The US dollar seems to be poised to pare its recent losses as the US10Y yield is already increasing as much as 5bps (it’s trading just shy of 2.1%) on softer damages made thus far by the hurricane Irma. The greenback is continuously advancing the most against the safe haven currencies such as JPY and CHF. On the flip side, there are the Canadian dollar and the NZ dollar – both have performed better than the USD so far. The former might be higher due to rising crude prices, in turn, the latter is up even as the New Zealand Institute of Economic Research (NZIER) has released a survey suggesting lower inflation and employment growth seen by surveyed economists.
Moving to commodities, we have creeping up oil prices for two reasons. Firstly, lower than expected disruptions of the oil facilities sparked by the hurricane Irma. Secondly, US refineries based in Texas are getting back to work after being offline on the back of Harvey’s stoppages. As a result, the WTI-Brent spread is narrowing as the US grade is rising 0.75% while its European peer is losing 0.3%. Moreover, gold prices are lowering 0.8% or more than $10, whereas cotton and soybean prices are giving back theirs gains fueled by Irma concerns.
The European equity markets have begun the new week with upbeat spirits which is a consequence of softer losses coming from the hurricane Irma. Moreover, North Korea decided not to launch its ballistic missile which strengthened demand for riskier assets. It’s worth underlining that the DE30 is being shored up mainly on the back of stellar performance of European insurers which are benefiting from softer than expected Irma losses.
It seemed that the end of the last week would be calm however, the Chinese watchdog weighed in once again which saw a hefty sell-off across all major virtual currencies. A report claimed that Chinese regulators ordered the nation’s digital exchanges to close. That was the second blow to the $150 billion cryptocurrencies market after the PBoC declared initial coin offerings (ICOs) illegal.
US dollar will be under the radar again this week because the inflation data is so important for the Fed at that point but it will share some of the spotlight with the pound that will be affected by the BoE meeting and crucial monthly data. Let us present the most noteworthy macroeconomic events for this week.