The US dollar fell to its lowest level in 18 months on Tuesday morning as North Korean tensions and flooding in Texas added to the strong euro to drive the greenback lower.
A trade-weighted index of major currencies against the dollar fell to its lowest level since January 2015, at 91.621, after starting the day above 92 points.
Assets across developed markets sold off as investors feared an increased risk of escalation in the ongoing North Korean crisis, after the pariah state fired a missile over Japan.
European equity markets fell steeply across the board, with US stocks expected to follow suit after early falls in Japan and Korea. Gold futures prices jumped to highs of $1,331.90 per troy ounce as investors bought safe havens.
US President Donald Trump has made tackling North Korea one of his foreign policy priorities, but he has so far failed to make any progress in limiting its belligerence.
Last night at around 10pm UK time the Japanese government sent out alerts to its people warning them to seek shelter in case of a missile strike.
While the missile passed harmlessly over Japan to land in the sea, it was still the first time since 2009 that the North Korean regime had fired a missile over Japanese territory.
Japanese Prime Minister Shinzo Abe called the missile launch as a “reckless action” and “an unprecedented, serious and a grave threat to our nation”, according to Reuters.
Despite the physical threat to the Japanese mainland, the yen, a traditional safe haven, appreciated sharply against the dollar. The dollar fell to its lowest level since April 2017 against the yen in morning trading, at ¥108.27.
The dollar has also been hit by the ongoing fall-out from flooding in Texas, which this morning remains “catastrophic and life-threatening”, according to the the US National Weather Service.
The costs to repair flood damages in Houston, the US’s fourth-largest city, are almost certain to be measured in the billions of dollars.
US President Donald Trump is due to visit the city to survey the damage, with flood waters expected to rise further as more rain falls.