After testing a nuke and firing off 5 missiles over the past few days, North Korea now says that it has abandoned its truce that ended the Korean War back in 1953.
They basically blamed the decision on South Korea joining the U.S.-led initiative to search ships for nuclear weapons. It called the South's actions a "declaration of war" and pledged to attack its ships if they were stopped.
Since then, South Korea reports that they see "steam" coming from a plant at North Korea's main nuclear facility (which had formerly been closed since July 2007). It's a sign that they aren't bluffing and that they intend to make "weapons-grade plutonium".
Meanwhile the U.N. is working on a statement that condemns these actions. However they'd better do better than that if they want to stop this "mad man"! You can't deal rationally with Kim Jong Il. You can see his insanity in his "Elton John like" glasses and his Elvis hair (JK).
Remember, it was only last month that they launched a missile over Japanese airspace!
So what does all of this mean for currencies? Well, if you love volatility, then the yen is the place to be. See a 5 minute chart below over the past few days and you will see that.
North Korea's actions are gyrating the Yen!
If you don't like sudden volatility, then you might want to avoid the "yen pairs" for now and focus on the "dollar pairs".
Do realize though that all of this "nuke talk" does ripple through several currencies and it may be hard to avoid altogether.
For when Japan or South Korea is threatened, money flows out of the yen and won and into the "biggest guy on the block" which is the U.S. (world super power and world's reserve currency too).
So while the dollar has recently broken its uptrend against a broad array of currencies recently, it will have short periods where it "holds up" okay due to the waves that North Korea is now making.