The dollar was bid and safe haven currencies were offered, reportedly on relief that North Korea didn’t conduct another missile test over the weekend (which had been widely feared on Friday). USD/JPY rallied over 0.5% in recouping about a half of the losses seen on Thursday and Friday last week. An intraday peak was clocked at 108.61.
EUR/USD clocked a 1.1993 low during the early phase of the London session. The low was seen in the wake of remarks by European Central Bank Executive Board member Benoit Coeure, who said that persistent euro strength would bring “undesirable consequences” for the inflation outlook, though follow-through euro selling proved to be limited as his remarks didn’t add much to the guidance already installed by the central bank’s post-policy meeting announcement and press conference last week.
In settling back around 1.2025, the euro is back to near net unchanged levels on the day. Action Economics said that they don’t expect dollar buying to sustain, seeing it will be more offered than bid in the days ahead as markets assess the economic damage being wrought by Hurricane Irma. There is also a high probability of continued saber rattling by North Korea as it draws nearer to a achieving a credible nuclear intercontinental ballistic missile threat.