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Yen dips after NKorea missile test, China-U.S. summit eyed

4/5/2017, 9:46:54 AMMarket Analysis
Yen dips after NKorea missile test, China-U.S. summit eyed

 The yen trended slightly weaker in Asia on Wednesday as a medium-range ballistic missile test by North Korea ahead of a summit between U.S. President Donald Trump and Chinese President Xi Jinping this week rattled nerves, but not markets and investors looked ahead to U.s. jobs data to set the tone.

USD/JPY changed hands at 110.78, up 0.03%, while AUD/USD traded at 0.7571, up 0.08%.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.04% to 100.38.

Overnight, the dollar traded higher against a basket of major currencies on Tuesday, after the release of upbeat U.S. trade data, while investors shifted focus to the Trump-Xi meeting.

In what was a quiet day for top-tier economic data releases, investors welcomed bullish trade data, showing that the U.S. trade deficit narrowed by more than expected in February.

The Commerce Department said Tuesday, the trade deficit shrank by 9.6% to $43.6 billion, while January's trade deficit was revised down to $48.2 billion from $48.5 billion.

Economists had forecast the trade gap contracting to $44.8 billion in February.

Meanwhile, a bout of uncertainty crept into markets, as investors fret over the impact on U.S.- China trade relations, should the meeting on Thursday prove unproductive.

Trump warned last week, the meeting will be "very difficult", given the many economic and security issues that divide the U.S. and China.

Elsewhere, GBP/USD fell as a slowdown in UK construction growth weighed on sentiment. In a report, market research firm Markit and the Chartered Institute of Purchasing & Supply (CIPS) said that their U.K. construction purchasing managers' index dropped to a seasonally adjusted 52.2 last month from February’s reading of 54.5.