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August 2017

Asian markets shaken by North Korean missile

Published: Tuesday 29 August 2017

  • Asian markets shaken by North Korean missile
  • Theresa May to reassure Japanese companies during her visit to Japan
  • Euro continues to strengthen with GBP-EUR pushing lower 
By Chris Verdet

Japan is in focus for a number of reasons this morning.

North Korea has fired another missile, which flew over Japan and landed in the Pacific Ocean.  Along with other traditional safe havens, such as the Swiss Franc and Gold, this has seen the Yen strengthen (perhaps somewhat counterintuitively) and includes an element of Japanese investors repatriating their overseas investments on fears of market and exchange rate volatility.

Japan’s Prime Minister, Shinzo Abe, has requested an emergency meeting of the UN Security Council, to "further strengthen pressure against North Korea."

Theresa May will start a three day trip to Japan tomorrow under pressure to reassure Japanese companies over the likely impact of Britain’s exit from the European Union (EU) on their UK investments.

Meanwhile, back in Europe, the Euro continues to strengthen, with GBP-EUR pushing lower still and EUR-USD recording a fresh seven month high this morning.

As the third round of Brexit negotiation starts, the EU's chief negotiator, Michel Barnier, has urged the UK to start "negotiating seriously" as, "to be honest, I am concerned. Time passes quickly." He welcomed the UK Government papers published before the meeting but emphasised that "we need UK positions on all separation issues" to make "sufficient progress". Barnier added "we need UK papers that are clear in order to have constructive negotiations and the sooner we remove the ambiguity, the sooner we will be in a position to discuss the future relationship and the transitional period."

Meanwhile, the UK's Brexit Secretary, David Davis, urged "flexibility and imagination on both sides". He reiterated that "our goal remains the same: we want to agree a deal that works in the best interests for both the European Union and the United Kingdom and people and businesses right across Europe. We're ready to roll up our sleeves and get back to work once more."

Across the Atlantic, Donald Trump has been suggesting that he may pull the US out of the North American Free Trade Agreement (NAFTA), their tripartite agreement with Canada and Mexico, as he seeks to renegotiate the deal.

Today’s data releases include the Japanese employment figures. Their unemployment rate remained unchanged at 2.8% in July.

UK nationwide house price data was also released this morning, with the August figures showing that UK house price growth has dropped to its lowest for three months.

In contrast, the German Gfk Consumer Confidence data released today showed that consumer confidence in Germany is at its highest for almost 16 years. However, this has had little effect on the Euro.

French Gross Domestic Product (GDP) figures were also released this morning, up 0.5% for the third time in a row this quarter.

Canadian Raw Material Prices and US Consumer Confidence will be released later today and will serve as important benchmarks for their respective countries’ economies. Better than forecast figures for Canada could have the power to help boost the Canadian Dollar, while a poor result could weaken the Canadian currency.

In the US, consumer sentiment on personal income and stability is a key economic indicator for the US overall; and with recent economic and political events in the US, this will be one to watch.
No pun intended 

There was a man who entered a local paper's pun contest. He sent in ten different puns, in the hope that at least one of the puns would win. Unfortunately, no pun in ten did. 

Today's Major Economic Releases

Market BST Data/Event Previous Expected
CAD 13:30 Canada: Raw Materials Price Index -3.7% -0.2%
CAD 13:30 Canada: Industrial Product Price Index -1.0% -0.7%
USD 15:00 US: Conference Board Consumer Confidence 121.1 120.9
NZD 23:45 New Zealand: Building Consents -1.0% -1.0%

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