- US Dollar rallies against the Euro
- The United Nations Security Council condemns North Korea’s outrageous actions
By Michael Hart
Risk appetite returned overnight as the Dow Jones Industrial average staged a 200 points swing in the biggest intraday comeback in nearly nine months. As a result, the US Dollar strengthened against the Euro, pushing it below the 1.20 level that was seen for a while yesterday. Some analysts attributed the rebound to the lack of escalation from the US regarding North Korea's firing of a missile over Japan. US President, Donald Trump, stated that all options are on the table, without any follow up. The United Nations Security Council (UNSC) issued a Presidential Statement and condemned North Korea for its “outrageous actions.” UNSC demanded that they "immediately cease all such actions" and warned that the actions were "not just a threat to the region" but to "all UN Member States". And such actions "deliberately undermining regional peace and stability and have caused grave security concerns around the world."
Meanwhile, as the third round of Brexit negotiation carries on in Brussels, there is so far no constructive news coming from the meeting. It's reported that the UK's Brexit Secretary, David Davis, is demanding legal clarification on the principles that the European Union (EU) uses to calculate the “divorce bill” and the UK is determined not to offer a figure, as it's perceived as a poor negotiation tactic. UK Prime Minister Theresa May's spokeswoman, Alison Donnelly, reiterated that May would like to move on to a "future relationship" as there are lots of issues that "you can't separate between withdrawal and future relationship." She reiterated that "our desire is to discuss both at the same time: we've repeatedly said that, and that's what we're working towards."
On the other hand, European Commission President, Jean-Claude Juncker, criticized that "none" of UK's position papers on Brexit is "satisfactory”. He complained that "the UK government is hesitant in showing all its cards." The EU is also clear that there will be no talks on trade agreements before settling some key issues, including the divorce bill. Juncker emphasised again that "first of all we settle the past before we look forward to the future." There are only two more rounds of talks scheduled before the EU summit in October. EU officials would then decide whether significant progress is made to move on to trade agreements. But based on the current lack of progress, it's highly unlikely that the negotiations will meet the deadline.
On the data front, the UK will release mortgage approvals and M4 money supply today. The Eurozone will release confidence indicators. From the US, the main focus will be on ADP employment and Gross Domestic Product (GDP) revision.