Korean won tumbles after South Korea's president declares martial law; euro gains
Korean won drops to more than two-year low
US dollar trims losses vs yen after JOLTS report
China's yuan falls to lowest since November 2023
Recasts, adds new comments, Korean won, U.S. data, FX table, bullets, byline, NEW YORK dateline, updates prices
By Gertrude Chavez-Dreyfuss and Amanda Cooper
NEW YORK/LONDON, Dec 3 (Reuters) -The Korean won was one of the biggest movers on Tuesday, plunging against the U.S. dollar after South Korea's president declared martial law in an unannounced late-night address on television.
The euro, meanwhile, which has hogged the headlines of late, recovered versus the greenback as political turmoil in France sent traders scrambling for hedging protection against further price swings.
The dollar, on the other hand, briefly rose after data showed U.S. job openings increased moderately in October while layoffs declined.
But it was the won that caught the market's attention, with political news coming out of left field.
South Korean President Yoon Suk Yeol said he had no choice but to resort to martial law in order to protect the liberal democracy, saying opposition parties have taken hostage of the parliamentary process to throw the country into a crisis.
The South Korean currency KRW= fell to as low as 1,443.40 won per dollar, the lowest since October 2022. It was last down 1.9% at 1,430.72.
"This naturally makes sense for the Korean won to plummet while we're all assessing what exactly is the emergency. It usually doesn't happen unless there is major fear or concern that the stability of the country is apparent," said Juan Perez, director of trading at Monex USA in Washington.
"When there is chaos in Asia, it makes a lot of sense for jumping to the yen and a lot of the funds that are usually invested in Korea start actually heading towards Japan and I think already you're seeing a bit of an unusual jump in favor of the yen."
The dollar fell 0.3% versus the yen to 149.12 yen JPY=EBS, while the euro also dipped, down 0.2% at 156.77 yen EURJPY=EBS. Traders are growing increasingly confident that Japan may hike interest rates this month.
The won sank to its lowest since May 2023 against the yen, and was last down 2.2% at 1,043 won KRWJPY=R.
The euro EUR=EBS, which had been the weakest G10 currency through November, began this month with a 0.7% fall on Monday and was last up 0.2% at $1.05185, as France's government heads for collapse over a budget impasse. EUR/GVD
French Prime Minister Michel Barnier faces a vote of no confidence on Wednesday after fierce opposition from across the political spectrum to his budget, which contains painful tax rises and spending cuts aimed at repairing the country's precarious finances.
Demand for hedges, as reflected by euro options volatility, has hit its highest since March 2023 this week and, with the combination of a string of weak data, political uncertainty in major euro zone economies and the seemingly unstoppable dollar, the single European currency could struggle.
WATCHING THE YUAN
The Chinese yuan, another currency to watch with the incoming administration of President-elect Donald Trump in the United States, hit a 13-month low on tariff risks and weakness in China's economy.
The yuan had already sold off in anticipation of more tariffs from Trump and improving U.S. manufacturing data, and a dive in Chinese bond yields to record lows has pulled the currency towards 7.3 per dollar for the first time since last November. CNY/
China fixed the yuan's trading band at its weakest in more than a year and traders ran with it to sell the currency at 7.2996 per dollar. The Chinese unit last traded at 7.2850 per dollar, slightly down 0.2%. It traded at 7.24 on Friday. CNY/
The U.S. dollar index was little changed to slightly down on the day at 106.34 =USD. It trimmed losses after data showed job openings, a measure of labor demand, had risen 372,000 to 7.744 million by the last day of October, the Labor Department's Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey, or JOLTS report.
"The Fed's December 18th decision will be a close one, but if the majority of voting members prioritize the employment mandate, markets should expect a cut in policy rates, supporting risk appetite," wrote Jeffrey Roach, chief economist at LPL Financial in emailed comments.
U.S. fed funds futures priced in a 70% chance of a 25 basis-point cut this month, and 30% odds of a pause, according to LSEG calculations, little changed from late Monday.
The dollar typically suffers seasonal weakness in December as companies tend to buy foreign currencies. However, traders are keeping a wary eye this year on Trump's incoming government and its support of the greenback.
Over the weekend, Trump threatened punitive tariffs unless BRICS member countries committed to the dollar as a reserve currency.
Currency bid prices at 3 December 04:27 p.m. GMT | |||||||
Description | RIC | Last | U.S. Close Previous Session | Pct Change | YTD Pct | High Bid | Low Bid |
Dollar index | =USD | 106.31 | 106.37 | -0.05% | 4.87% | 106.6 | 106.09 |
Euro/Dollar | EUR=EBS | 1.0511 | 1.0498 | 0.11% | -4.79% | $1.0531 | $1.0481 |
Dollar/Yen | JPY=D3 | 149.48 | 149.57 | -0.09% | 5.95% | 150.195 | 148.675 |
Euro/Yen | EURJPY= | 1.0511 | 157.02 | 0.06% | 0.96% | 157.98 | 156.19 |
Dollar/Swiss | CHF=EBS | 0.8858 | 0.8864 | -0.06% | 5.26% | 0.8889 | 0.883 |
Sterling/Dollar | GBP=D3 | 1.2661 | 1.2657 | 0.03% | -0.51% | $1.2698 | $1.2638 |
Dollar/Canadian | CAD=D3 | 1.4065 | 1.4046 | 0.16% | 6.13% | 1.4076 | 1.401 |
Aussie/Dollar | AUD=D3 | 0.6475 | 0.6476 | -0.02% | -5.04% | $0.6505 | $0.6456 |
Euro/Swiss | EURCHF= | 0.931 | 0.9305 | 0.05% | 0.26% | 0.9324 | 0.9292 |
Euro/Sterling | EURGBP= | 0.83 | 0.8294 | 0.07% | -4.25% | 0.8312 | 0.8288 |
NZ Dollar/Dollar | NZD=D3 | 0.5875 | 0.5888 | -0.2% | -7% | $0.5905 | 0.5865 |
Dollar/Norway | NOK= | 11.0593 | 11.0891 | -0.27% | 9.12% | 11.1303 | 11.0394 |
Euro/Norway | EURNOK= | 11.6255 | 11.652 | -0.23% | 3.58% | 11.677 | 11.6175 |
Dollar/Sweden | SEK= | 11.0145 | 10.9876 | 0.24% | 9.41% | 11.0273 | 10.9705 |
Euro/Sweden | EURSEK= | 11.5778 | 11.538 | 0.34% | 4.07% | 11.5846 | 11.5357 |
World FX rates https://tmsnrt.rs/2RBWI5E
Reporting by Gertrude Chavez-Dreyfuss in New York and Amanda Cooper in London; Additional reporting by Pranav Kashyap in Bengalaru and Tom Westbrook in Singapore; Editing by Nicholas Yong, Kirsten Donovan and Susan Fenton
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
