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The Greenback extended its climb from the previous trading session, taking advantage of the risk-off moves stemming from persistent geopolitical risks. The rebound in U.S. equities, along with anticipation for Yellen’s Jackson Hole speech, also lifted the dollar.

  • Canadian core retail sales up 0.7% vs. projected flat reading
  • Canadian headline retail sales posted 0.1% uptick vs. estimated 0.2% gain
  • Chinese CB leading index rose 0.9% in July vs. 1.7% previous
  • U.S. house prices ticked 0.1% higher vs. estimated 0.5% increase
  • Richmond manufacturing index unchanged at 14 vs. projected drop to 11
  • U.S. announces more sanctions on China and Russia
  • North Korean diplomat: Military drills are “an aggressive war scenario to carry out pre-emptive strikes against the DPRK”

Major Events/Reports

North Korea jitters still present

Earlier this week, the U.S. and South Korea kicked off their joint military exercises, keeping market watchers on edge about resurfacing tensions and a potential missile strike.

In this week’s UN disarmament forum in Geneva, a North Korean diplomat was quoted saying that these military drills are “an aggressive war scenario to carry out pre-emptive strikes against the DPRK” and that it would “certainly add gasoline to the fire driving the current tense situation to further deterioration.”

For now, big risk-off moves are still being kept in check as these threats are nothing new to the markets. U.S. Ambassador Wood also mentioned that dialogue remains an option but that they won’t hesitate to use “the full range of capabilities at our disposal” if push comes to shove. Any major provocation from the government heads or indications that either nation is prepping for an attack could lead risk aversion to kick into high gear.

Meanwhile, the U.S. government has also announced new sanctions against Russia and China in order to put more economic pressure on them to tame North Korea. In particular, the targeted companies and individuals are those seen to support Pyongyang’s nuclear program. The Chinese government responded that the U.S. should correct this “mistake” in order to prevent repercussions on their bilateral agreements.

Tech sector boosts Wall Street

U.S equities seemed to shrug off the slight risk-off mood in the markets as a strong rally in the tech sector led indices to close in the green.

Data from the U.S. economy turned out mixed, with the HPI showing a smaller than expected 0.1% uptick in house prices and the Richmond manufacturing index holding steady at 14 instead of dipping to the consensus at 11.

Canadian retail sales data

Over in the Great White North, data also turned out mixed as headline retail sales fell short of estimates with a meager 0.1% uptick while the core version of the report printed a higher than expected 0.7% gain instead of coming in flat.

A closer look at the components of the report reveals that the gains were driven mostly by more purchases in general merchandise stores, clothing and accessories, and building material and garden equipment. However, losses stemmed from lower sales at motor motor vehicle and parts dealers, as well as gasoline stations.

Major Market Mover(s):


The scrilla chalked up significant wins against its peers, buoyed by the rebound in U.S. stocks and safe-haven demand.

USD/CHF is up from .9618 to .9685 (+0.70%), USD/JPY climbed from 108.97 to 109.51 (+0.50%), NZD/USD is down to .7276 (-0.68%), and GBP/USD is down to 1.2825 (-0.60%).


The Loonie also managed to score some gains, thanks to stronger than expected core retail sales data.

EUR/CAD is down to 1.4763 (-0.49%), GBP/CAD tumbled from 1.6200 to 1.6109 (-0.54%), AUD/CAD dropped from .9970 to .9934 (-0.35%), and CAD/JPY popped up to 87.17 (+0.45%).

Watch Out For:

  • 1:30 am GMT: Japanese flash manufacturing PMI (52.3 expected, 52.1 previous)