USD 

The dollar regained some ground on the return of risk aversion stemming from North Korea jitters.

The US and South Korea have started their joint military exercises this week and a North Korean diplomat has been quoted saying that this could be an act of provocation. The Richmond manufacturing index was unchanged at 14 while US HPI posted a meager 0.1% uptick. Flash manufacturing and services PMIs are due next, along with new home sales data. 

EUR 

The euro tried to hold its ground even with downbeat economic data. Germany’s ZEW economic sentiment index fell from 17.5 to 10 versus the 14.8 consensus while the region’s index dropped from 35.6 to 29.3. Flash manufacturing and services PMIs are due and strong reports could allow the shared currency to rebound. 

GBP 

UK public sector net borrowing was at a deficit of 0.8 billion GBP, which means that the government was able to collect more than it spent for the period. There are no major reports lined up from the UK economy today but the pound remains under pressure on Brexit risks. 

CHF 

The franc had a mixed run as it mostly reacted to currency-specific events, managing to draw a bit of a bid on risk aversion. The Swiss trade balance showed a larger than expected surplus of 3.51 billion CHF versus the projected 2.88 billion CHF, easing the pressure on the SNB to intervene to keep the currency weak. 

JPY 

The yen was also able to benefit from risk-off flows as the revival of North Korean concerns prompted a flight to safety. Japan’s flash manufacturing PMI rose from 52.1 to 52.8, higher than the projected 52.3 figure. Risk appetite could continue to push yen pairs around from here. 

Commodity Currencies (AUD, NZD, CAD) 

Canada’s retail sales reports came in mixed but the Loonie was able to rake in some gains. The core reading showed a 0.7% gain instead of staying flat but the headline figure was up only 0.1% instead of the 0.2% consensus on weaker auto and gasoline sales. Crude oil inventories data is lined up next, along with New Zealand’s trade balance. 

By Kate Curtis from Trader’s Way