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Following the shell attack of North Korea on South Korea, Japan demands that the US, Japan and South Korea retaliate and attack North Korea. Japanese Prime Minister Naoto Kan called US President Barack Obama and South Korea’s Lee Myung-bak, and  demanded an immediate response.

Around 30,000 US troops are based in South Korea, and the 7th fleet including U.S.S. George Washington  are based in Japan. Kan is furious that a second attack in 8 months will remain unanswered. Before today’s attack on the island of Yeonpyeong, a North Korean submarine fired a torpedo and killed 46 South Korean sailors back in March.

Read more about the attack and the rumor that Kim Jung Il died.

Nobody wants a violent conflict in the Yellow Sea, but the US must also consider that a weak response against the North Koreans will put them in a weak position against the Iranians, if Iran will proceed with getting nuclear arms.

Currently USD/JPY is still in the 82.87 to 84.11 range. It jumped after the attack was reported, but fell back and is still in the wide range.

While the Japanese yen is a safe haven currency that benefits from global troubles, in this case, it is involved in the conflict. In the past, a North Korean missile flew over Japan, causing a big scare.

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