Forex – Dollar Drops Amid Risk Aversion  


© Reuters. The dollar slid against major Asian currencies Thursday morning

Investing.com –  The dollar slid against major Asian currencies Thursday morning after climbing overnight to a fresh high for the year. Without any key economic data in the region, investors focused on political events that clouded the market outlook. As risk appetite soured, the safe-haven yen was sent higher.

The that tracks the greenback against a basket of six major currencies last stood at 93.78, down 0.14%, at 12:49AM ET (04:49 GMT).  On Wednesday night, the index climbed above the 94 level for the first time this year, reaching 94.10.

The market was also reacting to the outcome of a meeting of the U.S. Federal Reserve on Wednesday. The Fed appeared to be content to let inflation run above the 2% target for a “temporary period”, signaling no rush to tighten monetary policy.

The pair slid 0.49% to 109.49 as the U.S. sought to impose more tariffs, reigniting fears of a trade war. The yen surged after U.S. President Donald Trump ordered Commerce Secretary Wilbur Ross to initiate a probe into automobile imports.

The yen was also affected by the reaction to uncertainty over whether a planned summit between Trump and North Korean leader Kim Jong-un would happen. Doubts over whether the summit will go ahead have destabilized geopolitical relations in Asia.

A top North Korean diplomat criticized U.S. Vice President Mike Pence who suggested that the fate of North Korea follow the Libyan model, prompting the Asian country to say that a “nuclear-to-nuclear showdown is entirely dependent upon the decision and behavior of the United States”. The Libyan model refers to the U.S. approach to that country, which ended with the capture and killing of leader Moammar Gadhafi after operations carried out with NATO support and help.

In Australia, the pair gained 0.13% at 0.7570 The Aussie was not hurt by headlines regarding potential hefty tariffs on foreign cars.

In China, the People’s Bank of China set the set the reference rate for the yuan against the dollar, the mid-point from which the currency is allowed to trade, at 6.3816 versus the previous day’s 6.3773. The pair gained 0.03% to trade at 6.3906. 

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