The US dollar is enjoying a firm today. Yesterday’s two weakest major currencies, the Australian dollar and Swedish krona are the strongest currencies, but little changed on the session. After a strong rebound in the greenback to start the week, it mostly consolidated yesterday.  

The euro was sold briefly through $1.1320 before finding a bid, while the sterling and yen are extending this week’s declines. Global equities are mixed, with modest gains in Asia and small losses in Europe. Bond yields are mostly firmer.  

The US confirmed North Korea’s claims that its tested an intercontinental ballistic missile. The US and South Korea almost immediately announced a new joint military exercise.  

The UN Security Council will meet today to discuss. Besides tightening the isolation of North Korea, it is not clear what other options are really available. Although the US has indicated that all options are on the table, there does not appear to be support for military options by South Korea, Japan, Russia or China.   

The South Korean won was little changed and the Kospi gained 0.3% to recover most of yesterday’s decline and is off slightly on the week. More broadly, the MSCI Asia Pacific Index snapped a three-day fall and rose 0.25%.  

Japanese shares initially fell to near two-week lows before recovering. The Topix and Nikkei closed on session highs, almost 0.6% and 0.3% higher respectively. Japan reported a stronger service PMI (53.3 in June from 53.0 in May). The composite reading slipped to 52.9 from 53.4. Still, it average 53.0 in Q2 after 52.5 in Q1 and 52.0 in Q4 16.  

The dollar is at its best level against the Japanese yen since the middle of May, as it tries to get a handhold above JPY113.50. Chart resistance is seen in the JPY113.80-JPY114.00 area. The dollar edged higher against the yen for the past two weeks. It is up a little more than 1% this week after a gain of a similar magnitude last week.