- JPY and CHF weaken as hurricane Irma has been downgraded to category 1
- North Korea refrains from launching another ballistic missile
- Chinese inflation accelerate more than expected in August
Asian session has abounded with quite upbeat moods as stock markets have performed quite well as Irma-related risks have abated to some extent. The hurricane is now moving up the West Coast of Florida albeit it has been marked down to a category 1 with gusts of 100mph. US President Donald Trump has said the US may have got a “little bit lucky” after Hurricane Irma veered from its original course and headed west along Florida’s coast. Either way, Trump has approved a disaster declaration for Florida.
As a result, the JPY and CHF are among the weakest currencies within the G10 basket. Let us recall that there was a clear risk-off mode Friday evening when traders abstained from riskier assets before the hurricane. The franc is losing against the US dollar 0.6% while the Japanese yen is retreating 0.48%. On the flip side, the Canadian dollar is gaining a foothold which corresponds to slightly higher oil prices. Crude prices are rebounding a bit on potential less damages and disruptions of the oil facilities. Moreover, North Korea refrained from launching its ballistic missile during the weekend which had been expected. It has also enhanced a risk-on mode on the markets.
Looking back to the weekend one could notice that Chinese inflation turned out to be higher than expected in August. CPI showed a 1.8% yoy pick-up compared to the prior release at 1.4% yoy. In turn, PPI came in at 6.3% yoy against the consensus at 5.7% yoy. The stronger readings have by far strengthened a global reflationary trend as the Chinese economy is likely to export inflation going forward. Furthermore, there was a release of Japanese machinery orders for July which easily beat the forecast at 4.1% mom and came in at 8% mom which is the highest reading since January 2016. This bodes well for CAPEX as the print was the first one for the third quarter.
Technically, the USDJPY is increasing in early trading however, there has been a breakout of 108.15 which could make the ongoing rebound quite dubious to continue.