Singapore - The yen rose for a second day as Tuesday’s missile test by North Korea prompted responses from the US and its allies, fueling demand for safer assets.
Leveraged accounts bought yen for dollars as South Korea and the US held a missile drill in response to North Korea’s rocket launch, an Asia-based currency trader said.
Treasury yields fell as trading resumed after the Independence Day holiday, while gold advanced. The dollar weakened as investors awaited minutes of the Federal Reserve’s June meeting.
“Geopolitics is back in front of investors’ minds, helping the bid tone in Treasury yields and yen,” said Rodrigo Catril, a currency strategist at National Australia Bank in Sydney.
Expectations for further US rate increases and stronger economic data were setting the stage for higher Treasury yields and the dollar’s advance against the yen, “but the outlook has now been hampered by tensions in the Korean peninsula,” he said.
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