By Gertrude Chavez-Dreyfuss and Amanda Cooper
NEW YORK/LONDON (Reuters) – The Korean won was among the biggest gainers on Tuesday, plunging against the U.S. dollar after South Korea’s president declared martial law in an unannounced late-night televised speech.
The euro, which has been making headlines of late, meanwhile recovered against the dollar as political unrest in France sent traders scrambling for protection against further price swings.
In contrast, the dollar briefly rose after data showed US job openings rose moderately in October, while layoffs fell.
But it was the win 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 to protect liberal democracy. Opposition parties have taken the parliamentary process hostage to plunge the country into crisis.
The South Korean currency fell as low as 1,443.40 won per dollar, the lowest since October 2022. The currency was last down 1.9% at 1,430.72.
“It is of course logical that the Korean won is plummeting while we are all assessing what exactly the emergency is. This usually does not happen unless there is great fear or concern that the stability of the country is evident,” said Juan Perez. trading director at Monex USA in Washington.
“When there is chaos in Asia, it makes a lot of sense to jump into the yen and a lot of the funds that are usually invested in Korea are actually moving towards Japan and I think you are already seeing a bit of an unusual jump in favor of the yen.”
The dollar fell 0.3% against the yen to 149.12 yen, while the euro also fell, 0.2% to 156.77 yen. Traders are increasingly confident that Japan will raise interest rates this month.
The won fell to its lowest level against the yen since May 2023, and was last down 2.2% at 1,043 won.
The euro, which was the weakest G10 currency through November, started this month with a decline of 0.7% on Monday and eventually rose 0.2% to $1.05185 as the French government faces 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 includes painful tax hikes and spending cuts aimed at repairing the country’s precarious finances.
Demand for hedges, as reflected by Euro options volatility, has reached its highest level since March 2023 this week, and the combination of a series of weak data, political uncertainty in the major Eurozone economies and the seemingly unstoppable dollar should common European currency battle.
LOOKING AT THE YUAN
The , another currency to watch with the incoming administration of President-elect Donald Trump in the United States, hit a 13-month low on rate risks and weakness in the Chinese economy.
The yuan had already sold off in anticipation of more tariffs from Trump and improving U.S. manufacturing data, and a plunge in Chinese bond yields to a record low has pulled the currency toward 7.3 per dollar for the first time since November last year. [CNY/]
China pushed the yuan’s trading range to its weakest point in more than a year and traders began selling the currency at 7.2996 per dollar. The Chinese unit last traded at 7.2850 per dollar, down slightly 0.2%. The price traded at 7.24 on Friday. [CNY/]
The price was little changed on the day to slightly lower at 106.34. Losses were pared after data showed that job openings, a measure of labor demand, rose by 372,000 to 7.744 million on the last day of October, the Labor Department’s Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey (JOLTS Report).
“The Dec. 18 Fed decision will be close, but if the majority of voting members prioritize the employment mandate, markets should expect a cut in the policy rate, which would support risk appetite,” wrote Jeffrey Roach, chief economist at LPL Financial (NASDAQ: ) in emailed comments.
U.S. Fed Funds futures are priced in at a 70% chance of a 25 basis point cut this month, and a 30% chance of a break, little changed from late Monday, according to LSEG calculations.
The dollar typically experiences seasonal weakness in December as companies tend to buy foreign currencies. However, traders are closely watching the new Trump administration and its support for the dollar this year.
Over the weekend, Trump threatened punitive tariffs unless BRICS member states committed to adopting the dollar as a reserve currency.
Currency
bid
prices at
3
December
04:27
pm GMT
Description RIC Last US Pct YTD Pct High Low
at Close Change bid
Last
Session
Dollar 106.31 106.37 -0.05% 4.87% 106.6 106.
index 09
Euro/pop 1.0511 1.0498 0.11% -4.79% $1.0531 $1.0
ar 481
Dollar/Year 149.48 149.57 -0.09% 5.95% 150.195 148.
no. 675
Euro/yen 1.0511 157.02 0.06% 0.96% 157.98 156.
19
Dollar/SW 0.8858 0.8864 -0.06% 5.26% 0.8889 0.88
iss 3
Sterling/ 1.2661 1.2657 0.03% -0.51% $1.2698 $1.2
Dollars 638
Dollar/Approx. 1.4065 1.4046 0.16% 6.13% 1.4076 1.40
Nadian 1
Australia/Thurs 0.6475 0.6476 -0.02% -5.04% $0.6505 $0.6
lar 456
Euro/Swiss 0.931 0.9305 0.05% 0.26% 0.9324 0.92
s 92
Euro/Star 0.83 0.8294 0.07% -4.25% 0.8312 0.82
ling 88
New Zealand 0.5875 0.5888 -0.2% -7% $0.5905 0.58
Dollar/Do 65
llar
Dollar/no 11.0593 11.0891 -0.27% 9.12% 11.1303 11.0
road 394
Euro/Norwegian 11.6255 11.652 -0.23% 3.58% 11.677 11.6
yes 175
Dollar/SW 11.0145 10.9876 0.24% 9.41% 11.0273 10.9
Eden 705
Euro/Sweden 11.5778 11.538 0.34% 4.07% 11.5846 11.5
en 357
