The dollar steadied against the yen on Wednesday, supported by strong US economic data while North Korea's latest missile launch had little immediate impact on currency markets though investors are focused on how the US responds to the test. The greenback was nearly flat at 111.560 yen, after rising 0.35 percent the previous day to pull away from a low below 111.00.
"The dollar drew broad bids on strong consumer confidence data, Treasury yields holding firm and relief that the tax bill was passed by the Senate Budget Committee," said Shin Kadota, senior strategist at Barclays in Tokyo. Data on Tuesday showed U.S consumer confidence surged to a near 17-year high in November, driven by a robust labour market.
US Senate Republicans pushed forward President Donald Trump's tax cut bill on Tuesday to pave the way for a full vote by the Senate as soon as Thursday, although some details of the bill were still to be settled. The currency market was unaffected by a North Korean test launch of what appeared to be an intercontinental ballistic missile (ICBM) that landed close to Japan. It was North Korea's first test launch since mid-September. "The market appears to have gotten used to such events. How the United States responds, however, still bears watching," Kadota at Barclays said.
The euro nudged up 0.1 percent to $1.1852 after dropping more than 0.5 percent overnight, pulling back from a two-month high of $1.1961 scaled on Monday on robust German data. The Swiss franc, which like the yen also tends to attract buyers in times of heightened geopolitical concerns, stood little changed at 0.9837 franc per dollar. The dollar index against a basket of six major currencies was a shade lower at 93.194 following overnight gains of 0.4 percent.
While supported, the dollar was seen needing a significant rise in Treasury yields for a further break higher. The 10-year Treasury yield did pull away overnight from a three-week low of 2.310 percent, but it has moved in a tight 4 basis point range so far this week. "Despite the latest list of potentially market-impacting events like upbeat US data, tax cut-related themes and North Korea's missile launch, the lack of volatility in Treasuries stands out," said Makoto Noji, senior strategist at SMBC Nikko Securities.
The pound was 0.2 percent higher at $1.3368 and in close reach of a near two-month high of $1.3388 set the previous day after The Daily Telegraph reported that Britain and the European Union had agreed on the Brexit divorce bill. The New Zealand dollar dipped 0.1 percent to $0.6895. The kiwi had risen to a 2-1/2-week high of $0.6945 on Tuesday amid a gradual ebb in domestic political concerns but was knocked off that peak after the country's central bank sounded surprisingly relaxed about the housing market as it loosened lending restrictions. The Australian dollar was steady at $0.7594.