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September 2017

Market response to latest North Korean missile more muted

Published: Friday 15 September 2017

  • Market response to latest North Korean missile more muted
  • Sterling soars on Bank of England announcements
  • Key US economic data awaited today
By Charlie Horsley
 
 
In world news this morning, we hear that North Korea launched another missile test over Japan. Even though it proves its capability of reaching Guam, and markets were jittery in response, the market reactions were more muted this time. The Japanese Yen and the Swiss Franc remain the weakest major currencies for the week. We await a response from the White House.
 
In a twist of fortunes, Sterling is set to end the week as the strongest currency, riding on the message from yesterday’s Bank of England (BoE) announcements that monetary policy tightening would come within months. The Bank of England said that higher inflation and a pickup in growth could lead to an interest rate hike in "the coming months". The main outcome of this has been for the markets to price in about a 50% chance of a rate hike in November, while the chance for a rate increase in February 2018 next year is already fully priced in.

The Pound is at its highest since early September 2016 against the US Dollar and a number of other currencies. The Pound reached its highest since 7th September 2016 against the US Dollar and the highest against the Euro since July of this year. It’s a good time to get in touch with your currency consultant to see what opportunities are available to you if you are trading Sterling-US Dollars or Sterling-Euro, in particular.

In terms of data releases, the latest New Zealand Business Manufacturing Index rose to 57.9 in August. And the Eurozone will release their trade balance figures today. But the main focus will be on US data, including Retail Sales and Industrial Production. Markets are keeping a close eye on the EUR-USD currency pairing, looking to see if the strength of the Euro is sustainable.
 
In London news, our thoughts are with all those caught up in the tube explosion incident at Parsons Green this morning. Some of the delightfully British messages on Twitter offering to put the kettle on for anyone stuck in the area are a reminder of the kindness and strength of many good people in this city.
 
Stay safe this weekend, wherever you may be.

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 10:00 EU: Trade Balance 22.3b 20.1b
GBP 12:00 Bank of England Quarterly Bulletin    
USD 13:30 US: Retail Sales 0.6% 0.1%
USD 13:30 US: Core Retail Sales 0.5% 0.5%
USD 13:30 US: Empire State Manufacturing Index 25.2 18.2
USD 14:15 US: Capacity Utilization Rate 76.7% 76.8%
USD 14:15 US: Industrial Production 0.2% 0.1%
GBP 14:30 UK: Conference Board Leading Index -0.1% -0.1%
USD 15:00 US: Preliminary UoM Consumer Sentiment 96.8 95.1

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news