On Sunday, September 3 North Korea carried out its sixth nuclear test, whose power was 100 kilotons – about 4-5 times more powerful than the explosion caused by the nuclear bomb dropped on Nagasaki in Japan in 1945 (21 kilotons), reports Yonhap.
On the same day the President Trump threatened on Twitter to stop trade relations with any country which trades with North Korea.
The trade relations of North Korea with China make about $3 billion per year. For North Korea that is the greatest source of foreign currency. The commodity turnover between China and the USA is several orders higher, made by about $500 billion.
The possible escalation of the conflict is a little unprobable, but against the background of this disorder there has been increased pressure upon the dollar's exchange rate. On Monday things were quiet as the United States celebrated Labor Day, we haven't seen noticeable fluctuations, though the market opened with a gap on all pairs (30 pips on the EUR/USD, for example), not in favor of the dollar. Today against the backdrop of expectations, the entry of the US into the market after the long holiday weekend, and the publication of a number of reports from about 6am GMT, the dollar began to grow insignificantly.
Overall, we expect a high volatility on the market by the beginning of the American session today.
