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The dollar gained across the board thanks to decreased concerns over a North Korean attack and effects of hurricane Irma on Uncle Sam.

  • Over the weekend: China’s CPI (y/y) pops up by 1.8% vs. 1.6% expected, 1.4% in July
  • Over the weekend: China’s PPI (y/y) rises by 6.3% vs. 5.7% expected, 5.5% in July
  • New Zealand’s NZIER lowers inflation forecasts from 1.5% to 1.1% in 2017/18
  • New Zealand’s NZIER lowers growth estimates from 3.1% to 2.8% in 2017/18
  • Japan’s core machinery orders up by 8.0% vs. 4.2% expected, -1.9% previous
  • Japan’s tertiary index activity up by 0.1% as expected, -0.2% previous
  • Easing concerns over North Korean risks boosts risk sentiment

Major Events/Reports:

Easing North Korean risk boosts risk sentiment

The biggest story of the hour is the absence of provocative action from North Korea over the weekend. If you recall, market bees were buzzing of a possible nuclear attack after the Republic tested its nuclear missiles ahead of its founding anniversary last Saturday.

But instead of making missiles rain, North Korea celebrated its 69th anniversary honouring the scientists behind the nuclear tests instead.

Not surprisingly, the Asian bourses as well as high-yielding currencies partied in the market streets.

  • Nikkei is up by 1.42% to 19,548.00;
  • Australia’s A SX 200 is up by 0.77% to 5,716.20;
  • Hang Seng is up by 0.97% to 27,938.00, while
  • Shanghai index is down by 0.03% to 12,003.66.

Weekend data from China

Data from the world’s second largest economy showed that consumer and factory gate prices both increased in August.

China’s consumer price index accelerated to 1.8% from a year earlier in August, which is faster than July’s 1.4% uptick and the expected 1.5% gain for the month. China’s National Bureau of Statistics attributed the gain to higher food prices as well as hot summer and heavy rains pushed vegetable and egg prices higher.

Excluding food and energy prices, CPI increased by 2.2% from a year earlier and beat July’s 2.1% increase. Analysts estimate that the trend will continue for consumer prices for the rest of the year as seasonal factors kick in.

Meanwhile the producer price index, which measures costs of goods at the factory gate, popped up to a four-month high of 6.3% in August. This is higher than July’s 5.5% increase and the expected 5.7% uptick.

Last weekend’s PPI report supported earlier PMI releases that show continued expansion for both the manufacturing and services industries. Apprehensions remain, however, especially since the government is likely to step in and curb financial risks by limiting debt options for many businesses.

Major Market Mover(s):

USD

A non-event weekend for North Korea and easing concerns over hurricane Irma’s effects on Uncle Sam boosted the Greenback against most of its major counterparts.

EUR/USD is down by 5 pips (-0.04%) to 1.2014;
GBP/USD is down by 8 pips (-0.06%) to 1.3178;
USD/JPY is up by 23 pips (+0.21%) to 108.45, and
USD/CHF is up by 24 pips (+0.25%) to .9494.

AUD and NZD

Overall dollar strength dragged on AUD/USD and NZD/USD in early Asian session trading but stronger-than-expected CPI and PPI reports from China and overall risk-taking soon inspired intraday reversals for the comdolls.

AUD/USD dipped to a session low of .8033 before recovering to .8049;
AUD/JPY gapped higher from 86.90 to 87.19 before closing at 87.27;
NZD/USD slipped to .7225 before rising to .7244; and
NZD/JPY fell to a low of 78.34 before settling at 78.55.

Watch Out For:

  • 6:00 am GMT: Preliminary machine tool orders (y/y)
  • 6:30 am GMT: Will France’s BoF business sentiment to improve from 105.0?
  • 8:00 am GMT: Italy’s industrial production (-0.5% expected, 1.1% previous)