Another week, another escalation in tensions around North Korea. The rogue nation claims it tested a mighty hydrogen bomb. While this cannot be verified, the artificial earthquake that was detected in the region seems massive enough. The tremors of 6.3 in the Richter scale pointed to a bomb that is 9.8 times deadlier than in the previous test.
The test triggered all around condemnation, including from China. The US responded with threats of its own, coming from President Trump and Defense Secretary Mattis.
The nuclear test took place over the weekend, and tremors in financial markets waited for markets to open. The safe-haven yen enjoyed flows. USD/JPY is some 60 pips lower in early trading: down from 110.10 to 109.50. Yes, the previous rise of tensions was related to a missile that flew over Japan. It took place less than a week ago. Nevertheless, when there’s trouble, regardless of the location, the yen gains.
Here is how the weekend gap looks on the dollar/yen chart:
