North Korea fears remain high

The diplomatic squeeze on North Korea tightened yesterday as the US started work on a fresh set of sanctions on the country and, more importantly, Chinese banks that aid its international trade. A lack of fresh provocation from Kim Jong Un yesterday has taken some of the demand out of haven assets although they remain elevated as we begin Tuesday’s session.

Given markets are back from their Labor Day Holidays so we could see some dollar volatility as the US opens up and catches up with a day out of the office.

ECB not ready for December?

Thursday’s run of comment from ‘sources’ was followed up on Friday with newswires reporting that the ECB was said to see a chance that the QE plan may not be fully ready by December and that extreme prudence was needed on both policy and the communication thereof. Euro fell like a falling missile after the news but has regained some poise courtesy of the USD selling.

As we noted on Friday an ECB meeting is due Thursday and we will be watching the language on tapering very closely to see whether the most aggressive run of single currency strength in a few years is built on shaky foundations.

Parliament returns and guess what’s top of the list

Parliament returns following their summer break today but instead of everyone telling each other what they did on their holidays, they will question Minister for Exiting the EU David Davis on the homework he had to do while school was out.

Indeed, Brexit is almost the only political game in town and David Davis is expected to make a statement today updating MPs on his talks with EU negotiator Michel Barnier and the position papers published so far. Wednesday’s Prime Minister’s Questions will likely be dominated by Brexit and Thursday will see MPs question Ministers from the Department for Exiting the EU and the second reading of the EU Withdrawal Bill ahead of a vote on Monday.

The Day Ahead

Services PMIs and ISMs are the likely main movers of the day although US factory orders will be interesting to see in light of the recent uptick in US GDP.

Have a great day