More a story of what hasn’t (not what has) happened
Late on Friday the greenback was subject to selling pressure well into the close as investors and markets took fright at the images of Hurricane Irma making its way across the Atlantic, ready to make landfall on Florida. After making landfall as a category 4 hurricane, Irma’s weakening from there is seen putting a cap on the toll of damage toward the lower end of the $20-$65 billion expected range.
On the other side of the globe, fears of another missile test on the Korean Peninsula was cited as another catalyst for avoiding the dollar, but Kim Jong-Un’s weekend passed by far more quietly. Nonetheless, last week’s hydrogen bomb test has kept pressure on the United Nations to install the harshest sanctions on the kingdom yet. On their latest reading, the sanctions looked to include oil, textiles and an asset freeze on everything Kim Jong-Un’s touched, but it looks like the proposals will be watered down to satisfy the Russian and Chinese contingent of the UN Security Council.
In summary, the recovery of the dollar this morning is more a case of the worst being avoided, as opposed to something purely positive happening stateside, and EUR/USD’s shifted back below 1.20 in response.
The pound poised to be both political and economic
In the UK, the pound’s poised to be both political and economic this week as Parliament returns to debate the ‘Great Repeal Bill’ that aims to transmute all EU laws onto the UK’s books and therefore under the UK’s control. Opposition politicians plan on voting against but the bill will likely maintain passage to a 3rd reading later in the month in a process that’s somewhat characterised the Brexit process – frustrating, overwrought and labored.
Sterling’s focus will fall on Thursday’s Bank of England meeting that is unlikely to result in any change in policy but – as always – it’s the discussion around the inflation and wage picture that will move sterling one way or the other; the members who voted for a hike last month will likely vote for one again and will be outvoted by the rest of the Committee.
Euro still in the driving seat
Despite the knock-on effects of the rebounding dollar on the Yen, Australian dollar and others, the euro’s still holding a lot of ground against the greenback and that could extend should US inflation numbers on Wednesday and Thursday move in the single currency’s favour. Elsewhere today though, the calendar’s thin and quiet, but investors should take solace; the rest of this week’s a busy one.
Have a great day