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US dollar sags on Xi-Trump summit nerves, geopolitical worries
[TOKYO] The US dollar nursed losses against a basket of currencies early on Thursday, weighed down by caution over the impending US-China summit and geopolitical concerns.
The US dollar index against a basket of major currencies was down 0.15 per cent at 100.410.
It had risen to a three-week high of 100.850 overnight on an upbeat US ADP private sector employment report.
But the currency tumbled from the three-week high despite hawkish-sounding minutes of the latest Federal Reserve meeting, which showed most policymakers think the central bank should begin trimming its US$4.5 trillion balance sheet later this year.
"Although the contents of the Fed minutes should have been supportive for the dollar, it was dragged down by ensuing price action in other markets, which saw equities react negatively to the minutes and Treasury yields fall," said Shusuke Yamada, senior strategist at Bank of America Merrill Lynch in Tokyo.
Wall Street shares reversed an earlier rally and slipped on Wednesday.
"Geopolitical risks are also weighing on the dollar. The market is only starting to factor in recent developments regarding North Korea, and it now wants to figure out the geopolitical implications of the US-China summit," Mr Yamada said.
Regional tensions have risen after North Korea test-fired a ballistic missile on Wednesday, just a day before a summit between US President Donald Trump and Chinese President Xi Jinping, where North Korea's arms development drive will take centre stage.
Financial markets are nervous over the summit because of Mr Trump's constant criticism of China's economic policies.
With the broader markets in a risk-averse mood, the Japanese yen gained on its perceived safe-haven status.
The US dollar was down 0.3 per cent at 110.390 yen, having slid from a high of 111.450 struck overnight.
The euro rose 0.2 per cent to US$1.0681.
The pound added 0.1 per cent to US$1.2494, after rising overnight on data showing growth in Britain's services sector.
The Australian dollar was steady at US$0.7566 while the New Zealand dollar rose 0.2 per cent to US$0.6977.