Quiet Day For USD Amid Threat From North Korea
A midday look at the currency market has the majors mostly flat as fresh fears of a threat from North Korea early Wednesday morning threw investors a curveball and added to the geopolitical concerns of potential outbreak of nuclear war. As a result, most of the safe haven assets have seen an uptick today with gold appreciating 1.37% to the 1280 level, 10-year treasury yields decreasing 1.5%, the dollar falling 0.34% and 1% against the yen and swiss franc, respectively.
This unexpected turn in the markets has resulted in a quieter dollar today. Despite good data for the U.S. seen in Nonfarm Productivity, which saw a 0.2% higher gain to 0.9% over the forecasted 0.7% in Q2 and much lower crude oil inventories, coming in about 3.7M barrels less than expected, further signaling greater demand in recent months, still has investors standing pat on increasing their dollar holdings.
However, I believe after another day or two investors will shake off the fear and return to their intended buying and selling for the week – provided nothing else spooks the market. The data today lends further credence to the likelihood of a July CPI beat on the forecasted 1.7% scheduled to be released Friday.