North Korea did it again: the rogue nation fired a missile over Japan’s northern island Hokkaido. While the projectile did not hit Japan’s territory, it certainly scared Japan, South Korea and also the US. Japanese citizens were asked to alerted to take cover.
And in currency markets, the safe-haven response outweighs the danger to Japan. The yen is strengthening across the board. USD/JPY is currently trading at 108.85, some 40 pips lower, but it had already dropped to 108.33, closer to support at 108.10.
What’s next? In previous flare-ups with North Korea, times of heightened tension were followed by quieter times. So, is it an opportunity to buy dollar/yen and wait for things to calm down?
Arguments can be made to the other side as well: the recent round of tensions is worse than previous ones, and this damp mood could prevail. In addition, the situation can deteriorate.
Here is how the missile launch had already affected the pair. Below 108.10, support is only at 107. Resistance is at 109.90.