• US President Donald Trump threatens North Korea with ’fear and fury’
  • Japan’s economy minister voices his remarks regarding BoJ’s policy
  • CHF and JPY are the strongest currencies among G10 peers

A risk-off mode is particularly well seen across the FX market following US President Donal Trump’s speech which took place yesterday. He vowed to respond to North Korea with “fire and fury” if it makes any more threats to attack the United States. He added that they (North Korea) ’will be met with fire and the fury like the world has never seen.’ Those commentaries daunted investors from riskier assets.

Experts on North Korea warned that aggressive rhetoric could backfire on Trump, convincing Kim Jong-un that his regime is in imminent jeopardy and triggering what he sees as a preemptive attack. We did not have to wait too long for a response from North Korea as the country said it was considering a missile strike on the US Pacific territory of Guam. That comments came in just hours after Trump’s threats aimed at North Korea.

link do file download linkSwiss franc along with Japanese yen are among best performing currencies following mounting tensions between the US and North Korea. Source: Bloomberg

It looks as if the conflict between two countries being in the dispute has gathered momentum which could be reflected in heightened volatility across miscellaneous assets as it’s tended to stabilize at its historically low levels of late. As a result, the Swiss franc along with Japanese yen are the best performing currencies as we’re gearing up for the European session.

Moreover, the Japanese currency could have taken advantage of Japan’s economy minister (Motegi) remarks as he said that the Bank of Japan should not just look at CPI to judge if it’s already out of deflation. According to him, the BoJ needs to look at several economic indicators as well (he did not name them though). He placed equal priority on fiscal discipline and economic growth.

link do file download linkThe USDJPY has carved out a support area at around 109.85 which seems to underpin bulls despite a risk-off mode. Source: xStation5

Taking a look at the USDJPY chart one could notice that the pair has managed to defend an important support zone so far, hence corrective moves toward 111 cannot be ruled out if the price is able to stay above a green rectangle.