Dollar slips against Japanese yen, Swiss franc

Greenback dragged down 0.40% amid simmering North Korea tensions

The dollar slipped against the Japanese yen and Swiss franc on Tuesday as global tensions simmered amid signs that North Korea could conduct more missile tests.

The US currency was down 0.40 percent at 109.335 yen, nearing a low of 109.220 hit the previous day in a knee-jerk reaction to North Korea’s hydrogen bomb test on Sunday.

The Swiss franc advanced 0.20 percent at 0.9548 franc per dollar, adding to gains from Monday, when it rose 0.70 percent.

Geopolitical tensions flared anew after North Korea conducted a powerful nuclear test on Sunday. The region has remained nervous, bracing for more ballistic missile tests amid perceived signs of activity by Pyongyang ahead of September 9, when the country marks its founding day.

North Korea has been seen moving what appears to be an intercontinental ballistic missile toward its west coast, South Korea’s Asia Business Daily reported on Tuesday, citing an unidentified intelligence source.

“The situation in North Korea poses risks for the market with no clear end in sight, limiting any bargain hunting for the dollar,” said Ayako Sera, senior market economist at Sumitomo Mitsui Trust.

“It is a contingency, like an earthquake, and participants are approaching it as such. For example, you won’t buy the yen just because you expect an earthquake, but you can always be poised to react to such an emergency.”

The euro gained 0.15 percent to $1.1907, edging back toward Monday’s high of $1.1922.

The common currency had risen to a 2-year high of $1.2070 a week ago and the focus was on whether it could remain on an uptrend after Thursday’s European Central Bank (ECB) policy meeting.

The euro has drawn a boost on expectations that the ECB would begin exiting its massive quantitative easing policy sooner rather than later, media reports said.

Many economists had initially expected the central bank to announce a reduction in September to its monthly asset purchases, but a majority now sees the ECB making the announcement in October instead.