US dollar rebounds as missile fears recede – Australia News


The US dollar has rebounded from a two-and-a-half year low 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 per cent to 92.34 early on Wednesday.

The dollar rose 0.15 per cent to 109.825 yen.

On Tuesday, after slumping to a four-and-a-half month low versus the safe haven currency, the greenback closed up 0.5 per cent.

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 on Wednesday, 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.

“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 the US President’s warning to Pyongyang earlier this month.

Markets so far seemed to be dismissing North Korea’s statement on Wednesday that the test was a first step in military action in the Pacific to “contain” the US 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…

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