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Forex – Dollar Rebounds Amid Fading North Korea Risks

Published 03/28/2018, 12:18 AM
© Reuters. The dollar recovered slowly in Asia on Wednesday morning
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Investing.com – The dollar recovered slowly in Asia on Wednesday morning as the safe-haven yen retreated against the greenback on risk-on sentiment that gave other Asian currencies a lift.

Over in Asia, the developments in the Korean peninsula and attempts to end the political scandal in Japan were risk-on developments that prompted investors to bet on risk assets.

The U.S. dollar index that tracks the greenback against a basket of six major currencies last stood at 88.98 at 11:50PM ET (03:50 GMT), up 0.02%, testing the 90 level. It recovered from a one-month low at 88.59 on Tuesday.

The tariffs imposed by the U.S. government on China sparked global fears of a trade war and hampered the dollar, but the dollar recovered amid hopes that the U.S. and China would begin negotiations. Investors also await the U.S. GDP growth data of the fourth quarter due on Thursday.

The South Korean won was the best performer in the Asian market, with the USD/KRW pair trading at 1,067.06, down 0.75%. The won surged against the dollar amid reports that confirmed North Korea’s leader Kim Jong-un’s visit to Beijing.

During his first known trip outside of the country, Kim said he was willing to give up nuclear weapons and hold a summit with the U.S., signaling the easing geopolitical tensions in East Asia.

The USD/JPY pair gained 0.17% to 105.52. The pair bounced back from the 104 level as the yen declined amid signs of an improving geopolitical situation with North Korea.

Reports said Japan’s Prime Minister Shinzo Abe is preparing for a meeting with the U.S. President Donald Trump in April to hold talks and develop a strategy ahead of a proposed meeting between North Korean and US leaders.

In China, the People’s Bank of China (PBOC) set the fix rate of yuan against the dollar at 6.2785 versus the previous day’s 6.2816. The USD/CNY pair eased 0.12% to 6.2744. The yuan continued to strengthen against the greenback.

Reports that confirmed North Korean leader Kim Jong-un met with Chinese President Xi Jinping caught some attention. Xi said China will be working with North Korea to “make new contribution to regional peace, stability and development.”

Elsewhere, the AUD/USD pair traded at 0.7695, up 0.18%. Australia’s HIA new home sales data revealed on Tuesday came in at -0.7%. The lackluster economic figures kept the Reserve Bank of Australia in a wait-and-see holding pattern.

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