Asian stocks were down again overnight, Reuters reports, as "Beijing continued guiding the yuan lower and a survey pointed to weakness in the Chinese service sector, while the Japanese yen drew support from risk aversion." The one exception was China's Shanghai Composite Index, up 0.3% where shares rallied for the first time in a week. Hong Kong’s Hang Seng Index and Australian shares closed down as did Japan.
North Korea's announcement that they had successfully tested a hydrogen bomb at an underground testing site and was quoted as saying it had "elevated the country's nuclear power to the next level" hardly soothed investor nerves as the sell off of the won and the KOSPI both dropped around 0.6 percent.
In the currencies markets it appeared money was moving to the yen and the dollar owing to China's weakness. Though the dollar was down overnight there 0.4 percent, China's weakness may lend strength to the dollar unless or until the U. S. stock market, as many think, tanks in a move long over due in their eyes. China's weakness helped move the dollar higher against the euro while pushing it lower against the yen.
Soft stock prices and falling U.S. bond yields can push the yen higher. The euro fell to its lowest level against the dollar in a month. Meanwhile, gold closed down 0.3%.
The WSJ noted: China’s central bank fixed the yuan at a fresh five-year low against the U.S. dollar, at 6.5314 compared with 6.5169 Tuesday. The onshore yuan, which can trade 2% above or below the fix, last traded at 6.5339 against the dollar, slightly weaker than 6.5157 on Tuesday but stronger than Monday.
The offshore yuan, which trades freely, reached 6.6639 to one U.S. dollar, its weakest level since 2011, compared with 6.6430 Tuesday.
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