Dollar firmer vs. yen, shrugs off North Korea missile launch

The dollar inched higher versus the yen on Friday, regaining its footing after taking a hit when North Korea fired a missile over Japan into the Pacific Ocean. 

The dollar last stood at 110.37 yen, up 0.1 percent on the day, a recovery from the intraday low of 109.55 yen set in early Asian trade on Friday when it came under pressure as the yen edged higher following reports of North Korea’s missile launch. 

North Korea fired a missile on Friday that flew over Japan’s northern island of Hokkaido far out into the Pacific Ocean, South Korean and Japanese officials said, further ratcheting up tensions after Pyongyang’s recent test of a powerful nuclear bomb. 

Japan is the world’s largest net creditor nation, and at times of uncertainty traders assume Japanese repatriation of overseas funds will eclipse foreign investors’ selling of Japanese assets. 

As a result, the yen has continued to operate as a safe-haven currency despite Japan’s geographical proximity to North Korea. 

While financial markets may stay jittery for now, the overall market reaction to North Korea’s missile launch will probably prove short-lived, market participants said. 

The dollar was unlikely to see any large fall against the yen, especially after the latest U.S. consumer inflation data bolstered expectations that the Fed could raise interest rates again by year-end, Murata added. 

The pound held steady at $1.3403. On Thursday it had topped $1.34 for the first time in a year, and recorded a daily gain of 1.4 percent. 

The euro slipped 0.1 percent to $1.1913, staying below a 2-1/2 year high of $1.2092 set last week.