Market Drivers September 18, 2017
Yen weakens as NK stays quiet
Cable jumpy ahead of Carney
Nikkei 0.52% Dax 0.59%
Oil $50/bbl
Gold $1315/oz.

Europe and Asia:
EUR EZ CPI 1.5% vs. 1.5%

North America:
USD NAHB 10:00

It’s been a relatively sedate start of trade in the FX market with risk on the dominant theme is Asia as the quiet from North Korea provide some relief for USDJPY.

The pair rose to a high of 111.43 in Asian afternoon dealing as it continued to extend Friday’s gains. The rally in USDJPY caught many traders off guard as the US data on Friday proved to be disappointing with Retail Sales missing their mark for the fifth month out of the past six. The consumer remains the weakest link in the US recovery story as full employment has not translated into meaningful wages gains just yet.

Still, the pair appears to be trading more on risk off/risk on flows rather than any US economic data, although this Wednesday’s FOMC statement is sure to set the tone of trade in USDJPY for the foreseeable future.

Elsewhere, cable put in a very jumpy performance in Asia and early London trade popping above the 1,.35600 figure only to retreat below 1.3550. The markets awaited the comments from Governor Carney who was scheduled to speak at an IMF lecture in Washington at 1500 GMT.

FX traders will be particularly keen to see if he reaffirms the hawkish comments of other MPC members last week that drove the pound above the post-Brexit highs in a furious rally on Thursday and Friday. Mr. Carney has been an unrepentant dove since Brexit vote, but the generally robust growth of the UK economy along with much higher than target inflation may have forced him to throw in the towel. If Mr. Carney reaffirms that the BOE will have to tighten soon – perhaps as early as November – expect sterling to extend its rally and test the 1.3700 barrier as the day proceeds.