CURRENCIES: Dollar Slides Vs. Swiss Franc As U.S.-North Korea Discord Prompts Run To Safety

By Carla Mozee, MarketWatch Features Dow Jones Newswires

North Korea's Kim Jong Un made explicit threat to strike a U.S. military base in Guam

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The dollar fell sharply against the Swiss franc Wednesday, with haven assets including Switzerland's currency bid higher following a verbal clash between North Korea and U.S. President Donald Trump.

Flight-to-safety moves pushed up the value of classic haven assets such as the franc, the Japanese yen and gold prices after North Korean leader Kim Jong Un made an explicit threat to strike a U.S. military base in Guam (http://www.marketwatch.com/story/north-korea-threatens-missile-strike-on-us-base-on-guam-2017-08-08).

His order, reported in state media, came hours after U.S. President Donald Trump warned Pyongyang not to "make any more threats" to the U.S., saying it would face a "fire and fury" response (http://www.marketwatch.com/story/trump-today-president-says-north-korea-faces-fire-and-fury-if-it-doesnt-halt-threats-2017-08-08) "like the world has never seen." Trump's comments came after a Washington Post report (https://www.washingtonpost.com/world/national-security/north-korea-now-making-missile-ready-nuclear-weapons-us-analysts-say/2017/08/08/e14b882a-7b6b-11e7-9d08-b79f191668ed_story.html?utm_term=.0938becb046e) that North Korea has built a miniaturized nuclear warhead.

The Swiss franc bought $1.0373 on Wednesday, representing a 1% rise from $1.0266 late Tuesday in New York. Meanwhile, the dollar fetched Yen109.77, a drop from Yen110.31.

"The unpredictable nature of North Korea means it is hard to gauge exactly how likely an attack is, yet given the military power of both nations, there is no surprise we are seeing markets shift out of risk assets and into havens such as the yen and gold," said IG market analyst Joshua Mahony, in a note.

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Gold prices were up nearly 1% (http://www.marketwatch.com/story/gold-gains-about-1-as-us-north-korea-tensions-grow-2017-08-09) to $1,273.30 an ounce. Meanwhile, European stocks were sliding, with French and German benchmarks losing at least 1.2% each. Korea's Kospi stock benchmark lost 1.1% while U.S. stock futures were losing ground ahead of Wednesday's open (http://www.marketwatch.com/story/us-stock-futures-pull-back-on-rising-north-korea-tensions-2017-08-09).

"With European, U.S. and Asian markets all suffering heavily in anticipation of a potential conflict in Asia, it is worthwhile noting that we have heard similar posturing between Trump and Kim Jong Un before," said Mahony.

"There is a big difference between words and actions. Kim Jong Un knows that by starting a conflict he is by and large marking the beginning of the end for his regime. Meanwhile, Trump knows that a conflict in North Korea could risk a huge amount of casualties and a huge humanitarian crisis on China's doorstep."

The British pound bought $1.3008, up slightly from $1.2993 late Tuesday in New York. The euro fetched $1.1744 compared with $1.1752 late Wednesday in New York.

(END) Dow Jones Newswires

August 09, 2017 06:34 ET (10:34 GMT)