Talking Points:
- Asian stocks finished another nervy session mixed
- However, the US Dollar hogged the limelight, unwelcome though it was
- Between North Korea, Hurricane season and declining expectations of US monetary tightening, the currency looks bereft
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The US Dollar was under severe pressure again Friday, hitting its weakest level since last November against the Japanese Yen.
Weakening expectations of further US interest rate rises combined with ongoing tensions over North Korea and the risk-appetite weakening effects of Hurricane Irma to keep the currency down. There is some speculation that Pyongyang might try another missile launch on Saturday, it being North Korea’s national day.
The Euro continued to gain too, despite European Central Bank President Mario Draghi Thursday declining to indicate that ultra-loose monetary policy was about to change. And China’s Yuan posted its biggest two-week rally for more than three decades against the beleaguered greenback.
The Australian Dollar rose to two-year highs while stock markets were mixed. The Nikkei 225 closed down 0.6% with all other major bourses in the red except for the Hang Seng in Hong Kong which added about 0.3%.
On the local data front, China’s exports rose 5.5% on the year in US Dollar terms in August, with imports up 13.3%. Exports’ gain was thus a little softer than the 6% markets had looked for, while imports exceeded the 10% forecast. Japanese second-quarter growth was revised sharply lower, more or less as markets had expected. However the numbers were effectively ignored in the welter of US Dollar selling.
Crude oil futures continued to gain, with traded benchmarks adding about ten cents per barrel. Meanwhile Gold prices surged thanks to perceptions that US monetary policy now won’t be tightening anytime soon.
The rest of Friday will offer Canadian employment numbers and inflation forecasts from the Bank of England. Reserve Bank of Australia Governor Philip Lowe is also due to speak.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
