Investors move to safe havens as USA and North Korea trade threats

Nuclear Nerves Wipe $1t Off Stocks

Nuclear Nerves Wipe $1t Off Stocks

While North Korea regularly threatens to destroy the United States and its allies, the report was unusual in its detail.

While the conflict between the two countries remains a war of words markets are wary that the threat could escalate, in no small part to the unpredictability of the respective leaders, Trump and Kim Jong Un.

Trump's threat earlier this week, to unleash "fire and fury" on Pyongyang if it attacked, was ultimately dismissed as bluster by many investors.

The Chinese volatility gauge jumped by the most since January 2016.

US stock futures ESc1 were marginally softer on Friday.

Weakness in U.S. Treasury yields may also be supporting the yen, Sweeting said.

The greenback slipped 0.83 per cent to a near two-week low against the Swiss franc and fell to 110.11 yen, its lowest in almost two months against the Japanese currency.

In a note sent to clients late on Thursday, the US bank predicted the single currency would rise to $1.25 in the first quarter of next year and reach parity with sterling for the first time.

The US dollar extended losses against the yen to hit a new two-month low.

Meanwhile, euro/dollar was 0.2% up, just shy of the 1.18 handle, pound/dollar was flat, having earlier hit a three-week low of 1.2939 and dollar/yen was 0.1% down above the 109 level - the pair fell to 108.72 after the data on US CPI, its lowest since April 20.

The yen tends to benefit during times of geopolitical or financial stress as Japan is the world's biggest creditor nation and there is an assumption that Japanese investors there will repatriate funds in a crisis.

Silver futures for September delivery on the Comex rose 2.9 per cent, the biggest gain for a most-active contract since November.

Markets are now focused on United States consumer price data for July, due later in the session.

"Our outlook anticipates a continued moderate growth trend, with some further strengthening in the labor market and an increase in inflation over the medium term toward our objective of 2 percent", Dudley said in prepared remarks that did not specifically mention monetary policy. UBS said in a note it had increased its long position in gold as forward real interest rates declined and commodity prices increased, while it also added to longs in the platinum group metals as investment demand rose.

U.S. crude futures extended losses from Thursday, when they tumbled 2 per cent on fears of slowing demand and lingering concerns over a global oversupply.

Equity markets had traded with a soft tone in Europe and there was a sharp increase in selling pressure in NY with the S&P 500 index declining by close to 1.0%. It is poised to end the week down 1 percent.

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