The dollar hoarded hefty gains on Wednesday after strong US retail sales revived the chance of another Federal Reserve rate hike this year, while Asian stocks inched ahead as tensions in the Korean peninsula went off the boil.
European bourses looked set for a somnolent start with Eurostoxx 50 futures steady, while E-Mini futures for the S&P 500 were also barely changed.
North Korean leader Kim Jong Un has delayed a decision on firing missiles towards Guam while he waits to see what the United States does, as Washington said any dialogue was up to Kim.
The break in threat and counter-threat was enough for South Korean stocks to bounce 0.5 percent, though they remain well short of a record peak touched last month. The next flash point could be a joint US-South Korean military exercise starting on August 21.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.3 per cent and Japan's Nikkei lost 0.1 per cent.
There was no clear lead from Wall Street, where the Dow ended on Tuesday up 0.02 percent. The S&P 500 lost 0.05 per cent and the Nasdaq 0.11 per cent.
US retail sales
The economic news, however, was much more emphatic, with US retail sales rising the most in seven months in July as consumers spent more on 10 of 13 retail sectors.
Importantly, upward revisions to sales for both May and June countered concerns that consumption had entered a downtrend and lifted the outlook for economic growth.
Investors reacted by narrowing odds on the Fed tightening again this year and sent two-year Treasury yields up to 1.36 per cent from 1.29 per cent on Friday.
Fed policy minutes
Minutes of the Fed's July meeting are due later in the session and should show how the debate on rate hikes is shifting within the central bank.
“The minutes will show a Committee that is likely to announce a change in balance sheet policy at the September meeting,” wrote analysts at JPMorgan in a note.
“We think the minutes will be less forthright about the timing of the next rate hike, which we still expect to occur in December.”
Bitcoin bonanza
The dollar duly rallied to its highest level against a basket of major currencies in nearly three weeks and was last holding at 93.824. The euro dipped to $1.1740, though it had found solid support around $l.1686 overnight.
The yen took an added blow from the easing in risk aversion and sagged to 110.64 per dollar. The dollar's 1.4 per cent jump on Tuesday was the biggest daily rise since April.
Sterling also slumped after UK inflation numbers came in below forecast, breaching key support levels against both the euro and dollar. The pound was last at $1.2863, having shed 1.1 percent the previous session.
All that action paled in comparison to the digital currency Bitcoin, which has surged over $1,200 so far this month to reach $4,100 amid fevered speculative demand.
“Interest in digital currencies has spiked recently as proponents tout benefits such as a lack of centralised control and limited supply,” said William O'Loughlin, an investment analyst at Rivkin Securities.
“However, anyone thinking of buying the currency should realise that it is incredibly volatile and could fall in value as quickly as it rose.”
Gold, crude oil
In commodity markets, the revival in risk appetite dragged gold back to $1,272.90 an ounce, and away from Friday's two-month top of $1,291.86.
Oil prices nudged higher after data from the American Petroleum Institute showed a much larger fall in crude inventories than expected.
US crude added 21 cents to $47.76 per barrel, while Brent firmed 26 cents to $51.06.