SINGAPORE (REUTERS) - The safe-haven Japanese yen was up in early Asian trade on Tuesday (Dec 20) after attacks in Germany and Turkey spooked investors, while regional stocks were steady as financial markets pondered upbeat comments from the Federal Reserve chair Janet Yellen.
Traders were also looking ahead to the Bank of Japan's rates decision later in the day, and while policy settings are set to be kept steady the focus will be on Governor Haruhiko Kuroda's take on surging global bond yields and the impact on rates in Japan.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2 per cent in early trade on Tuesday, while Tokyo's Nikkei was flat.
Wall Street ended higher on Monday, albeit below the session's highs, as optimism over Yellen's upbeat comments about the US labor market offset some of the risk aversion after attacks in Germany and Turkey.
"It seems like (Yellen) is acknowledging the continued improvement in the jobs market. That's pretty consistent with what she and other policymakers have been saying," said Eric Viloria, currency strategist at Wells Fargo Securities in New York.
The markets were rattled after a truck ploughed into a crowded Christmas market in central Berlin on Monday evening, killing nine people and injuring up to 50 others, in what appeared to be one of the deadliest attacks in Germany in decades.
The euro slid 0.5 per cent to US$1.0401 on Monday and was little changed at US$1.04065 in early Asian trade on Tuesday.
The euro was also pressured on concerns over security in the West after the Russian ambassador to Turkey was shot and killed in an attack at an art gallery in the Turkish capital of Ankara.
The Turkish lira was steady at 3.5327 per dollar on Tuesday after falling 0.7 per cent on Monday. The rouble was also little changed on Tuesday at 61.8245 per dollar. It slumped to as low as 62.0907 per dollar on Monday but recovered to end the day up 0.3 per cent at 61.8475.
The flight to safety following the attacks boosted the Japanese yen, although the safe haven currency pared some of the gains as the US dollar strengthened after Yellen's comments.
The dollar, which fell as much as 1.2 per cent on Monday against the yen, ended the session down 0.7 per cent at 117.205 yen. It was 0.1 per cent weaker at 117.11 yen on Tuesday.
Investors are awaiting the outcome of a two-day Bank of Japan policy meeting later on Tuesday at which the central bank is widely expected to maintain its 10-year government bond yield target as a generally weaker yen helps Japan's economic prospects, a Reuters poll showed on Friday.
The US dollar has risen 11.3 per cent versus the yen since the surprise presidential election victory of Republican Donald Trump.
The dollar index, which tracks the greenback against a basket of six global peers, climbed 0.2 per cent on Monday after Yellen's upbeat labor market assessment, and was little changed at 103.08 on Tuesday.
Gold, which rose 0.4 per cent on Monday, surrendered some of the gains to trade 0.1 per cent lower at $1,137.66 early on Tuesday.
Oil was flat on Tuesday amid low volumes as the market awaited clarity on whether US production from shale fields would grow enough to offset planned output cuts by Opec, Russia and other producers next year.
US crude held steady at US$52.11 per barrel after closing up 0.4 per cent on Monday.