The US dollar declined on Tuesday as tensions on the Korean peninsula heightens following North Korea’s latest act of firing a missile over Japan.
A North Korean missile was launched just before 6am in Japan which triggered warnings in the northern part of the country, urging people to take cover.
This is the first time North Korea was able to successfully fire a missile over the country since 1998, when it sent a satellite launch vehicle over Japan.
Pyongyang is supposed to be prohibited from missile testing as stated under the United Nations (UN) Security Council resolutions. In spite of this, it did not stop North Korean leader Kim Jong-un from trying to put together the country’s nuclear and missile programs.
Japanese Prime Minister Shinzo Abe stated that the missile firing poses an unprecedented, serious, and grave threat which greatly disrupts regional peace and stability.
Abe and US President Donald Trump had agreed to call for an emergency meeting of the UN Security Council, and to put more pressure on North Korea in response to the incident.
As a result of Pyongyang’s intimidation, the greenback’s strength against a basket of major currencies weakened as the US dollar index edged lower by 0.4 percent to 91.75.
The dollar was down by 0.6 percent against the yen to 108.49, after hitting a four-month low of 108.33 in early Asian trade on Tuesday, its lowest level since mid-April.
Analyst Teppei Ino said that the possibility of the greenback to fall further against the yen cannot be excluded given the situation is showing no signs of settling down therefore, Ino suggested to be on the lookout as it is very difficult to get a good read on what might take place after this.
The US dollar also lost 0.4 to 1.2454 against its Canadian counterpart, while it dropped 1.2 percent to 0.9436 against the Swiss franc after hitting a one-month high of 0.9498 at one point.
With the growing geopolitical tensions over North Korea’s missile launch in Japan, the yen is supposed to move higher but that is not the case this time, as it was not doing well than expected on Tuesday.
Japan’s currency climbed against the dollar, with the greenback only acquiring 108.33 in early trade, down from the levels of nearly 111 that it got earlier in the month. It is currently trading with a 0.6 percent loss to 108.48.
The Australian dollar was also on the losing side against the yen as it edged lower by 0.5 percent to 86.49, while the euro fell 0.1 percent to 130.70.
On the other hand, the yen rose as much as 0.8 percent to 10.336 against the South Korean won, higher than the 10.225 on Monday.
The euro continued to gain against the US dollar on Tuesday with a 0.5 percent boost to 1.2046, surpassing its highest level since January 2015 of 1.1986 in early trade. The sterling also added 0.1 percent to 1.2955 against the greenback.
Other high earning currencies, including the Australian and New Zealand dollar recovered from previous losses on Tuesday after market sentiment weakened due to North Korea’s missile launch.
The Aussie rose 0.1 percent to 0.7973 against its American counterpart after dropping to 0.7924 in earlier session.
The kiwi was up 0.3 percent to 0.7282, edging higher from the previous trade of 0.7227.