Probable fall in JPY, GOLD and a possible rise in USD and indices

The U.S. dollar won a reprieve from risk aversion on Monday after North Korean dictator Kim Jong Un decided to hold a party over the weekend rather than launch another missile, tempering safe havens such as the yen and Treasuries.

Investors remained cautious over the possible economic impact of Hurricane Irma as it chewed its way up the Florida coast, knocking out electricity to 3 million homes and businesses statewide.

The United States and its allies had been bracing for another long-range missile launch to mark for the 69th anniversary of North Korea’s founding on Saturday.

The sense of relief was enough to lift E-Mini futures for the S&P 500 ESc1 by 0.5 percent, while yields on 10-year Treasury notes rose 3 basis points to 2.09 percent US10YT=RR.

“It’s too early to say the risks are gone, but one thing for sure is that market players now think the situation won’t get worse as it did some weeks ago,” said Lee Kyung-min, a stock analyst at Daishin Securities in Seoul.

Lee added that many foreign investors and domestic institutions are purchasing South Korean tech and chemicals shares as quarterly earning season nears.

China’s central bank was also a focus in Asia after sources said it plans to scrap reserve requirements for financial institutions settling foreign exchange forward yuan positions with effect from Monday.

“The removal potentially makes it easier for traders to purchase the USD, easing the pressure for yuan appreciation,” said analysts at ANZ in a note.

“The change likely signals some discomfort about the stronger yuan and its impact on Chinese exports.”

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