2017.09.2603:56:00UTC+00Yen Strengthens as North Korean Tensions Grow

The Japanese yen strengthened on Tuesday, against the backdrop of growing tensions on the Korean Peninsula, while investors await new clues on the U.S. monetary policy outlook.

The risk-averse mood raised the appeal of safe-haven government debt, with the yield on benchmark 10-year Treasury notes slipping to 2.218 percent from its U.S. close on Monday of 2.220 percent.

Federal Reserve Chair Janet Yellen is set to speak later on Tuesday on “Prospects for Growth: Reassessing the Fundamentals”. Investors will pay attention to her words for signals on whether the U.S. central bank will stick with its plan to hike interest rates in December.

The dollar fell 0.1 percent versus the yen to 111.61, well short of the previous week's two-month peak of 112.725.

The euro eased after dropping on Monday after a significantly diminished election victory for German Chancellor Angela Merkel which was also accompanied by a surge in support for the far right.

The common currency was little changed on the day at $1.1848.

The dollar index, which tracks the U.S. currency against a basket of six major peers, slipped to 92.634.

North Korea's foreign minister recently said that a tweet by President Donald Trump counted as a declaration of war on North Korea and that Pyongyang reserved the right to take countermeasures, including shooting down U.S. bombers even if they are not in its air space.