Korean crisis keeps damper on markets
The euro drifted in a narrow range yesterday as simmering geopolitical tensions put investors off adding big bets before a European Central Bank meeting this week when policymakers might voice some concerns about the single currency's strength.
While ECB officials have been very careful about expressing their concerns over the currency's rise this year, as the euro still remains broadly below levels obtaining when policymakers launched their monetary stimulus plans, there are some markets fears that that may change.
The euro edged 0.1pc higher to $1.1905, rising for a second day with most currencies trading in tight overnight ranges as tensions over North Korea remained high.
Political tensions kept the dollar on the back foot against the yen and the Swiss franc.
North Korea has been observed moving what appeared to be an intercontinental ballistic missile towards its west coast, South Korea's Asia Business Daily reported on Tuesday, citing an unidentified intelligence source.
Wall Street stocks fell on Tuesday after the Labour Day break, trading for the first time since North Korea's biggest nuclear bomb test yet, and the US dollar and Treasury yields fell.
The pan-European FTSEurofirst 300 index lost 0.11pc and MSCI's gauge of stocks across the globe shed 0.27pc.
"It's a more risk-averse picture," said Vassili Serebriakov, FX strategist at Credit Agricole in New York. "North Korea accounts for most of it."
In Europe, markets were also lower, with stocks cutting their morning gains and investors shifting into bonds and the yen though demand for gold eased after Monday's rise to a one-year high.