Economy

Equities hit record as Irma weakens

Equities hit record as Irma weakens”

EUR/USD clocked a 1.1993 low during the early phase of the London session.

Irma, once ranked as one of the most powerful hurricane recorded in the Atlantic, was downgraded to a tropical storm in the morning, but still caused severe flooding in many Florida cities and knocked out power to about 5.8 million homes and businesses.

GBP/USD is supported in the range of 1.3100 levels and now trading at 1.3163 levels.

AB Foods, the owner of discount clothing chain Primark, said adjusted operating profit for the financial year ending September 16 will be "well ahead" of the previous year due to stronger profit delivery from Primark and "an even lower level" of markdowns. The euro was down 0.3 percent at $1.1998 while the dollar rose 0.7 percent to 108.62 yen. That does not represent a full quelling of the unease that has gathered over sterling in the first months of Brexit negotiations.

The Bank of England will nearly certainly leave policy unchanged Thursday, even though the United Kingdom inflation reading two days earlier may show a pickup.

USD/CAD is supported at 1.2058 levels and is trading at 1.2119 levels.

Sharp gains in US bond yields also prompted buy-back in the battered dollar.

Investors who turned to safe haven assets like bonds and gold in light of worsening tensions between USA allies and North Korea, started to return to riskier trades like equities, helping give stock markets a boost. Investors had expected that the Bank of Canada would wait until October to hike again after it increased rates in July for the first time in almost seven years. The blue-chip index closed down 0.3%, or 19.38 points, at 7,377.60 on Friday.

USA retail sales and inflation data are due this week. Rising tensions between the USA and North Korea have weighed on stocks in recent weeks and raised the prices of gold and bonds. Brent crude futures edged down 0.11 percent to trade at $53.78.

AUD/USD is supported around 0.8000 levels and now trading at 0.8024 levels.

Investors are so focused on the hurricane and the Federal Reserve's potential monetary tightening that they are missing the enormous boost the weaker dollar and low interest rates will give the USA economy, said Jim Paulsen, chief investment strategist at the Leuthold Group in Minneapolis. The Dollar is not out of the woods yet, with the upside coming more from a lack of action from North Korea than a shift in sentiment towards FED monetary policy, though that could all change this week should U.S inflation and retail sales figures impress. Heating oil fell 2 cents to $1.74 a gallon. The Aussie rose 1 percent last week for its fourth consecutive weekly gain.

Investors may have gotten another break from easing geopolitical tensions. North Korea failed to conduct a missile test over the weekend, which some predicted the country might do to mark the anniversary of its founding.

In response, the ICE U.S. Dollar Index DXY, +0.05% a gauge of the greenback's performance against six rivals, rose 0.1% to 91.4901.

ENERGY: Benchmark U.S. crude rose 29 cents to $47.77 a barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price worldwide oils, fell 18 cents to $53.60 a barrel in London. The price of gold recently rose to a one-year high.

- Britain's 10-year yield increased five basis points to 1.04 percent.

Gold had been lifted last week by fears of a North Korean missile launch and the impact of Irma on the U.S. economy, helping to drive the dollar to its weakest since January 2015 and USA bond yields to 10-month lows.

- The Japanese yen sank 1.5 percent, the most since January, to 109.45 per dollar. United States gold futures for December delivery were down 0,9 percent at $1,339.20.

Brent crude prices fell around 0.5% to 53.47 USA dollars per barrel amid fears that Hurricane Irma would curb demand for oil in Florida, which is one of the largest consumers of oil in the United States.



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