Asia headed lower this morning as markets digested a renewed war of words between North Korea and the US. Earlier this week at the United Nations, President Trump delivered a stern warning to Kim Jong Un, threatening to destroy the hermit nation. In turn, on Friday, the North Korean Leader said Trump will face the counter-measures of his talk. In the meantime a North Korean official was also reported saying that his country was considering conducting a hydrogen bomb test in the pacific.
In Wednesday’s latest communication by the Fed, the US Central bank annonced it intended to start unwinding its $4.5 trillion balance sheet. Markets are also still expecting a last rate hike to be delivered towards end of year.
The US Dollar closed higher on Wednesday after the Fed but has given back much of Wednesday’s gains already at the time of writing as the North Korean tensions exacerbated.
The negative sentiment this morning was also due to the S&P’s downgrade of China’s Sovereign Rating by one notch from AA- to A+, citing a fast credit growth. The negative mood and its links to China sent the Aussie lower this morning and the currency is currently losing across the board.
The risk-off mode has pushed the USDJPY lower this morning, with the currency pair currently trading at 111.83 after yesterday’s highs of 112.71
Later today ECB President Mario Draghi will be attending events in Dublin and is expected to deliver a speech. Later we also have canadian CPI for August.
