Swiss franc gives up gains following strong midweek safe-haven flight on U.S.-North Korea tensions
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The dollar strengthened against the Swiss franc and the euro Thursday, as the Swiss currency gave up some of its gains from Wednesday's rush into safer assets on the back of escalating North Korean tensions.
The dollar strengthened against the Swiss franc on Thursday, buying 0.9642 franc compared to 0.9636 franc late Wednesday in New York. On Wednesday, the Swiss currency rallied around 1%, as investors flocked to assets perceived safer in times of economic or geopolitical uncertainty.
The dollar was clawing back some ground, a sign that markets are settling down somewhat after the geopolitical shock, said Richard Perry, market analyst at Hantec Markets.
Flight to safety has helped lift the Japanese yen and gold prices, after North Korean leader Kim Jong Un made an explicit threat on Wednesday to strike a U.S. military base in Guam.
Even with relative market calm, the geopolitical tensions appeared to be no closer to easing on Thursday, as North Korea waged a war of words with U.S. President Donald Trump. "Sound dialogue is not possible with such a guy bereft of reason and only absolute force can work on him," said North Korean state media on Thursday, according to the BBC (http://www.bbc.co.uk/news/world-asia-40883372). The Asian country also detailed plans (http://www.marketwatch.com/story/north-korea-details-plan-to-fire-missiles-toward-guam-says-only-absolute-force-will-work-with-trump-2017-08-09) for that threatened missile strike on Guam.
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"The big caveat to that is that the players are so inexperienced in this game of foreign policy that their bravado could stumble into a conflict situation," Hantec said in a note.
Meanwhile on the domestic front, U.S. initial jobless claims for the week ended July 29 exceeded consensus estimates (http://www.marketwatch.com/story/us-jobless-claims-rise-by-3000-to-244000-2017-08-10), recording 244,000 versus 240,000 expected this morning. Continuing jobless claims reduced to 1,951,000 from 1,967,000 before. The U.S. producer price index also missed expectations dipped 0.1% versus a 0.1% growth forecast.
A broader measure of the dollar, the ICE Dollar index , which compares the buck to six rivals, was trading at 93.6450 compared with 93.7170 before the jobless claims release. Against the yen, the greenback traded at Yen109.67, below Yen110.06 late on Wednesday.
In a speech, New York Fed Governor William Dudley said modest wage growth is reflection of sluggish productivity (http://www.marketwatch.com/story/feds-dudley-says-modest-wage-growth-reflects-sluggish-productivity-2017-08-10). His remarks did not produce much initial reaction among currency trading.
The euro bought $1.1739, compared with $1.1760 late Wednesday in New York. The pound strengthened to $1.3006, just above Wednesday's level of $1.3004.
Those currencies have largely traded sideways in the past 48 hours, noted Konstantinos Anthis, on the ADS Securities research team.
"The fact that both European currencies have not been hit harder by the U.S./ North Korea situation, indicates that there is substantial fundamental backing behind them. It seems that investors feel more comfortable having their money in euros -- or even pounds -- rather than buying the U.S. dollar," said Anthis, in a note to clients.
Elsewhere, the New Zealand dollar weakened against its U.S. counterpart after Reserve Bank of New Zealand's Governor Graeme Wheeler and Assistant Governor John McDermott said the kiwi needed to weaken--possibly through intervention by the central bank. Previously, the central bank only considered a weaker currency as helpful to economic policy.
One New Zealand dollar bought $0.728 compared to $0.733 late Wednesday in New York.
(END) Dow Jones Newswires
August 10, 2017 10:07 ET (14:07 GMT)