The dollar erased its losses to post a gain for the first time in three days as risk appetite rebounded in the aftermath of North Korea’s latest missile test.
The Bloomberg Dollar Spot Index — which was down as much as half a percent earlier in the session — advanced 0.2 percent as Treasuries and other haven assets trimmed gains. Investors had sought safety after North Korea fired a missile that flew over northern Japan, but then reversed much of that move amid a relatively contained response from the White House. The dollar rose versus many of its G-10 peers, with the biggest advance coming against the yen.
- President Trump said that “all options” were under consideration in response to North Korea’s move; markets later looked past Kim Jong Un’s latest provocation as the president traveled to Texas to survey the destruction in the wake of Harvey
- “It makes sense to start really considering getting long the dollar, particularly relative to some of the other developed-market country currencies,” says Mike Swell of Goldman Sachs Asset Management. “The fundamentals lie in the U.S., where you have stronger growth, and you have the potential for tax policy change, which can make a big difference”
- USD/JPY remained near a session high of 109.90, its highest in almost two weeks, amid the reversal of risk sentiment. The pair had reached its daily top as speculative accounts squared short-dollar positions ahead of the futures market close, tripping stops above 109.50 and 109.80. Offers are touted between 110.00 and 110.20, though the appetite for JPY is waning as EUR/JPY moves higher. The yen had gained as much as 0.9 percent versus the dollar overnight
- Nikkei reports that the U.S. and Japan will call for an international embargo on oil exports to North Korea
- USD/CAD pared gains to trade around 1.2520 after failing to break above the pivot resistance level of 1.2550 as crude prices faltered. Spot regroups, eyeing another test higher, targeting key…