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Draghi's euro headache, Hurricane Irma hurtles toward the U.S., and Trump says military action remains an option on North Korea. Here are some of the things people in markets are talking about.
Mario Draghi's euro problem got bigger on Thursday. Despite blaming the trimming of inflation forecasts on the currency's appreciation, the euro gained on most of its G-10 peers, breaking above 1.20 versus the U.S. dollar. The central bank kept monetary policy unchanged and deferred on providing clarity on tweaks to its asset purchasing program until October, but staffers are reportedly presenting options that stick within the current parameters of the plan.
Here Comes Irma
Hurricane Irma is on a collision course with Miami after wreaking havoc on Puerto Rico and a number of islands in the Caribbean. It's due to hit the U.S. on Sunday, though it's difficult to predict its path with precision. Meanwhile, the U.S. Federal Emergency Management Agency is almost out of money amid continued relief efforts related to Hurricane Harvey. Warm waters and a moist atmosphere proved fertile ground for the formation of the storm, which is relatively rare in an El Nino year, according to experts. More bad news: there are another two hurricanes churning in the Atlantic. A group of insurers with acute exposure to the region are plunging as the storm approaches. Norwegian Cruise Line is giving passengers on its Escape vessel the option of disembarking the ship in Miami or staying on and sailing away from the storm. Billionaire Richard Branson and his crew were able to find shelter from the storm in his concrete wine cellar on a private island in the Caribbean.
Japanese trade data released at 8:50 a.m. Tokyo time is forecast to show the monthly surplus more than doubled in July to 2 trillion yen, while the final reading of second-quarter GDP growth is expected to confirm the economy expanded for the sixth consecutive quarter. Australian home loans, due out at 10:30 a.m., are forecast to rise 1 percent month-on-month in July. Reserve Bank of Australia Deputy Governor Guy Debelle is slated to participate in a panel on interest rate benchmarks; later in the day, Governor Philip Lowe will deliver a speech in Sydney. We may also get an update on Chinese trade data for August, projected to show that import and export growth decelerated while the monthly trade surplus swelled. Asian hours will also play host to a double dose of Fedspeak from regional bank presidents Bill Dudley and Esther George.
The astounding rally in 10-year Treasuries continued, with yields plumbing fresh 2017 lows. The flattening yield curve flattened U.S. banks on Thursday, with the SPDR Financials Select Sector ETF down 1.7 percent. Major U.S. equity benchmarks were little changed. Crude oil futures also barely budged on Thursday despite the Russian finance minister's endorsement of an extension to the deal between major producers to limit output.
Nikkei 225 and S&P/ASX 200 equity futures are trading to the upside ahead of the open of the final session this week. For now, traders appear to be waiting for a hawkish shift from the Reserve Bank of Australia to take the resilient currency another leg higher. Stocks in the region took their cues from the temporary resolution of the U.S. debt ceiling dilemma to rise on Thursday, with South Korean equities leading the way.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Trump keeps up the pressure on North Korea.
- The Aussie’s resilience puts it among the biggest gainers.
- A chart that might bother Lloyd Blankfein.
- Tencent’s massive rally too much of a good thing.
- Ask Alexa: whither Amazon’s second headquarters?
- A budget Asian airline says it can cut fares by 30 percent.
- How to not run a luxury Dubai hotel.