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Dollar jumps, stocks cautious amid optimism over Trump-Kim summit

Investors were hopeful of a positive outcome from a highly anticipated U.S.-Korea summit

Reuters  |  Sydney 

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The dollar jumped to a 3-week top on Tuesday while Asian shares started cautiously as investors were hopeful of a positive outcome from a highly anticipated U.S.-Korea summit, which could set the stage for ending a nuclear stand-off on the Korean peninsula.

Japan's Nikkei <.N225> climbed 0.8 per cent to the highest in three weeks and South Korean shares added 0.1 per cent. Australia's <.AXJO> benchmark index was a tad firmer while New Zealand eased 0.3 per cent <.NZ50>.

That left MSCI's broadest index of Asia-Pacific shares outside <.MIAPJ0000PUS> a touch softer at 573.31.

The historic meeting between U.S. President and North Korea's Kim Jong Un is due to start at 0100 GMT in

Ahead of the summit, Trump said the meeting could "work out very nicely" as the countries try to narrow differences on how to end a nuclear standoff on the Korean peninsula.

Many analysts said the bar was pretty low for what will be deemed a successful summit, given the past failures in talks with

"This seems to be the first step on the road in what is going to be a long drawn out process," said Ray Attrill, head of forex strategy, National Bank, Sydney.

"If there appears to be a genuine intent on both sides to use this summit as a platform for a serious negotiation of a peace treaty, I guess that's what success would look like today," he said.

"Nobody is expecting a peace treaty today, that is being overly optimistic. But if this turns out to be a complete failure there might be some implications for risk assets."

A denuclearisation deal would be positive for South Korean assets given the possible boost to growth and fading geopolitical risks, analysts at said in a note.

The lead from Wall Street was mixed too, with the Dow <.DJI> barely changed, the <.SPX> up 0.1 per cent and the Nasdaq <.IXIC> adding 0.2 per cent.

CAUTIOUS TRADE

There were some nerves, after Trump upset the Group of Seven's efforts to show a united front, choosing to back out of a previous joint communique. The action drew criticism from and France, and Trump called Canadian Prime Minister "very dishonest and weak."

By and large, though, "are generally shrugging off the trainwreck," Attrill said. Instead, they are looking ahead to a busy week.

Tuesday's summit will be followed by policy meetings of the U.S. Federal Reserve, which is expected to raise rates, and the as well as a Brexit bill vote in the British parliament.

The greenback was well bid on Tuesday morning, with the dollar index <.DXY> up 0.1 per cent against a basket of major currencies. [FRX/]

Against the safe-haven yen, the dollar jumped to a three-week top of 110.42.

Also helping calm were comments from Italy's new coalition government that it had no intention of leaving the euro zone and planned to cut debt.

The euro hovered near a three-week high of $1.1840. It was last at $1.1773.

In commodities, U.S. crude rose 6 cents to $66.16 per barrel, while Brent gained 5 cents to $76.51.

Spot gold was a tad weaker at $1,298.06 an ounce.

First Published: Tue, June 12 2018. 06:28 IST
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