Japan Defence Min: North Korean projectiles are a grave threat

• Geopolitical risks weighing on the Yen and financial markets in Asia.
• USD/JPY holding the 105 handle, so far. 

The risk-off themes keep flowing on the geopolitical front. While USD/CNH rallying to fresh highs and the US Treasury officially calling out China as a currency manipulator, seeking assistance from the IMF on the matter, on the back burners, there are repeated threats from North Korea.

As reported by CNBC, North Korea on Tuesday continued to ramp up its weapons demonstrations by firing unidentified projectiles twice into the sea while lashing out at the United States and South Korea for continuing their joint military exercises the North says could derail fragile nuclear diplomacy.

The Japan Defence Minister has said that the North Korean projectiles are a grave threat. The South Korea Dep Fin Min said, "We will take pre-emptive measures if issues with japan cause volatility in the financial markets.' 

FX implications

The combination of the geopolitical risks are going to continue weighing on global equities and should remain supportive of the Yen and CHF. When markets have digested just how deed routed they are for the foreseeable future, there is no telling how much damage there is to unfold - The S&P 500 made its biggest one-day decline on record overnight. Volatility has risen to the highest levels since the last stock market roue in 2018 - The VIX is at 24.59 +6.98 (39.64%).