Forex - Dollar and Yen Rally On Risk Aversion

© Reuters. The dollar maintained its momentum, continuing to rally against major currencies in morning trade

Investing.com - The dollar maintained its momentum, continuing to rally against major currencies in morning trade in Asia Wednesday even as both the Japanese yen and Korean won also gained ground.

The climbed to a fresh high of 94.93 overnight. The index that tracks the greenback against a basket of six major currencies gained 0.08% to 94.91 at 11:19PM ET (03:19 GMT).  The dollar is poised to continue climbing.

Meanwhile, the political turmoil in Italy sent investors rushing to U.S. Treasuries and to the Japanese yen.

The rose to 2.82%, boosting the demand for the dollar.

Geopolitical tensions in East Asia eased as White House confirmed the U.S.-North Korean summit, boosting market confidence. White House spokeswoman Sarah Huckabee Sanders said on Tuesday that the U.S. is prepared for the planned meeting between President Donald Trump and North Korean leader Kim Jong Un.

The Korean won traded higher against the dollar, with the pair losing 0.33% to 1,081.81 on Wednesday morning.

Like the won, the Japanese yen also gained against the dollar, with the pair sliding 0.07% to 108.68.

Political woes in Italy also supported the yen, as the euro fell to a 10-month low, prompting investors to move into safe-haven assets.

The yen was also supported by Japan’s monthly retail sales data, which beat expectation by posting 1.6% growth for April versus the estimated 0.9% and the 1.0% recorded in March. The data measures the change in the total value of inflation-adjusted sales at the retail level and is the top indicator of consumer spending, which accounts for the majority of overall economic activity in Japan

However, Bank of Japan (BoJ) Governor Kuroda said the central bank must begin to investigate why Japan's inflation is still sluggish and wage growth is lagging despite years of ultra-loosening monetary policy.

In Australia, the pair lost 0.15% at 0.7494. The Aussie was dragged down by the weaker-than-expected building approvals data that came in at -5.0% rather than the forecast -2.9%. The approvals data measures the change in the number of new building approvals issued by the government and serves as a key indicator of demand in the housing market.

In China, the People's Bank of China set the set the reference rate for the yuan against the dollar, the mid-point from which the currency is allowed to trade, at 6.4207 versus the previous day's 6.4021. The pair gained 0.10% to trade at 6.4255.

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