* Investor jitters over N.Korea related tensions ease for now
* Dollar up from Tuesday’s 4-1/2 month low vs yen
* Euro down from 2-1/2 year peak vs dollar
* Aussie jumps on surprisingly upbeat construction data
By Lisa Twaronite and Masayuki Kitano
SINGAPORE, Aug 30 (Reuters) - The dollar pulled away from the previous session’s 4-1/2 month lows against the yen on Wednesday as investors’ concerns over North Korea’s latest missile test eased for now, while the Australian dollar surged on upbeat construction data.
The dollar index, which tracks the greenback’s value against a basket of six major currencies, added 0.1 percent to 92.292 , having recovered from Tuesday’s low of 91.621, its lowest level since January 2015.
The dollar last traded at 109.77 yen, up from Tuesday’s low of 108.265 yen, its lowest level since mid-April.
“The dollar/yen reacted yesterday, moving lower, and that seems to be reversing today,” said Mitul Kotecha, head of Asia macro strategy for Barclays in Singapore.
“Its become a typical reaction to what’s been happening in North Korea, where you initially see some risk aversion in markets and then reverse that move relatively quickly,” Kotecha said.
North Korea’s launch on Tuesday of a ballistic missile over Japan’s northern island of Hokkaido initially spooked investors. It triggered a drop in U.S. bond yields and a slide in the dollar against the yen, which tends to benefit during times of crisis on the assumption that Japanese investors will repatriate funds.
The greenback later recovered, with U.S. equities rising on Tuesday and the U.S. 10-year Treasury yield pulling up from 9-month lows.
The U.S. 10-year Treasury yield last stood at 2.148 percent . On Tuesday, the U.S. 10-year bond yield fell as low as 2.086 percent, its lowest level since Nov. 10.
North Korean leader Kim Jong Un guided a launch of an intermediate-range ballistic missile on Tuesday in a drill to counter the joint military exercises by South Korean and U.S. militaries, the North’s official KCNA news agency said on Wednesday.
KCNA quoted Kim as saying it was necessary for the North Korean military to undertake more exercises focused on operations in the Pacific.
While North Korea-related risks haven’t gone away, the fact that the dollar managed to bounce back sharply from Tuesday’s lows could lend support to the greenback in the near term, said Andrew Bresler, deputy head of sales trading in Asia-Pacific for Saxo Markets in Singapore.
“We’ve certainly remained pretty cautious on the outlook for risk here, and definitely not buying fully into the discounting of the North Korean tensions,” he said.
In the wake of the sharp swings seen in the dollar against major currencies on Tuesday, it is difficult to have a clear view on the dollar’s near-term outlook, Bresler said, adding that U.S. economic data would be a focus in coming days.
Friday’s closely-watched U.S. employment report for August is expected to show employers added 182,000 jobs, according to the median estimate of 60 economists polled by Reuters.
Investors are also gauging the potential economic fallout of Tropical Storm Harvey, which brought catastrophic flooding to Texas this week and shut down nearly a fifth of the U.S’s crude oil refining capacity.
The euro edged up 0.1 percent to $1.1981, having retreated from Tuesday’s high of $1.2070, its strongest level since January 2015.
The Australian dollar was the standout mover of the Asian session, jumping 0.5 percent to a four-week high of $0.7995 .
Australian construction spending boasted its biggest rise on record last quarter as miners splashed out on major engineering projects, a surprise that could lift economic growth well above initial expectations. (Reporting by Lisa Twaronite & Masayuki Kitano; Editing by Eric Meijer and Kim Coghill)