Investing.com – The dollar edged up to a three-week high on Tuesday as investors hope to see a positive outcome from the highly-anticipated U.S.-North Korea summit that could potentially ease tensions on the Korean Peninsula.
U.S. President Donald Trump started a historic meeting with North Korean leader Kim Jong Un in Singapore around 09:00AM ET(01:00 GMT) with both sides seeking to narrow differences over how to end a nuclear standoff on the Korean peninsula.
Trump tweeted “Great to be in Singapore, excitement in the air!” as he arrived in Singapore on Monday to have the first face-to-face meeting between a sitting U.S. president and a North Korean leader.
The U.S. dollar index, designed to track the greenback against a basket of six major currencies, rose 0.17% to 93.72 by 12:40AM ET (04:40 GMT).
The USD/JPY pair jumped 0.25% to 110.32, reaching a three-week top.
As a safe-haven currency, the yen often rises in times political tensions and market turmoil. The dollar’s rise against the yen reflects optimism that the Trump-Kim meeting will yield a positive outcome on the denuclearisation of North Korea.
Meanwhile, the USD/CNY pair rose to CNY6.4044. The People’s Bank of China set the yuan’s reference rate, the mid-point from which the currency is allowed to trade, at 6.4121 compared to previous day’s fix of 6.4064.
The next set of cues for the dollar are likely to come from a Federal Open Market Committee meeting that starts Wednesday. The Fed is widely expected to raise interest rates for the second time this year, but investors are more focused on whether the central bank will decide on four interest hikes in 2018.
The Bank of Japan will also review its monetary policy at a two-day meeting later this week, but not much change is expected.
The USD/AUD pair dropped to 1.3131 as the Aussie also rose ahead of the U.S.-North Korea summit. The National Australia Bank was set to release its newest monthly report on business conditions and business confidence, and the Bureau of Statistics to release April housing finance figures.