Korean tensions keep yen near eight-week highs

The VIX closed 1.4 percent higher but at the lowest level of the day at 11.11, after rising as high as 12.63.

Investors also drew some encouragement from new government data showing USA inflation at the consumer level inched higher last month.

Pyongyang said on Wednesday it was considering plans for a missile strike on the U.S. Pacific territory of Guam, just hours after Trump said North Korea would face “fire and fury” if it threatens the United States, his strongest warning yet for North.

Politics lifted USA defense stocks.

Investors had rushed to safe-haven assets after strongly worded exchanges between Washington and nuclear-armed North Korea late on Tuesday. “What’s happened in North Korea is enough to do that”, said Matthew Peterson, Chief Wealth Strategist for LPL Financial in Charlotte, North Carolina. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 2.212 percent. The Dow shed 0.2 percent. “You’re less than 2 percent off the high for the S&P heading into a weekend where uncertainty with North Korea still lingers”, said Lerner. A rise in expectations for global inflation has left investors generally short of the two currencies and the turnaround in the franc this week by contrast follows its worst week since the Swiss National Bank removed a ceiling on the currency in January 2015.

Hours later, North Korea responded by saying it is seriously considering a missile strike on the Pacific island of Guam, home to a U.S. military base. “While tensions are running high, traders will be reluctant to be long”.

“Yesterday’s flare up felt a little different initially probably more so because of the inexperience of President Trump in the area of foreign policy, particularly given his tendency to conduct policy by way of tweet and press conference”, says CMC Markets analyst Michael Hewson.

European bourses also looked set to open lower across the board, with Eurostoxx 50 futures already down 0.7 percent in early trade.

In other precious metals, silver rose 0.4 percent to $16.48 per ounce. The FTSE 100 index of leading British shares was 0.7 percent lower at 7,489.

The dollar was down 0.53% against the yen at 109.48 yen, after briefly dropping as low as 109.53.

The S&P’s record close on August 7 likely helped fuel its latest sell-off.

Shanghai eked out gains in morning trade although Seoul shares continued their decline after slumping more than one per cent yesterday, and Hong Kong was also down. It was last up 0.0 percent at 1.1329 per euro. The Labor Department said its producer price index for final demand edged down by 0.1 percent in July after inching up by 0.1 percent in June.

Asian equities fell, driving the region’s benchmark index to its biggest loss in a month, on rising geopolitical risk after President Donald Trump warned the U.S. will retaliate against North Korea, raising tension between the two countries.