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Dollar pairs spent the Labor Day long weekend chillin’ like ice cream fillin’ even as the U.S. economy is facing a couple of potential challenges. Safe-havens like gold and the Swiss franc continued to advance, indicating that risk aversion remains in play.

  • U.S. and Canadian banks closed for Labor Day
  • Florida bracing for category 4 storm Hurricane Irma
  • U.S. President Trump: Full range of diplomatic, conventional, and nuclear capabilities at our disposal

Major Events/Reports

All eyes on North Korea

Pyongyang’s missile launch over the weekend continued to keep market participants on edge, waiting to see whether tensions will escalate or if a diplomatic approach would be pursued. The White House issued an official statement disclosing the phone discussion between Trump and Japanese PM Abe, saying:

“President Trump reaffirmed the commitment of the United States to defending our homeland, territories, and allies using the full range of diplomatic, conventional, and nuclear capabilities at our disposal.”

The statement also indicated that both leaders condemned North Korea’s provocative actions and pledged to continue close cooperation. According to a news source from the hermit nation, they were able to test a hydrogen bomb or a nuclear weapon that could be loaded into a long-range missile.

Meanwhile, South Korean President Moon Jae-in agreed with Trump in terms of stepping up their efforts to get North Korea to back down. In particular, the two leaders agreed to let South Korea fill its missiles with heavier warheads in case an actual strike does happen.

Another hurricane to hit the U.S.

Even though Hurricane Harvey has weakened and relief efforts are underway, another major storm is projected to hit the U.S. coast, this time in Florida and close to the Caribbean islands.

The National Hurricane Center upgraded Hurricane Irma into a category 4 storm, prompting Florida Governor Scott to declare a state of emergency to get preparations underway. The storm is forecasted to hit Puerto Rico midweek and reach Florida by Friday.

Major Market Mover(s):

JPY & CHF

Risk-off vibes continued throughout the day as the lack of any other major updates kept the safe-havens ahead of the pack.

USD/CHF dipped to the .9550 mark, USD/JPY continues to test support at 109.50, AUD/JPY is down to a low of 87.08, CAD/JPY is down to 88.30, AUD/CHF tested support at .9550, and EUR/CHF is treading sideways at 1.1405.

GBP

Surprisingly, the pound chalked up some last minute losses for the trading session even as there were no reports released. Some speculate that this may be due to Norway’s $1 trillion sovereign wealth fund loading up on investments in the U.K. economy, with many believing that this might be a wrong move.

GBP/USD tumbled from 1.2966 to a low of 1.2912, GBP/JPY is down to the 141.50 minor psychological support, EUR/GBP popped up to a high of .9227, and GBP/CAD is down to the 1.6020 area.

Watch Out For:

  • 12:30 am GMT: Australia AIG services index (56.4 previous)
  • 2:00 am GMT: New Zealand ANZ commodity prices (-0.8% previous)
  • 2:30 am GMT: Australia current account balance (-7.9B AUD expected, -3.1B AUD previous)
  • 2:45 am GMT: Chinese Caixin services PMI (51.8 expected, 51.5 previous)
  • 5:30 am GMT: RBA interest rate decision (Read Forex Gump’s preview here!)