The US dollar was in a weak spot against its peers, weighed down by weak PPI, downbeat Fed rhetoric, and threats from North Korea. US equity indices chalked up large losses for the day as investors are starting to get worried about an actual strike from Pyongyang while Trump refuses to take a more diplomatic stance. Headline and core PPI fell 0.1% and the CPI readings are due today.
The euro was unable to make much headway after seeing a miss in French industrial production. The report chalked up a 1.1% drop versus the estimated 0.6% dip but the Italian trade balance managed to beat forecasts. Final CPI readings from Germany and France are due today so upgrades or the lack of downgrades could still be a plus for the shared currency.
UK economic reports turned out mixed as manufacturing production came in line with estimates, the goods trade balance printed a larger deficit, and the industrial production report beat expectations. Traders still seem to be seeing some signs of resilience in the economy and the lack of top-tier UK data today could keep this sentiment in place.
The franc was able to score some gains on risk-off moves even as traders are wary of SNB intervention. There were no reports out of the Swiss economy then and none are due today so market sentiment could keep pushing franc pairs around.
The yen was the consistent winner for the day since it took its share of the dollar’s safe-haven flows. Core machinery orders saw a worse than expected 1.9% drop while PPI jumped from 2.2% to 2.6%, keeping positive inflation expectations supportive of yen gains. Japanese banks are closed for the holiday today.
Commodity Currencies (AUD, NZD, CAD)
The comdolls continued to reel from risk aversion as traders moved their holdings to safe-havens in light of the tension with North Korea. The Kiwi also got dragged lower during RBNZ head Wheeler’s speech when he threatened currency intervention if NZD keeps rallying. There are no major reports due from the comdoll economies for the rest of the day so market sentiment could be the main driver.