Investing.com – The dollar eased from session highs against a basket of global currencies on Wednesday, as geopolitical tensions between the U.S. and North Korea intensified, lifting investor demand for safe havens like gold and the yen.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.07% to 93.55.
The dollar eased from two-week highs, as market participants fled risky assets on the back of U.S. President Donald Trump’s warning to North Korea on Tuesday that the isolated nation faces "fire and fury" if it makes more threats to the United States.
Trump’s comments came hours after revelations the Kim Jong-un led nation had successfully created a miniaturized nuclear weapon designed to fit inside its missiles.
Geopolitical tensions deepened, after Pyongyang replied it was "carefully examining" a plan to strike Guam, where a U.S. military base is located, prompting investors to seek safe haven assets like the yen.
Producer price index and the consumer price index data, both used as measures of inflation, due Thursday and Friday, respectively, is expected to shift investor focus to monetary policy, as the slowdown inflation has been a key concern for the Federal Reserve.
The U.S. central bank left its benchmark rate unchanged in July amid concerns about the slowdown in inflation but expressed optimism that its long-term target of about 2% inflation would be met.
An uptick in safe haven demand, lifted the yen against the dollar, as USD/JPY fell 0.33% to Y109.98.
GBP/USD rose by 0.04% to $1.2995, as falling investor expectations of the Bank of England introducing monetary policy tightening continued to weigh on sterling in the wake of the Bank of England governor Mark Carney’s somewhat dovish comments, following the central bank’s decision to leave rates unchanged.
EUR/USD lost 0.08% to $1.1743 while EUR/GBP traded flat at £0.9039.
USD/CAD rose 0.28% to C$1.2702, after data showed Canada housing starts increased to 222,300 last month from 212,900 in June. Analysts had expected housing starts to hit 205,000 in July.