Geopolitical Clashes Shoves Dollar Down

The U.S Dollar fell to a 5-month low against its Asian rival, the yen, due to several reported geopolitical frictions since the weekend. It enticed investors to transfer to safe-haven assets such as the Japanese currency and gold.

In the weekend, the U.S. military pivoted a naval-strike unit along with the USS Carl Vinson aircraft carrier to North Korea. Moreover, President Donald Trump discharged 59 Tomahawk cruise missiles going to Syria from Navy warships located in the Mediterranean Sea. Evidently, the U.S. attacks are in retaliation for chemical attacks instigated by Syrian dictator Bashar al-Assad himself which killed numerous innocent civilians.

Tensions keep on arising in the Korean Peninsula after the missile launches in Syria as fears escalate that the same can happen at any time. Yet, North Korea is ready to fight back in the event that the United States show signs of aggression. The former has given a warning of a possible nuclear attack to the latter.  Trump even tweeted that Pyongyang was “looking for trouble” and his country is ready to solve the problem, even with China on his side or not.

This resulted in the weakening of the dollar. The dollar USDJPY went down to -0.03%, closing at ¥109.75 compared to Monday’s ¥110.94. Whereas the euro EURUSD increased by +0.0943%, rising to $1.0624 from $1.0595.

Even the US Dollar Index (a measure of the greenback’s potency versus the other six currency rivals) reduced by 0.3% in 100.70. 

At the more so, the Russian ruble bettered dollar with USDRUB at 57.14 rubles. Also, the euro fared better than the dollar. The recent events gave enough favors to the rise of the yen. Simmering geopolitical strains stirred investors to a flight response shifting to the Japanese yen.  It does not mean that the United States is under the weather, but it is just that the current tide acts in favor of the yen and investors does not want to miss out on any opportunity of buying it. The Japanese currency is regarded as a safety net during times of market volatility. It can also be interpreted as a signal that investors are becoming uneasy with the status of the global stock-market involving the United States at present.  

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