The U.S. dollar hovered near six-month lows during Monday’s Asian session as political turmoil kept traders on edge. The dollar index was up 0.1 percent in early trade, but traders remained wary since the firing of a ballistic missile by North Korea on Sunday, its second missile test in a week, which reportedly confirms the country’s ability to hit U.S. targets.

In addition to global political tensions facing the U.S., President Donald Trump faces internal political strife surrounding his budget proposal which is set to be revealed on Tuesday, while President Trump is visiting the Middle East. The proposal purportedly includes Medicaid cuts and reductions of funding to social assistance programs as part of his controversial tax reform and fiscal stimulus plan.  

The dollar also struggled due to the relative strength of the euro which traded at $1.1188 as of 6 a.m. GMT on Monday, after hitting a six-month high on Friday. Recent economic improvements in Europe have renewed hopes that the European Central Bank will lighten its dovish tone at its upcoming meeting next month.  

Asian Market Movements

Asian stocks saw their biggest daily rise in a month on Monday, with MSCI’s broadest index of Asia-Pacific shares outside Japan rising 0.9 percent, and the index is now up 17 percent on the year, compared to emerging markets which have gained only 8 percent. Japan’s Nikkei 225 was up 0.43 percent and Hong Kong’s Hang Seng Index was up 0.94 percent during Monday’s Asian session.  

The dollar inched up slightly against the yen, trading at 111.47 after sinking nearly 2 percent last week.