’s past tweets sent the Peso tumbling, they had begun losing steam in recent months. This time the drop could signal an end to this year’s 16% jump, and put pressure on traders who are still holding bullish positions on the currency.