(Changes reference to currency "peg" in 11th, 12th paras to
* Japanese importer demand limits dollar's downside
* US, Chinese leaders to discuss Pyongyang's arms
* U.S. economy, Trump's policy agenda remain in focus
* Investors keep eye on Czech crown
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, April 5 The dollar came under pressure
on Wednesday after North Korea fired a ballistic missile into
the sea ahead of a summit between U.S. and Chinese leaders,
losing its grip on gains made earlier against the yen.
The missile firing -- a day before talks on economic and
security issues between U.S. President Donald Trump and his
Chinese counterpart Xi Jinping -- further diminished investor
risk appetite in a week that has seen a flight to safety.
Trump's consistently harsh rhetoric on China has raised
concerns about the summit and weighed on the dollar, as has
speculation that the U.S. president will face challenges
implementing his promised growth-boosting policies after his
administration failed to pass healthcare reform.
The dollar edged down 0.1 percent to 110.63 yen,
off a day's high of 110.92 and well below last Friday's 10-day
peak of 112.19 yen.
The dollar index, which tracks the U.S. currency against a
trade-weighted basket of six peers, was slightly down on the day
at 100.48, as slumping U.S. Treasury yields also gave
investors little incentive to buy the greenback.
"It's a bit of a mixed picture. Some downside risk (for the
dollar) on the upcoming meeting between Chinese president Xi
Jinping and Trump ... but to be honest, so far it's been the
case that his (Trump's) rhetoric is a lot worse than his policy
actions," said Lee Hardman, currency strategist at MUFG in
Though the perceived safe-haven Japanese currency tends to
gain in times of geopolitical tension or risk aversion, the
dollar got some help from Japanese importers on a "gotobi" date
-- the fifth day of the month and dates that are multiple of
five -- on which accounts are usually settled.
"Today, there is real demand for the dollar, on 'gotobi,' so
its downside should be limited," said Kaneo Ogino, director at
foreign exchange research firm Global-info Co in Tokyo.
The U.S. non-farm payrolls report out on Friday will be
watched keenly by investors. Economists polled by Reuters
predict the U.S. economy will have added 180,000 jobs in March.
The euro edged slightly higher by 0.1 percent to $1.0676
Investors also kept a close eye on the Czech crown
amid rising speculation that the Czech central bank could soon
drop its cap on the value of the currency against the euro. It
was last down 0.1 percent to the single currency.
"I think they (Czech National Bank) are telegraphing it
(dropping the cap), so they must have an intention of removing
it," said Stephen Gallo, currency strategist with BMO Capital
"I suspect that they're watching very closely the events
taking place in France though, ahead of the Presidential
elections. I doubt they'll remove it before we get a result
The Australian dollar also crept higher to $0.7577,
pulling away from a three-week low of $0.7545 hit in the
previous session when investors pared bets that the Reserve Bank
of Australia would hike rates this year.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Reporting by Ritvik Carvalho; Additional reporting by Tokyo
markets team; Editing by Catherine Evans)