Dollar rebounds as North Korea missile test fears recede, Asia stocks flat


Syndicated News
Written by Syndicated News

SINGAPORE, Aug 30 2017 : The dollar rebounded from a 2-1/2-year low today as concerns about North Korea’s firing of a missile over Japan ebbed, but Asian stocks were muted despite Wall Street’s higher close.

The dollar index, which tracks the greenback against a basket of six major peers, edged up 0.1 percent to 92.34.

The dollar rose 0.15 percent to 109.825 yen JPY=D4. Yesterday, after slumping to a 4-1/2-month low versus the safe haven currency, the greenback closed up 0.5 percent.

The yen tends to benefit during times of geo-political or financial stress as Japan is the world’s biggest creditor nation and there is an assumption that Japanese investors will repatriate funds in a crisis.

The dollar was also little changed against the safe haven Swiss franc, buying 0.9555 early today, after hitting its lowest since August 2015 in the previous session.

“Calmer heads have prevailed once again in financial markets, with traders seemingly happy to cover short positions and add a touch of risk into their portfolio,” said Chris Weston, chief market strategist at IG in Melbourne.

 U.S. President “Donald Trump produced a fairly measured response (to North Korea) and the view that ’all options are on the table’ suggests he is not ready to bring ’fire and fury’,” Weston said, referring to Trump’s warning to Pyongyang earlier this month.

Markets so far seemed to be dismissing North Korea’s statement today that the test was a first step in military action in the Pacific to “contain” the U.S. territory of Guam.

Reports of the launch by North Korean media were lacking the usual boasts of technical advances, indicating the test may not have accomplished its intended goals.

Currency traders are looking now to non-farm payrolls data for August, due on Friday.

MSCI’s broadest index of Asia-Pacific shares outside Japan was flat in early trade. South Korea’s KOSPI share index.KS11 and Australian shares both inched up 0.1 percent.

Japan’s Nikkei .N225 rose 0.5 percent as the yen weakened.

In commodities, gasoline hit a near-two-year high after Hurricane Harvey shut down nearly a fifth of the U.S’s refining capacity, and more closures are expected.

U.S. gasoline futures rose 2.25 percent to $1.8234, bringing gains this week to 9.4 percent.

The rise in crude inventories as a result of refinery shutdowns, however, weighed on oil prices.

Global benchmark Brent slipped 0.2 percent to $51.91.

Spot gold was little changed at $1,308.55 an ounce today. Yesterday, the precious metal jumped to its highest level since Trump was elected U.S. president, before closing flat. – Reuters



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Syndicated News

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