• Short week for risky bets
  • Sanctions sans China
  • UK manufacturing surprises to the upside
  • EU keeps plowing ahead

Risk-on trades are hitting financial markets hard this morning after the hiatus of bank holidays in Europe and Asia. EU keeps plowing ahead Emerging market currencies like ZAR and TRY are up significantly against the greenback. US Treasury yields are also up, a surprising move for a shortened trading week.

Unexpectedly hitting a three-year high, UK manufacturing surged in April. Manufacturing production expanded at the fastest pace in three months. New work was driven by inflows from clients both domestic and abroad, and sterling moved higher on the news despite ongoing concerns over Brexit negotiations.

There is a meeting today in Seoul between the US, South Korea, Japan, Australia, France, Germany, UK, and EU officials. They will discuss strengthening sanctions on North Korea – but not as a plan for joint action, it’s a discussion of each nation’s individual sanctions in an effort to control Pyongyang’s nuclear ambitions. On the heels of this headline, President Trump has stated that he would be willing to meet the President of North Korea, Kim Jong Un; “if it would be appropriate for me to meet with him, I would absolutely, I would be honored to do it.” Trump had expressed a willingness to meet with North Korea’s dictator during the campaign trail, but had yet to follow through with such commitments, drawing harder lines against Pyongyang once in the Whitehouse.

The Euro Area continues to show robust economic growth. Manufacturing expanded at the fastest pace in six years and Eurozone unemployment continues to hang at eight-year lows. This only furthers the argument for tapering the extensive QE programme at the ECB, making Mario Draghi’s press conference Thursday all the more important.

EURUSD: Euro remains flat from a day ago, juggling few themes but failing to elicit a clear trend from any one of them.

GBPUSD: Positive data from the UK helped recover overnight losses and has cable trading flat.

AUDUSD: Aussie dollar has retreated from spikes early morning to sit flat against the greenback.

USDCAD: Canadian dollar sinking with crude oil prices.

USDJPY: Despite the risk-on mood in emerging markets, the yen sits lower against the USD.