Dollar gains in Asia as NKorea eyed, kiwi down after rates
The dollar gained slightly in Asia on Thursday amid continued geopolitical tensions and the kiwi fell on a more dovish than expected view on interest rates going forward.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, inched up by 0.02% to 93.43.
The Reserve Bank of New Zealand held its official cash rate at a record low 1.75% as expected on Thursday and said that it expects a neutral view to persist with inflation projections well anchored around 2%.
NZD/USD traded down 0.26% after the decision to 0.7347.
In Japan, core machinery orders dropped 1.9% on month in June, well below the 3.7% gain seen and fell at 5.2% pace annually compared to a 1.0% drop seen. As well, producer prices in Japan rose 0.3% on month in July, a tick higher than the 0.2% gain seen and at a 2.6% gain on year, also beating expectations.
Overnight, 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 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.