North Korea heightens tensions, Hurricane Harvey wreaks havoc

August 29, 2017

Plenty of news around the world today, with non-economic events likely to play a role in market movements, while overshadowing data releases.

North Korea took the drastic step of firing a missile into Japanese airspace overnight, potentially destabilising an already delicate situation. The world now waits with bated breath as to the next step in this global stand-off. This comes at a time when the US is occupied with domestic matters, so it is unsure what steps the US will take to de-escalate the North Korean situation. During times of possible armed conflict however, gold tends to perform strongly as it is considered a ‘safe-haven’ asset. We have already seen gold get stronger over the last few days as traders find comfort in the precious metal.

The other huge event in the world today is Hurricane Harvey in the US. It has smashed the state of Texas and has caused the loss of life and massive damage to everything in its path. While the loss of life is the most concerning from a humanitarian point of view, the financial cost of the damage will run into the billions of dollars. People will be left displaced and infrastructure will be destroyed. While events like this will require people to be employed to clean up in the aftermath, it also affects economic growth within the country as there is no economic output from the country’s second largest state by population. Among the infrastructure damaged are the oil refineries that dot the Texan landscape. Refineries have either been destroyed, severely damaged or shut down. This halt in production may cause oil prices in the US to fluctuate somewhat as a large supply has suddenly been cut.

The Euro also continued its rally overnight, spiking above the $1.198 mark. The strong words by Mario Draghi at the Jackson Hole Symposium, coupled with the hurricane in the US have all contributed to fluctuations with the currency.

As for announcements, the US Consumer Confidence figure headlines the list. Also being published is US S&P/CS Composite-20 HPI, BoJ Core CPI from Japan, German GfK Consumer Climate, French Consumer Spending & Prelim GDP and UK Nationwide HPI. Finally, Canada are releasing RMPI & IPPI data.