Dollar and South Korean Won Slip Amid North Korea Tensions

Dollar and South Korean Won Slip Amid North Korea Tensions

Dollar and South Korean Won Slip Amid North Korea Tensions

The U.S. blue-chip index is down 1.1% this week and the S&P 500 is 1.6% lower, facing its worst weekly performance since November.

Rising tensions between North Korea and the United States were once again the theme of the day with only the release of much-awaited inflation figures out of the U.S. managing to divert attention away from developments on that front. A gauge of volatility on the S&P 500, the VIX hit its highest reading for over a month.

As well as monitoring the geopolitical backdrop, investors are looking ahead to an appearance Thursday by Bill Dudley, president of the U.S. Federal Reserve Bank of NY, for signs of the Fed's outlook on the economy. The Japanese markets were closed for a holiday. The index had its biggest drop since mid-May a day earlier. United States bond prices also rose while gold closed at its highest for the week up 1.52% to $1281.

The recovery fit a recent pattern of investors using dips to put more money in stocks.

"We take comfort that numerous smaller markets are growing strongly, offsetting declines in the key markets Italy, Russia (weather impact) and Nigeria (price increases)", they added. Trump is issuing a new warning over the North's development of nuclear weapons.

Tensions increased further late in the NY session following comments by President Trump that the United States would respond to any threat with "fire and fury, the like of which the world has never seen".

The International Energy Agency said Opec members were not complying with production cuts, which were holding back efforts to rebalance the market quickly. It's still the highest it's been since May.

Barrick Gold Corp rose 2.1 percent to C$21.7, while Goldcorp Inc rose 0.9 percent to C$16.29.

Federal Reserve Bank of New York President William Dudley will make an appearance later in the day and his comments will be parsed for clues regarding the future pace of interest rate hikes. In particular, July headline inflation came in at 0.1% month-month in July, falling short of expectations for CPI growth to stand at 0.2% - still this was better than June's 0.0%.

"Today's inflation data put the Fed on pause and really diminishes the fact that there's still some noise going around with the North Korea-U.S. situation", said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.

Railroad stocks have shown a strong move to the upside on the day, driving the Dow Jones Railroads Index up by 1.3%. This statement helped push the dollar from its highs.

Korean shares open lower amid escalating tensions over N. Korea
The data comes amid tepid inflation that has remained below the Federal Reserve's 2 percent target, despite low unemployment. Silver added 0.4% to $17.15 US per ounce after hitting $17.24, its highest since June 14, in the previous session.

In the Dow, declines in shares of Merck and those of DuPont, recently down 0.9 per cent and 0.8 per cent respectively, outweighed gains in shares of Apple and those of Microsoft, recently up 1.3 per cent and 0.7 per cent respectively.

Blue Apron shares rose 6.73 percent after the meal-kit delivery service provider reported a rise in revenue in its first quarterly report since debut. The company also said sales at its established stores declined for the fourth straight quarter. The company's stock dropped $4.15, or 3.88 per cent, to $102.83 US.

US Treasury yields fell to as low as 2.197 percent, their lowest level since June 28 overnight.

US crude futures extended losses from Thursday, when they tumbled 2 percent on fears of slowing demand and lingering concerns over a global oversupply. Brent crude, used to price worldwide oils, rose 20 cents to $52.10 a barrel in London.

Focusing on United Kingdom stocks, Old Mutual was among the biggest fallers after saying it was taking a "cautious" approach to the dividend despite hiking half-year profits. Natural gas was also flat at $2.98 per 1,000 cubic feet.

Gold fell $2.10 to $1,262.60 an ounce.

The euro was down 0.1 percent at $1.175 while the dollar fell 0.6 percent to 109.68 yen.

Major indexes in Europe closed mostly lower.

In European markets, the French CAC 40 was down 0.7% and Frankfurt's DAX 30 shed 1.2%. Britain's FTSE 100 added 0.1 percent. South Korea's Kospi fell 0.2 percent.

The technology sector .SPLRCT was the S&P's biggest drag with a 2.2 per cent drop.

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