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GLOBAL MARKETS-Stocks ignore North Korea missile test; sterling soars on BoE bets

From Reuters - September 15, 2017

LONDON (Reuters) - Shares and other risk assets barely moved and gold fell on Friday as traders paid little attention to the latest missile test by North Korea, shifting their focus to where and when interest rates will go up.

London, Frankfurt and Paris were a shade lower and futures pointed to a steady start for Wall Street was after Pyongyang fired a second test missile in as many weeks over Japan, but both regions looked set for their best week since July.

The yen was also pushed lower to 111.2 per dollar JPY= in the currency markets, but that too was a continuation of trend.

The Japanese currency has seen its biggest fall this week in 10 months while the dollar .DXY is headed for its biggest rise since April, thanks to a revival in U.S. inflation data and bets the Federal Reserve could raise rates again this year after all.

You have risk appetite returning in the markets more generally at the moment, so you have all these forces pushing down the yen, said Vasileios Gkionakis, global head of FX strategy at UniCredit.

Britain's pound GBP= was the other main standout, rising to a 14-month high of $1.3430 as the Bank of England reiterated that it might soon raise interest rates for the first time in a decade.

If these data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth continue, the appropriate time for a rise in the Bank Rate might be as early as in the coming months, Gertjan Vlieghe, normally one of the BoEs most dovish members, said.

Sterling was also on course for its best week in over eight years on a trade-weighted basis and since November 2016 against the euro, which finally looks to have cooled following its surge this year.

If they dont do it (hike rates) this time, their credibility will be lost completely for the next few years, Unicredits Gkionakis said. Markets expect the BoE to move in November, he added.

The BoE signals fed into bond markets, too. Yields pushed up after dipping overnight on the geopolitical tensions. Safe-haven gold XAU= was also heading for its biggest weekly drop since July.

North Koreas latest test missile flew over Japans northern island of Hokkaido before landing about 3,700 km (2,300 miles) into the Pacific Ocean, which would be far enough to reach the U.S. Pacific territory of Guam.

Germanys 10-year government bond yield, the benchmark for the region, inched up to 0.43 percent to flirt with its biggest weekly rise since late June.

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