US Dollar Hits Rocks after White House Cancels North Korea Summit, Citing "Tremendous Anger"

-White House cancels June summit with North Korea.

-Cites NK regime's "tremendous anger and open hostility".

-US Dollar falls broadly, while gold rises and global stocks drop.

© Gage Skidmore

The US Dollar weakened broadly Thursday while so called safe-haven assets rose broadly after the White House said it has cancelled a landmark summit between President Trump and North Korean leader Kim Jong-Un, citing "tremendous anger and open hostility" displayed by the regime in some of its most recent statements. 

The decision comes on the day that North Korea claimed to have destroyed a key nuclear weapons testing site in a bid to demonstrate sincerity about wanting to pursue denuclearisation of the Korean peninsula. It also follows a landmark meeting between the leaders of North and South Korea, in which both made commitments to seek improved ties.

Both US and North Korean leaders were due to meet in Singapore on June 12 to discuss the winding down of North Korea's weapons programme in what was a landmark event for geopolitics and a diplomatic coup for President Donald Trump. But statements reported to have been made by the North Korean regime during recent days prompted the White House to think again. 

"I was very much looking forward to being there with you. Sadly, based on the tremendous anger and open hostility displayed in your most recent statement, I feel it is inappropriate, at this time, to have this long-planned meeting," President Trump says, in a letter published by the White House. "Therefore, please let this letter serve to represent that the Singapore summit, for the good of both parties, but to the detriment of the world, will not take place."

June's now-cancelled summit had been seen as the White House's best chance of shuttering North Korea's nuclear weapons programme and dealing with its arsenal, which the hermit nation has repeatedly threatened to turn against the US, in a peaceful manner.

"You talk about your nuclear capabilities, but ours are so massive and powerful that I pray to God they never have to be used," President Trump continued. "The world, and North Korea in particular, has lost a great opportunity for lasting peace and great prosperity and wealth. This missed opportunity is a truly sad moment in history."

In the week leading up to Thursday Vice President Mike Pence told Fox News that North Korea would be making a "great mistake" if it does not go ahead with the summit and that the country could end up like Libya "if Kim Jon-Un does not make a deal." 

Those remarks preceded similar comments by White House national security adviser John Bolton. Each of the statements drew a stern rebuke from North Korea's vice-minister of foreign affairs Choe Son Hui, published by state-owned KCNA news agency.

"As a person involved in the U.S. affairs, I cannot suppress my surprise at such ignorant and stupid remarks gushing out from the mouth of the U.S. vice-president," Hui says. "If he is vice-president of "single superpower" as is in name, it will be proper for him to know even a little bit about the current state of global affairs and to sense to a certain degree the trends in dialogue and the climate of détente."

North Korea has claimed it wants to pursue denuclearisation of the Korean peninsula but Hui drew attention to US demands for the surrender of its arsenal Thursday and flagged the fate suffered by Libya less than 10 years after having abandoned its own push for nuclear and chemical weapons. Choe also emphasised that while Libya had only sought to develop nuclear weapons, North Korea actually has them and was, in part, motivated to secure them by events in Libya. 

"We will neither beg the U.S. for dialogue nor take the trouble to persuade them if they do not want to sit together with us" Choe continued. "Whether the U.S. will meet us at a meeting room or encounter us at nuclear-to-nuclear showdown is entirely dependent upon the decision and behavior of the United States."

The full text of the North Korean statement can be read here. The White House letter can be read here. 

The US Dollar fall across the board in response to the announcement, with the steepest losses seen relative to the safe-haven Japanese Yen and Swiss Franc, which left the USD/JPY rate down 0.60% at 109.21 and the USD/CHF rate 0.47% lower at 0.9864. 

Above: USD/JPY exchange rate shown at daily intervals.

The Pound-to-Dollar rate was 0.24% higher at 1.34 and the Euro-to-Dollar rate was 0.33% higher at 1.1748 in the immediate aftermath of the announcement, although it soon gave up much of that gain. 

Meanwhile, the price of gold rose by 0.83% to $1,305.6 and global stock markets turned lower. The S&P 500 was down 0.45% at 2,716.67 late in the London session while the FTSE 100 was -0.72% lower at 7,732.5

Above: Pound-to-Dollar rate shown at daily intervals.

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