Damages caused by Hurricane Irma are still colossal
The dollar index has bounced back up from its two years lows
Oil traders are also paying attention to the comment of the Saudi oil minister
The US Futures and European markets are enjoying the relief rally. Investors are feeling somewhat relieved today, after the most dire predictions in terms of the disaster caused by Hurricane Irma have evaporated. The damage caused by Hurricane Irma is still colossal as streets have been turned into rivers and nearly 3 million people are without any power. However, thankfully, the overall impact of Irma is falling short of predictions. It is important to keep in mind that the full damage picture will still be colossal. The dollar index has bounced back up from its two years lows purely because the estimates of economic damage are far less than anticipated. The US inflation data will be the talk of the week when it comes to the dollar index from here onwards and a number better than the expectations could satisfy the bulls.
The black gold is recovering its losses as the gulf coast refinery process has seen its production come back online and the effects of Hurricane Harvey are dissipating. Hurricane Irma has paralyzed the tanker traffic and caused nearly 6000 gas stations to close, therefore, the path towards the 50 for crude oil is still looking challenging. Oil traders are also paying attention to the comment of the Saudi oil minister, in which he said that there is a possibility that the current production cut by the cartel could easily roll over to March 2018.
North Korea thankfully didn’t ranch up the tension over the weekend as it was widely expected that the country may surprise the world with more missile test. Nonetheless, the US is going to push the UN for the strongest form of sanction on North Korea in their meeting today. The profit taking in the safe haven market dragged the price of yellow metal lower. Holdings of the SPDR gold trust which is the world’s largest gold exchange traded fund has seen its holding dropping by nearly 0.3%. The near term support is at 1320 and the upside is capped by the resistance of 1360.
Back in the UK, the parliament is set to vote on the Brexit Repeal Bill. The Brexit secretary has given a clear indication that a vote against the bill will not be short of a disaster for the country. It would trigger a chaos in terms of Britain’s exit from the European Union. The repeal bill provides that there will be no dramatic changes to British laws for businesses and individuals. This bill is nothing but the carbon copy under which the same EU laws are implemented in the British law. Moreover, this is going to be a big week for the Sterling as the UK inflation data is due on Tuesday. The number is expected to rise to 2.8% y/y in August. Regardless of the outcome, we do not think that the BOE will be changing its monetary policy stance anytime soon.