Amid climbing rhetoric, North Korea announced on Sunday that it had successfully tested a hydrogen bomb that was capable of being mounted on a ballistic missile. The test was estimated to have been almost 10 times more powerful than previous explosions and triggered an earthquake of 6.3 magnitude.
US President Trump immediately threatened to tighten economic sanctions and halt trade with any country doing business with the “rogue” regime, while Defense Secretary Jim Mattis warned of a “massive military response.” The nuclear test overshadowed tepid US August employment figures, which showed Nonfarm payrolls growing by 156,000 last month, below the consensus estimate of 180,000. The Yen typically gains when investors try to reduce their risk exposure because the Yen is often used as a funding source to buy higher-yielding assets. In the aftermath of the latest increase in tensions, the USDJPY currency pair has plunged to around 109.500.