Forex - Dollar hit by concerns over North Korea, rates outlook

US Stock Futures Rattled by North Korea Tensions

The Swiss franc advanced 0.2 percent at $0.9548 franc per dollar, adding to gains from Monday, when it rose 0.7 percent. The dollar had earlier fallen as low as 108.49, close to its lowest levels since mid-April.

Gold, another asset sought in troubled times, edged down 0.1 percent to $1,337 an ounce after touching $1,344 on Tuesday, its highest since September 2016.

US stocks sank on Tuesday, with the S&P 500 stumbling to its biggest single-day loss in about three weeks, as investors weighed fresh tensions with North Korea. Geopolitical tensions flared anew after North Korea conducted a powerful nuclear test on Sunday.

The dollar dipped 0.1 percent against a basket of currencies .DXY and was down 0.2 percent versus the yen, which investors often seek during uncertain times. Markets retain their safe haven bias from trading yesterday. Labour ministry data showed wages fell in both nominal and inflation-adjusted real terms.

Kashkari is a known dove, preferring to see more inflation.

Fears of lagging inflation plague other regions as well.

Fed governor Lael Brainard said the US central bank should be cautious about raising interest rates amid the economy's to reach its 2% inflation target.

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Former Scotland hero and ex-Celtic boss Strachan roared "bring it on" after watching Scotland win two games on the bounce. He said: "The Slovakia game will be massive now, hopefully the fans come out and support us".

Analysts said the comments cast more doubt over the likelihood of another rate hike this year. FOMC members Brainard, Kashkari, and Kaplan are scheduled to speak today by 11:30GMT, 17:10GMT and 23:00GMT respectively.

"We rallied pretty hard over the past two weeks and didn't really break out to the upside so I think that set us up to give some back today", said William Delwiche, investment strategist at Baird in Milwaukee.

Although risk aversion weighed on the dollar/yen, "an unabashedly dovish Brainard was unquestionably the reason" for the deeper move into the 108 level, Stephen Innes, APAC head of trading at OANDA, said in a note. The Canadian dollar traded at C$1.2392 to the USA dollar after hitting a two-year high earlier in the week in anticipation of the rates decision.

The dollar index (.DXY) fell 0.35 percent while the yen (JPY=) strengthened 0.84 percent versus the greenback at 108.83 per dollar.

If inflation continues to fall short of the central bank's 2 per cent target, "it would be prudent to raise the federal funds rate more gradually".

Still, six forecast that rates would rise on Wednesday to 1.0 percent, with several changing their view after the strong second-quarter GDP data.

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