FX Round-up: Greenback in the red, North Korean risks calm down

Digital Look Sharecast | 11 Sep, 2017 17:37 | | |

cbdolaryen123

Monday saw some respite for the US dollar as it gained 0.55% to 91.859 against a basket of currencies by 1715 BST. There was also some degree of breathing room as recent North Korean missile threats died down and a classification downgrade of Hurricane Irma to a Category 1.

North Korea celebrated it's founding day on the weekend. Over recent weeks, Pyongyang has launched several missile tests in the Pacific region which sparked turmoil and concern on global markets.

The weekend celebrations however seem to have proceeded without the threat of further missile tests, as many feared. As a result, the US dollar has gained some ground across the board and safe haven currencies are on the back foot.

The dollar index hit it's lowest level in over two years on Friday as investors expressed major concern over the short-term impact of Hurricane Irma and tensions between North Korea and the US.

Brad Bechtel at Jefferies said, "We were pretty oversold going into the end of the week in the dollar and there was a lot of potential risk on the horizon," adding, "The fact that we didn't get much on that front is helping the dollar recover a little bit."

Against safe haven currency the Japanese yen, the greenback was up 1.2% to 109.15, recovering 1.45% from Friday's low of 107.41.

The Swiss franc also lost some ground with USD/CHF trading just over 1% up to 0.9540, as investors decided to favour risk assets.

In the UK, Parliament members are voting on the Repeal Bill which overturns the 1972 Act which took Britain into the European Economic Community (EEC). In doing so, it incorporates EU laws into the UK statute book.

This vote has had minimal effect on sterling moves today and on the whole price action has been subdued with cable trading 0.17% lower to 1.3171, in part also due to a lack of significant data releases.

Sterling traded higher against the euro by 0.48% to 1.1015, as market participants look towards Thursday's interest rate announcement and policy statement from the Bank of England's (BoE).

Lee Hardman at Japan's MUFG said, "We expect the BoE to reiterate this week that the market is underestimating the scale of rate hikes likely in the coming years, although they will likely stop short of signalling a rate hike is imminent this year."

The single currency traded lower against the dollar, down 0.64% to 1.1957, retreating from a near two-year high on Friday.

The euro tumbled towards the day's lows after European Central Bank board member Benoit Coeure said improved Eurozone growth could offset some of the negative effects of the single currency's strength but that a persistent exchange rate shock could drag down inflation.

"Compared with past demand shocks, policy will remain more accommodative for longer, thereby likely muting further the pass-through of any growth-driven exchange rate appreciation," he said.

More news

16:53 Chevron cancels drillship contract with Transocean

Chevron blew a hole in Transocean's share price on Thursday after cancelling its contract for ultra-deep water drillship Discoverer Clear Leader one year ahead of its scheduled expiry, effective from the following November.

16:21 Barnier fires shot across May's bows ahead of Florence speech

Ahead of the UK Prime Minister's major Brexit speech on Friday, chief European Union Brexit negotiator Michel Barnier has warned Theresa May against trying to have her cake and eat it and stressing that if a transition period is requested it will first require a withdrawal agreement.

16:16 US open: Stocks dip as two-year yields hover near eight-year highs

Stocks are stuck in a bit of a rut as traders try to work out the implications of the US central bank's policy announcement the night before, despite a raft of better-than-expected readings on the economy.

15:54 IG Design Group swallows Aussie card firm Biscay

Designer and manufacturer of celebration, gifting, stationery and creative play products IG Design Group announced on Thursday that it has signed a contract to acquire the trade and certain assets of Biscay Greetings, which it described as a “leading” greetings card and paper products business based in Australia.

15:54 Friday preview: Importance of May's Brexit speech 'cannot be over-emphasised'

Theresa May's Big Brexit Speech in Florence may dominate the narrative on Friday, though for traders and investors there's PMI surveys and one from the CBI, with results from Sage and Smiths Group.

15:52 Engineering studies to enable Liberator field begin, i3 says

Independent oil and gas company i3 Energy announced on Thursday that detailed engineering studies to enable its 100% owned-and-operated Liberator field, to be tied into the existing Blake field 'host' infrastructure and produced through the Bleo Holm floating production storage and offloading vessel (FPSO) had commenced.

15:50 FTSE 250 movers: Kier rallies on results but Capita crumbles

London's FTSE 250 was down 0.6% to 19,422.90 in afternoon trade on Thursday.

15:39 Eurozone consumer confidence increases in September

Eurozone households are feeling more confident about the economic situation, according to a key European Commission survey released on Thursday afternoon.

15:28 FTSE 100 movers: Johnson Matthey rallies but Fresnillo loses its shine

London's FTSE 100 was flat at 7,271.33 in afternoon trade on Thursday as investors digested the latest UK borrowing figures.

15:26 Interest rates set to tumble in Brazil, Pantheon Macroeconomics says

Consumer prices in Brazil edged higher in September but remained well below the central bank's target level, which meant policy rates were set to tumble, according to some economists.