Dollar stays buoyant in Asian trade

The dollar hovered near a three-week high against the yen on Tuesday after US President Donald Trump and North Korean leader Kim Jong Un signed a "comprehensive" letter at a historic summit aimed at the denuclearisation of the Korean peninsula. Trump said the meeting in Singapore had gone "better than anybody could have expected" and he anticipated that the denuclearisation process would start "very, very quickly".
The meeting, a key event for world markets, came just months after they traded insults and tensions spiralled in the region over North Korea's nuclear and missile programmes as it raced toward the goal of developing a nuclear-tipped missile capable of hitting the United States.
The US currency rose to as high as 110.495 yen, its strongest 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 greenback was last up 0.3 percent at 110.390 yen, nudged off highs after news that White House economic adviser Larry Kudlow suffered a heart attack. The US currency was not quite able to muster the momentum to stretch its gains as the markets waited for further details of the Trump-Kim meeting. "Markets have a risk on tone as the Trump-Kim meeting has so far produced much positive symbolism, but little in the way of substance," wrote Adam Cole, chief currency strategist at RBC Capital Markets.
Negotiations between Washington and Pyongyang could turn out to be a long drawn process and investor focus was expected to shift toward the week's other key events, notably central banks meetings. The US 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. "While an encouraging US-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," said Shin Kadota, senior strategist at Barclays in Tokyo. 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 0.2 percent lower at $1.1763. 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 93.789. The Australian dollar was up 0.1 percent at $0.7617 after slipping earlier to $0.7584.