On Friday, the Nikkei closed lower amid geopolitical tension across the globe. There wasn’t just one, but two incidents that came about. The Nikkei also dropped as the yen surged higher. Data from the U.S. sparked some hope that global growth is still doing well. The Nikkei dropped 0.49% to 18,335.63.
Geopolitical Problems
There were two geopolitical problems that really spooked the Nikkei. The first of which was the UUUUU U U UUU U U U U U U. It was believed that there were about 94 ISIS fighters that may have been killed by the blast. The reason for using the bomb was to destroy underground tunnels and weapons used by ISIS.
The bomb that was dropped is the largest non-nuclear bomb, which is nicknamed “the mother of all bombs”. The second geopolitical problem involves an escalation between the United States and North Korea. The main issue is that North Korea is building a rogue nuclear program, and has been doing a series of missile tests. The U.S. has expressed concerns with this issue.
It is pushing North Korea to abandon its missile program completely. What do both of these geopolitical events have to do with the Nikkei? The fear is that one or both of such conflicts could cause a war. If that happens, a war would cause mass panic. That means traders would fade the Nikkei lower.
Higher Yen
With all the risk factors around the globe, the yen traded higher. In addition, the dollar was trading somewhat flat as well. That really helped the yen edge higher. The USDUSDUSD USD USD USDUSD on Friday, indicating a stronger yen currency.
The yen had really recovered from its low at the beginning of the week versus the dollar. At the beginning of last week the USD/JPY pair traded as high as 110. That meant that early last week, the dollar was much stronger. Towards the end of the week the yen made a remarkable recovery.
