North Korea tensions send dollar to eight-week low vs yen

South Korea South Korea won Yen, North Korean Blow China’s yuan Currency Investors

FX round-up : Dissapointing data and simmering geopolitical tensions boost haven currencies

US President Donald Trump issued a new threat to North Korea, saying American weapons were "locked and loaded" as Pyongyang accused him of driving the Korean Peninsula to the brink of nuclear war.

The Japanese yen hit an eight-week high against the USA dollar, and US -traded Nikkei stock futures dropped 2 percent to their lowest since mid May.

The yen is often sought in times of geopolitical tension, partly because Japan has a big current account surplus.

The Swiss franc, the other traditional safety-play among currencies, has benefited too. Its weekly gain of 2.6 per cent is the largest since June 2016.

In bond markets, the yield on US Treasuries fell, also pressured by the lowered expectations for a Fed move.

"There is a low probability that we will have a war with North Korea", he said, and a larger pullback in stocks is "a buyable drop". "But with the rhetoric having gone to a different level, the market just can't afford to take that risk", said BNY Mellon FX strategist Neil Mellor.

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Many world stock markets have hit record or multiyear highs in recent weeks, leaving them vulnerable to a sell-off, and the tensions over North Korea proved to be the trigger.

But the yen added to an already-strong weekly rally of close to 1.5 percent, hitting its highest in nearly four months versus the dollar at 108.73 yen. The euro zone's version is at its highest since April, when France's election was rattling the region.

The S&P 500 dropped the most since May and MSCI's gauge of stocks across the globe .MIWD00000PUS lost 1.1 percent in its third straight day of declines, as it pulled further back from all-time highs. USA gold futures for December delivery was mostly unchanged at $1,290.50 per ounce.

"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".

Trump's outbursts have chiefly affected Asian markets, with the tense mood dragging shares in the continent lower. "Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay.

Disappointing economic data releases weighed on both sides of the Atlantic today with a negative goods trade balance for the United Kingdom (-0.1% versus expectations of 1.4%), higher unemployment claims from the U.S. (244,000) and also a negative month-on-month PPI figure for the USA (-0.1%).

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MSCI's broadest index of Asia-Pacific shares outside Japan skidded 1.55 percent, its biggest one-day loss since mid-December.

Escalating turmoil between the U.S. and North Korea has continued to dominate the news flow in forex markets as the war of words threatens to spill over into army confrontation.

After touching a more than two-month high, spot gold last added 0.1 percent to $1,287.18 an ounce. It soared over 2 percent in the previous two sessions, and is set for a weekly gain of 2.25 percent.

Crude oil prices fell on Thursday, on concerns of lingering global oversupply as Russian Federation considered a future output resumption and OPEC boosted its July production numbers.

US crude was down 0.9 percent at $48.16 per barrel, on track for a weekly loss of 2.9 percent.

Global benchmark Brent also lost 0.9 percent to $51.44, after Thursday's 1.5 percent drop. The euro has weakened against the dollar to last trade at $1.1755.

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