The US dollar weakened against the yen on Friday, with tensions simmering on the Korean Peninsula and as the boost from heightened expectations of a US interest rate hike in December faded.
The US dollar fell 0.42 percent to ¥111.99, snapping a five-day winning streak against the Japanese currency, but it is still up 1 percent from last week’s ¥110.84.
In Taipei, the New Taiwan dollar rose against the greenback, gaining NT$0.017 to close at NT$30.191, down 0.4 percent from last week’s NT$30.075.
North Korea on Friday said it might test a hydrogen bomb over the Pacific Ocean after US President Donald Trump threatened to destroy the country, with North Korean leader Kim Jong-un promising to make a “mentally deranged” Trump pay dearly for his comments.
“The dollar is coming under a little bit of pressure into the end of the week here. The post-FOMC rally in the dollar certainly appears to be losing some steam,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange Inc in Washington. “Increasing tensions with North Korea is putting a little bit of selling pressure on the dollar, especially against the Japanese yen.”
The yen tends to benefit during times of crisis due to Japan’s net creditor nation status and the expectation that Japanese investors would repatriate assets.
“Keep in mind the yen is bouncing off of about a two-month low,” Esiner said.
The US dollar scaled a two-month peak of ¥112.71 on Thursday after the Bank of Japan maintained its bond-buying pledge.
The move also was spurred by the US Federal Reserve’s policy statement on Wednesday, in which it signaled it still intended to raise rates in December.
The US dollar index, which tracks the greenback against six major currencies, was down 0.13 percent to 92.136 on Friday, but was up 0.3 percent for the week.
Sterling skidded against the US dollar and the euro after British Prime Minister Theresa May failed to give any concrete details for how Britain might retain preferential access to Europe’s single market.
In a closely watched speech in Italy, May said Britain should stay in the trade bloc during a roughly two-year transition out of the EU and offered concessions on a divorce deal as she appealed for a revival of Brexit negotiations.
Sterling was down 0.32 percent against the greenback at US$1.3534, after falling as low as US$1.349. It is down 0.7 percent from last week’s US$1.36.
The euro inched up 0.07 percent to US$1.1947, with traders not seeing today’s German elections as a source of risk. The common currency is little changed from last week’s US$1.1946.
Additional reporting by CNA
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