The dollar held steady against the yen on Wednesday, having recovered from 4-1/2 month lows, as investor concerns over North Korea’s latest missile test eased for now, Reuters reported.
The dollar last traded at 109.78 yen JPY=, having recovered from Tuesday's low of 108.265 yen, the greenback's lowest level since mid-April.
North Korea’s launch on Tuesday of a ballistic missile over Japan’s northern island of Hokkaido had initially spooked investors, triggering a drop in U.S. bond yields and a slide in the dollar versus the yen.
The greenback later recovered, however, as U.S. equities rose on Tuesday and the U.S. 10-year Treasury yield pulled up from 9-month lows.
The U.S. 10-year Treasury yield last stood at 2.148 percent US10YT=RR. On Tuesday, the U.S. 10-year bond yield fell as low as 2.086 percent, its lowest level since Nov. 10.
While the North Korea-related risks haven’t gone away, the fact that the dollar managed to bounce back sharply from Tuesday’s lows could lend support to the greenback in the near term, said Andrew Bresler, deputy head of sales trading in Asia- Pacific for Saxo Markets in Singapore.
“We’ve certainly remained pretty cautious on the outlook for risk here, and definitely not buying fully into the discounting of the North Korean tensions,” he said.
In the wake of the sharp swings seen in the dollar against major currencies on Tuesday, it is difficult to have a clear view on the dollar’s near-term outlook, Bresler said, adding that U.S. economic data would be a focus in coming days.
The dollar index, which tracks the greenback’s value against a basket of six major currencies, last stood at 92.337 .DXY, having recovered from Tuesday’s low of 91.621, its lowest level since January 2015.
North Korean leader Kim Jong Un guided a launch of an intermediate-range ballistic missile on Tuesday in a drill to counter the joint military exercises by South Korean and U.S. militaries, the North’s official KCNA news agency said on Wednesday.
KCNA quoted Kim as saying it was necessary for the North Korean military to undertake more exercises focused on operations in the Pacific.
The euro held steady at $1.1973 EUR=, having retreated from Tuesday's high of $1.2070, which was the euro's strongest level since January 2015.