Dollar, equities up on relief as North Korea holds fire

The US dollar won a reprieve from risk aversion on Monday after North Korean leader Kim Jong Un decided to hold a party over the weekend rather than launch another missile, tempering safe havens such as the yen and Treasuries. Investors remained cautious over the possible economic impact of Hurricane Irma in the Florida coast, knocking out electricity to more than 3 million homes and businesses statewide.

SYDNEY — The US dollar won a reprieve from risk aversion on Monday after North Korean leader Kim Jong Un decided to hold a party over the weekend rather than launch another missile, tempering safe havens such as the yen and Treasuries.

Investors remained cautious over the possible economic impact of hurricane Irma as it made its way up the Florida coast, knocking out electricity to more than three million homes and businesses statewide.

Japan’s Nikkei rose 1.40% after Pyongyang held a massive celebration to congratulate the nuclear scientists and technicians who steered the country’s sixth and largest nuclear test a week earlier. The United States and its allies had been bracing for another long-range missile launch to mark the 69th anniversary of North Korea’s founding on Saturday.

South Korea’s main index added 0.60%, while MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.50%.

“It’s too early to say the risks are gone, but one thing for sure is that market players now think the situation won’t get worse as it did some weeks ago,” said Lee Kyungmin, a stock analyst at Daishin Securities in Seoul.

Mr. Lee added that many foreign investors and domestic institutions are purchasing South Korean tech and chemicals shares as quarterly earning season nears.

The sense of relief was enough to lift E-Mini futures for the S&P 500 by 0.50%, while yields on 10year Treasury notes rose three basis points to 2.09%.

In Europe, futures for the Eurostoxx 50 rose 0.60% while Germany’s DAX added 0.70%.

The US dollar hovered at ¥ 108.38, up from Friday ’ s 10- month trough of ¥ 107.32. Against a basket of currencies, the dollar added 0.17% to 91.509 but that was still uncomfortably close to last week’s two- and- a- halfyear low of 91.011.

The euro eased to $ 1.2015, having hit a top of $ 1.2092 on Friday amid speculation the European Central Bank ( ECB) was closer to starting a windback of its stimulus program. ECB off icials last week generally agreed their next move would be to cut their bond purchases and discussed a range of options, Reuters reported.

China’s central bank was also a focus in Asia after it scrapped reserve requirements for financial institutions settling foreign exchange forward yuan positions with effect from Monday.

“The removal potentially makes it easier for traders to purchase the USD, easing the pressure for yuan appreciation,” said analysts at ANZ in a note.

“The change likely signals some discomfort about the stronger yuan and its impact on Chinese exports.” —