While the US counts the damage from the ongoing disastrous tropical storm Harvey, the dollar managed to reverse losses during the Asian trading hours as investors’ fears over a dangerous escalation of tensions between North Korea and the US eased. Meanwhile, the aussie peaked at a 4-week high after construction projects recorded the highest growth in six years.
Despite catastrophic thunderstorm Harvey continuing to move slowly around Texas, causing the death of 12 people and a damage amounting to 10bn dollars so far, the dollar surged on Wednesday against a basket of major currencies as investors gave up a part of their safe-haven assets. This came after the UN Security Council in an emergency meeting yesterday did not punish North Korea with further sanctions. In the same day, the US president during his visit to Houston said in response to the latest and most dangerous North Korea’s missile test that “the world has received North Korea’s latest message loud and clear”. Moreover, he added that “all options are on the table”.
The dollar index, which gauges the dollar’s strength against a trade-weighted basket of currencies, jumped to 92.48 after It touched a 2 ½ -year low of 91.52 on Tuesday.
Dollar/yen bounced up by 0.26% to overcome the key 110 level, recovering from yesterday’s losses which pushed the pair to a 4-month low of 108.25.
Dollar/swiss franc was moving sideways around 0.9560 during the Asian session after it climbed above the 0.9500 key level on late Tuesday.
In Australia, the Australian Bureau of Statistics released data on building approvals and construction projects completed. According to the numbers, building approvals fell unexpectedly by 1.7% m/m in July, following a substantial rise of 11.7% in the previous month. Expectations were for a decline of 5% instead. On the other hand, construction works completed in the second quarter surprised analysts as the figure revealed a growth of 9.3% q/q compared to 1.0% forecasted and 0.9% seen in the previous quarter. This was the highest increase posted since November 2011. As a result, the aussie rose to a 4-week high of $0.7994 during early Asian trading before it pulled back to $0.7967.
The kiwi retreated against the dollar to $0.7252 after the RBNZ Governor Graeme Wheeler, who steps down from his role at the end of September, argued on Wednesday that a lower kiwi was needed to support exports and inflation.
Looking at commodities, oil prices continued weakening, while gold experienced a sharp fall amid softer geopolitical risks. WTI crude dropped by 0.19% to $46.35 per barrel, whilst Brent declined by 0.10% to $51.95. Gold sank to $1308.06 per ounce, after touching a 9-month high of $1325.85.
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