Finance

Dollar hits 8-week low vs yen, N.Korea tensions spook investors

Dollar hits 8-week low vs yen, N.Korea tensions spook investors

"Heightened geopolitical risks overnight have seen the markets flip from risk-on to risk-off and we have to wait and see how long this move runs before adding some positions", said Viraj Patel, an FX strategist at ING in London.

The CBOE Volatility Index, better known as the VIX and the most widely followed barometer of expected near-term stock market volatility, rose the most in about 12 weeks.The index ended up 4.93 points at 16.04, the highest level since November 8, when Trump was elected president.

The so-called fear gauge - the CBOE Volatility Index (VIX), the most widely followed barometer of expected United States stock market volatility, hit its highest since November 8, when Mr Trump was elected president.

"The level which we are looking at now is $1,300". The euro zone's version is at its highest since April, when France's election was rattling the region. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.48 percent lower.

Asian equities excluding Japan slid the most in eight months on Friday as the rhetoric between US and North Korean leaders intensified.

"Of course, it's all come at a time when share markets are due for a correction, so North Korea has provided a flawless trigger".

Other markets: Asian markets had another tough day (http://www.marketwatch.com/story/asian-markets-extend-selloff-in-face-of-north-korean-crisis-2017-08-10), while the Hong Kong Hang Seng Index and the South Korea Kospi dropped 2.5% and 3.2%, respectively, for the week. "Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay. The U.S. currency was down 0.5 percent at 109.73 yen, following a retreat to 109.740, its weakest since June 15.

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The Korean won also continued to fall, down 0.45 percent to 1,147.2.

Japanese markets were closed for a holiday but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe was on track to post its largest weekly drop since the week before Donald Trump won the US presidential election in November.

Gold, another classic safe haven asset, was trading at around $1,285 per ounce, up more than two per cent this week and near a nine-week high.

The Indonesian rupiah slipped by about 0.1 percent to its lowest in over 4 weeks.

On Thursday the greenback had shed 0.8 percent versus the yen, with the Japanese currency rallying broadly against most major currencies. The DJIA was poised for a fall of 1.1%, making for its worst week since a 1.5% drop in the one ended March 24.

Away from the geopolitical drama, US inflation data is due at 1330 GMT. The Federal Reserve is likely to scale back on its expected pace of interest rate hikes if inflation continues to be soft.