– Dollar pressure –
On equity markets, Seoul shed 0.7 percent and Japan’s Nikkei ended the morning session 0.9 percent down as the stronger yen hurt exporters. Hong Kong slipped 0.4 percent and Sydney shed 0.3 percent, while Singapore gave up 0.4 percent.
However, Shanghai wiped out early losses to rise 0.2 percent in mid-morning trade.
“It’s all eyes on dollar-yen this morning, as it’s expected this latest NK aggression, could further intensify geopolitical tensions,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
“The key now is how the international community will respond given how ineffective the tightened UN sanctions have been at discouraging North Korea’s ambitions.”
Sunday’s test was of a device that could be put on an intercontinental missile that could reach the United States, North Korea claimed.
Adding to pressure on the dollar was a below-expectations read on US jobs creation for August, which raised questions about the chances of a third Federal Reserve interest rate hike before the end of the year.
However, the greenback was holding its own against the euro after a report said the European Central Bank (ECB) could put off a decision on the future of its bond-buying stimulus programme until the end of the year.
The single currency has enjoyed a rally this year as a string of positive data from the eurozone fanned speculation the ECB would soon announce plans to begin scaling back the scheme.