FX round-up: Russia and China weigh in to help diffuse North Pacific tensions

Digital Look Sharecast | 11 Aug, 2017 17:45 - Updated: 17:46 | | |


Day three of the sabre-rattling between the US and North Korea have again benefited safe haven currencies, although to a lesser degree.

Talks were held on Friday between Russia and China aimed at diffusing tensions in the North Pacific which has helped to calm matters somewhat. German chancellor Angela Merkel has also weighed in stating, "an escalation of the rhetoric is the wrong answer," adding "I see the need for enduring work at the U.N. Security Council [...] as well as tight cooperation between the countries involved, especially the U.S. and China."

Negative US data releases added to the pressure on the US dollar on Friday, with CPI and core CPI both coming in at 0.1%, below market expectations of 0.2%.

The less than favourable inflation figures throw more cold water on any expectations of a rate hike in the US this year and weighed on the dollar index to take it lower by 0.16% at 1600 BST, to 93.248 slipping to a one week low.

USD/JPY lost further ground on the back of the bad figures and continued safe haven purchasing of the Japanese yen, taking the pair 0.16% lower to 109.03.

Currently sitting on a support area, marking the neckline of a double top formation on the daily timeframe, the pair is poised to make significant moves in either direction.

For the Swiss franc, the price action seen today was similar to USD/JPY, with the pair relatively unchanged on the day at 0.9621, down only 0.06%.

Sterling was fairly flat against the dollar on Friday with support in the 1.2952 area intact, despite negative CPI figures from the US, this area seemed remarkably strong with possible bids lying in wait. By the London close, the pair was down only 0.02% to trade at 1.2973.

GBP/USD currently sits at near a three week low as the outlook for the UK economy grows cloudy following a week of mixed results. Speaking on the recent sentiment surrounding the pound, FX strategist Viraj Patel of ING said, "The July bounce in sterling was on some expectations that the Bank of England will increase interest rates at its last policy meeting, but with fundamentals looking increasingly downbeat for the economy, it seems to be a path of gradual weakness for sterling."

Against the euro, sterling did not fair so well either, trading lower 0.22% lower on the day to 1.1000.

The euro faired a bit better against the dollar on Friday, which could have been due to a slight increase in risk appetite, but most likely due to the worse than expected CPI figures from the US, to trade 0.23% higher to 1.1798.

More news

16 Aug Europe close: Dip in euro boosts stocks

Reports that European Central Bank chief Mario Draghi was not planning to signal a policy shift at a key conference next week weighed on the euro, in turn giving a lift to stocks across the Continent.

16 Aug Maersk defies analysts with unexpected loss, yet shares gain

Danish transport and logistics group AP Moller Maersk saw its shares lift Wednesday after its chief executive Soren Skou, painted an optimistic future for the company.

16 Aug US open: Wall Street resumes grind higher

Wall Street resumed its grind higher ahead of the release of the minutes of the US central bank's last policy meeting as - for the moment at least - worries around recent events on the Korean peninsula recede in the rear view mirror.

16 Aug Target increases guidance after impressive second quarter

Target announced Wednesday it had earned $1.23 per share in the second quarter of the year on reported revenues of $16.43bn, a 1.6% increase.

16 Aug London close: Stocks hold onto early gains after jobs report

London stocks held on to Wednesday's early gains on the back of stronger-than-expected labour market data, fading geopolitical tensions and a rally for resources stocks.

16 Aug Shell completes sale of stake in SADAF

Shell announced on Wednesday that it had completed the sale of its 50% share in SADAF, the company's joint venture with SABIC, following regulatory approval from the kingdom of Saudi Arabia.

16 Aug WTI falls back as DoE reveals rise in weekly US oil output

US crude oil stockpiles fell sharply despite rising imports amid still high levels of refinery runs.

16 Aug Thursday preview: Can Kingfisher and Hikma Pharma turn around fortunes?

Thursday will see results from two businesses trying to turn around fortunes after some difficult few months, in the case of Hikma Pharmaceuticals, or years, in the case of Kingfisher.

16 Aug Bezant Resources aims for profits from Colombia licence in 3 months

Bezant Resources announced on Wednesday the start of commercial production from its FKJ-083 licence in the Choco province of Western Colombia and said it was expecting to reach operational profitability in the next three months.

16 Aug Admiral lifts payout as injury claims costs put brake on profits

Admiral's profits for the first six months of the year were hit by the rising cost of personal injury claims after the government changed the payment calculation, though the insurer surprised some analysts by hiking its half-year pay-dividend.