Forex news for Asia trading Friday 15 September, 2017

There was plenty of yen action kicking off early in Asia today. It all started with a dip for USD/JPY on US Treasury Secretary Mnuchin saying:

"Although we respect the Fed's independence, we are concerned about economic growth. We're doing everything we can -- whether it's tax reform, whether it's regulatory relief, whether it's trade -- to create economic growth. And we're less concerned about inflation at the moment"

The key take aways from this are:

Although we respect the Fed's independence

  • Yeah, that's b/s - saying this translates as we don't respect the Fed's independence

we're less concerned about inflation at the moment

  • Coming after the higher than expected inflation reading, that is quite significant. Mnuchin's boss is a property developer and politician - he does not want higher interest rates. He is looking to replace Yellen with someone more ... malleable.

Anyway, yeah, USD/JPY took a dip from circa 110.50 to under 110.20 in a sharp fashion.

But ... wait ... there's more ...

An hour or so later North Korea launched a ballistic missile, and this one again overflew Japan (Hokkaido) to land in the Pacific Ocean. More:

USD/JPY dropped like a rock, to under 109.60 at one stage and then rose like a rocket itself, back toward 110 rapidly. It sat around the 00/10 into early Tokyo trade and then ticked back somewhat to circa 110.30 - its been pretty much 20/30 ever since.

Yen crosses lower alongside the lower USD/JPY and then these, too, bounced.

I should note that both Mnuchin's inflation comment and the North Korean missile test came at the thinnest liquidity time of the 24 hour forex day. Moves can be exacerbated by the thinness of trading at this time. If I were a US Treasury Secretary and ex-Goldman Sachs big swinger I'd likely be aware of how my comments could impact ... and if I was despotic head of a totalitarian state I'd likely be aware of how missile launches might impact too.

Maybe I just don't care in either case, or maybe there is something more to it ... I'm sure ForexLive traders can make up their own minds.

via GIPHY ... He said /launched what??? When???!!!

Taking a bit of a step back, the reaction from the yen was not as dramatic as it has been. There are factors at work against the yen right now:

  • US tax reform seemingly on a better path
  • US debt ceiling problems postponed
  • Trump reconciling with senior Dems
  • & therefore risk assets looking more attractive

I'm not calling an end to the 'yen as safe haven' meme (especially in the minutes following an event such as a missile launch or bomb test) but today's more limited (extent and time) yen gain in the wake of the missile firing is suggestive of it diminishing.

USD/CHF fell also (flows into the safe haven CHF), but its fully reversed its drop as I update (USD/JPY is pretty close to having done so also as I update).

EUR/USD has done little. Cable even less.

AUD/USD is net more or less unchanged on the session - it hasn't done much today - a very small range indeed. NZD/USD is a few tics higher but again not much in it.

We got comments in late US time/very early Asia from a Bank of Canada official (see bullets above) but USD/CAD has done little here also.

Gold benefitted from the missile launch but has pretty much retraced its gains also.

Still to come:

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