Reports from Monday, October 9, state that the dollar has held steady against the yen. This comes after its retreat from a 12 week high last week. The dip in value last week was accounted to the focus on geopolitical risks.
According to reports, North Korea is preparing to test a long-range missile. According to a Russian lawmaker, recently returned from a visit to Pyongyang, the country believes this missile can reach the west coast of the U.S.
On Friday, October 7, the dollar was already on its way down due to profit taking when the threat of North-Korea’s missiles reached headlines. This contributed to the dollar losing more point on the global market.
Commenting on the fluctuations, head of trading in the Asia–Pacific for Onada, Stephen Innes stated, “This market’s very, very jumpy.”
The dollar last traded at 112.56 yen and as of October 7, the dollar had reached a peak of 113.44 yen, its highest level since July 14.
However, despite this, trading was thinner than usual when Tokyo closed on Monday, October 7 for a public holiday.
As Japan is the largest net creditor nation in the world, traders automatically assume that during times of economic uncertainty, Japanese earnings from foreign countries will eclipse foreign investors’ selling of Japanese assets.
This means the yen has continued to maintain its position despite the country’s proximity to North Korea.
The dollar index, which measures the U.S. dollar against six major currencies, moved from 0.1 percent to 93.709. On October 7, it had touched a high of 94.267, the strongest it has been in over two months.
The data collected from the U.S. labor market report in September was seen as a sign for the potential rise of the dollar. It also created expectations for the Federal Reserve to raise interest rates again in December.