The US dollar was able to start the week on a good note on easing geopolitical tensions and the weakening Hurricane Irma. Officials have reportedly scaled down their sanctions on the hermit nation in order to get the vote from China and Russia, but this could still be met with actual strikes from North Korea based on their foreign ministry’s statements. There have been no reports out of the US economy but the upbeat stock market performance has lifted the dollar. Only the NFIB Small Business Index and JOLTS job openings are due from the US today.
The euro retreated against some of its peers as traders appear hesitant to take the shared currency any higher without fresh catalysts. Italy’s industrial production report was stronger than expected with a 0.1% uptick instead of the estimated 0.5% decline. French final non-farm payrolls for Q2 and the Italian quarterly unemployment rate are lined up next.
The pound had a quiet start to the trading week as traders are positioning ahead of the top-tier events. UK CPI is up for release next and both headline and core CPI could post stronger price pressures, which might then revive expectations of an upbeat BOE statement later in the week. Headline CPI could advance from 2.6% to 2.8% while the core reading could tick up from 2.4% to 2.5%.
The franc returned some of its recent gains as risk appetite improved and traders lightened up on their lower-yielding holdings. There were no reports out of the Swiss economy on Monday and none are due today so market sentiment could be the primary driver of franc price action.
The yen was one of the biggest losers so far in the week as improving risk appetite led traders to dump the lower-yielding currency. Data from Japan was mixed, with core machinery orders up 8.0% versus the 4.2% forecast and tertiary industry activity up 0.1% as expected. Preliminary machine tool orders rose 36.3% on a year-over-year basis. There are no reports due from Japan today so risk sentiment could be key.
Commodity Currencies (AUD, NZD, CAD)
The Loonie had another big win as rumors of another OPEC extension were floated after Saudi Arabia’s energy minister met with his counterparts in Venezuela, UAE, and Kazakhstan. Canadian housing starts also turned out better than expected, rising from 222K to 223K instead of declining to the estimated 216K figure. Australia’s NAB business confidence index is due next.