Emerging markets fell
The US Dollar Index rose by 0.54% on January 5, 2016. It was the biggest rise since the FOMC’s (Federal Open Market Committee) rate hike decision. The Japanese yen also posted gains. The US dollar-Japanese yen currency pair is inversely related to the Japanese yen. It fell by 0.27%. It closed the day at 119.11. The US Dollar Index ended the day at 99.40. The rise in both of the currencies was mainly due to economic and political happenings in China and North Korea, respectively.
North Korea’s bomb test adds to the uncertainty
International events impacted the rise in the yen and US dollar. North Korea successfully tested a hydrogen bomb. This added fuel to the geopolitical crisis in the region, especially the tensions between North Korea and South Korea. The demand for safer assets was already high. The Chinese markets crashed on January 4, 2016. Also, more uncertainties have been added. This pushed up the demand for safe-haven currencies like the US dollar and Japanese yen.
Impact on the market
Regarding ETFs, the PowerShares DB US Dollar Bullish ETF (UUP) rose by 0.58% on January 5, 2016. The WisdomTree Bloomberg US Dollar Bullish Fund ETF (USDU) encompasses developed economies and emerging market currencies. It rose by 0.29%.
Banking ADRs (American depositary receipts) were trading on a mixed note on January 5, 2016. JPMorgan Chase (JPM) rose by 0.17%. Citigroup (C) fell by 0.53%. Wells Fargo (WFC) was trading on a flat note for the day. It fell by 0.02%.