The U.S. dollar briefly escapes a previous four-month low versus the Japanese yen on Wednesday. The Aussie dollar got some support from positive construction figures. Geopolitical uncertainties regarding the ballistic missile test of North Korea somehow eased for a while.
Last Tuesday, the estranged nation launched a missile that flew over northern Japan’s island Hokkaido which spooked global investors. This is one of the reasons why the greenback declined against the yen and the slide of U.S. bond yields. Yen benefits from financial and geopolitical crisis because investors from the nation will send the funds back to their country once a tension rises.
The index which tracks the value of the U.S. currency against its major peers, the dollar index, edged up more than 0.1 percent to 92.292. It recovered its weakest level since January 2015 at 91.621. On the previous trade, the greenback traded at 109.77 yen following its lowest level since mid-April at 108.265 yen.
Barclay’s head of Asia macro strategy Mitul Kotecha said the dollar/yen pair was slowly moving yesterday and it looks like it is reversing currently. He added this became a usual reaction to what’s occurring in North Korea in which we initially witness risk aversion between markets and alter that move rapidly.
Looking in other currencies, the Australian dollar surged to a four-week high or 0.5 percent at $0.7995. This is driven by the construction spending in the Down Under boosted in the previous quarter after miners spent plenty of money on major engineering projects.