10/08/2017 - North Korea Tensions Spark Safe Haven Flow

USD

Traditional safe-haven currencies including the Swiss franc and Japanese yen rose on Wednesday, boosted by worries about increased tensions between the United States and North Korea. Most Asian currencies stumbled, with the Korean won on pace for its biggest fall in nearly eight weeks following the news of a potential attack. The Swiss franc was on pace for its biggest single-day rise against the euro since the Swiss National Bank removed its cap on the currency in January 2015. The warning came just hours after U.S. President Donald Trump told North Korea that any threat it presented to the United States would be met with "fire and fury."

Tensions between the US and North Korea have intensified as North Korea warned it is "carefully examining" plans for a missile strike on the U.S. Pacific territory of Guam. Rattled financial markets prompted US Secretary of State Rex Tillerson to try to play down the rhetoric.

GBP

The European Union has proposed that Britons living in the bloc after Brexit will only have the right to stay in the country where they are resident when Britain leaves, Brexit minister David Davis said in a letter on Wednesday. The future rights of UK nationals living in the EU and EU nationals living in Britain is one of the issues the EU wants to settle in the first stage negotiations. Only then will it move on to talks over the future trading relationship.

In a letter updating a committee of lawmakers from Britain's upper house of parliament on the negotiations, Davis said the EU was only offering restricted residency rights to Britons. After the first full round of talks last month, chief EU negotiator Michel Barnier said there was "a fundamental divergence" between the two sides on how to protect the rights of expatriates after Brexit. Britain set out in June proposals to allow current immigrants from the EU to retain healthcare, work rights and other benefits that are more generous than those given to migrants from elsewhere.

Key Announcements

09.30 – GBP: Manufacturing Production MoM; Forecast at 0.0% against previous of -0.2%

13.30 – USD: Producer Price Index MoM; Forecast to remain unchanged at t 0.1%

13.30 – USD: Initial Jobless Claims expected to remain unchanged at 240k