FX Action: USD-JPY recouped to around 113.00
FX Action: USD-JPY recouped to around 113.00, back within scope of yesterday's two-and-a-half-month peak at 113.25, having lifted out of the correction lows near 112.40. Favourable U.S. fiscal and monetary policy stances present solid fundamentals for the buck relative to most other currencies. The North Korea situation makes USD-JPY a potentially risky call for bulls, however, with the pair likely be sensitive to any fresh escalations in geopolitical tensions. The rogue nation has threated to detonate an H-bomb in the Pacific while demanding international recognition of it being a nuclear power, while the U.S. and allies have said that this is unacceptable. The immediate risks is whether Pyongyang carries through on its H-bomb threat, a scenario that would mark a dramatic escalation. USD-JPY has resistance at 112.64-71.