Fed-driven dollar jump winds as long-term Fed stance is unclear

TVC:DXY   U.S. Dollar Currency Index
The situation on Korean peninsula remains one of the most high-quality and coherent dollar signals, especially paired with the yen. USDJPY lost half a percentage point in the course of trading on Friday after Kim Jong-un again threatened to conduct a nuclear test in response to Trump's statement to destroy North Korea. In the medium term, USDJPY buyers remain the dominant force due to the growing divergence of policies of the two central banks.

The North Korean foreign minister promised investors a very hectic weekend saying that testing the bomb in the Pacific Ocean would have “unprecedented scale." The Korean Kospi index closed Friday at a loss of 0.74%, the Nikkei 225 interrupted the weekly growth losing 0.25%, as investors decided to cut risk exposure before the end of the week.

Despite the proximity of Japan to a source of trouble, the yen continues to be in demand in moments of instability due to the country's status of a "net lender.”

The Fed this week has portrayed itself as much optimist as possible, but even this was not enough to reverse the trend for the dollar. After correction above 92.00 level, the dollar index is inferior to virtually on all fronts against the main opponents. The hint of a rate hike in December allowed the US currency to only breathe in before the next dive, as the Fed's long-term position, with the end of the Yellen period in February, looks very uncertain.

Gold continues to struggle for a level of $ 1,300 and will probably end the week with minimal changes, the oil market can maintain its outlook for growth closing the week above $50 per barrel.

Arthur Idiatulin
This analysis is provided as general market commentary and does not constitute investment advice.