TOKYO (June 12): The dollar rose to a three-week high against the yen on Tuesday, elevated by hopes that the closely-watched U.S.-North Korea summit can pave the way towards a reduction in tensions between the two old foes.
U.S. President Donald Trump begins a historic meeting with North Korean leader Kim Jong Un in Singapore starting at around 0100 GMT with both sides seeking to narrow differences over how to end a nuclear standoff on the Korean peninsula.
The U.S. currency rose about 0.4 percent to 110.490 yen , its highest since May 23.
The dollar's rise against the yen, a perceived safe haven often sought in times of political tensions and market turmoil, reflected optimism that the Trump-Kim summit would open the door to the eventual denuclearisation of North Korea.
"The dollar is enjoying a lift against the yen after breaking above the 200-day moving average (at around 110.19 yen) threshold amid a generally risk-on mood," said Shin Kadota, senior strategist at Barclays in Tokyo.
"And while an encouraging U.S.-North Korea summit outcome would be supportive for the dollar, participants may opt to wait out the next big event, the FOMC (Federal Open Market Committee) meeting before committing themselves."
The U.S. Federal Reserve holds a two-day meeting starting on June 12, and it is widely expected to raise interest rates for the second time this year. The focus is on whether the central bank will hint at raising rates a total of four times in 2018.
The European Central Bank also meets on June 14, when it could signal intentions to start unwinding its massive bond purchasing programme.
The Bank of Japan also concludes a two-day meeting on Friday at which it is widely expected to keep its loose monetary policy intact.
Against a buoyant dollar, the euro was a 0.3 percent lower at $1.1750.
The single currency reversed modest gains made on Monday after assurances from Italy that it would not leave the European Union calmed investors' nerves.
The dollar index against a basket of six major currencies climbed 0.25 percent to 93.798.
The Australian dollar slipped 0.15 percent to $0.7596 , pressured by the dollar's broad strength. - Reuters
Source: The Edge Markets