Economy

Dollar Rallies As Irma, North Korea Fears Calm

Dollar Rallies As Irma, North Korea Fears Calm

Indices, which have been in consolidation over the last month or so, are now expected to enjoy a mini relief rally although we should get interesting insight into just how much investors perceive the threat of an escalation to have subsided. Meanwhile, North Korea celebrated its 69th anniversary without testing any missiles or nuclear bombs alleviating concern it would use the occasion to flaunt its fire power.

The risk on sentiment will likely see the Euro remain on the back foot through the remainder of the day, which could see the Euro give up $1.20 levels early in the session, with the only consideration for the day being any possible friction between the North Korean's and the U.S, though a war of words is more palatable than actual missile or nuclear tests, as far as the markets are concerned. The country proclaimed itself to be an "unbeatable atomic power" amid the festivities.

The most severe United Nations sanctions so far against North Korea, imposed just weeks ago, introduced a complete ban on coal and iron exports, blocked worldwide sales of North Korean lead ore and seafood and imposed travel bans and asset freezes on individuals and companies.

At 10:26 a.m. ET (1426 GMT), the Toronto Stock Exchange's S&P/TSX composite index rose 55.35 points, or 0.37 percent, to 15,040.67, rebounding after five straight sessions of losses. The blue-chip index closed down 0.3%, or 19.38 points, at 7,377.60 on Friday. "We haven't seen that for almost five years". However, any reading above 50 indicates expansion in the sector. The Nikkei 225 index bounced back from its worst week in seven months to gain 1.4% as the Japanese yen, a traditional haven in times of geopolitical and economic stress, weakened. This was the fastest since January and exceeded the expected level of 1.6%. The Fed has a 2 percent inflation target. Dow Jones Industrial Average futures jumped 104 points, or 0.5%, to 21,882, while S&P 500 futures gained 11.25 points, or 0.5%, to 2,472.25.

Meanwhile, investors expressed relief after Hurricane Irma was downgraded to a tropical storm, lowering the potential of further damage to the US, as some commenters estimated the damage from Irma to be about $100 billion. The threshold for a storm to become a hurricane is 74 miles per hour.

Forecasters have warned the threat to life still remains, as Florida continues to be battered by 100 miles per hour winds and torrential rain. While heavy flooding swamped Miami and other cities, the state's largest city was spared the brunt of the storm. The update of most interest will be that from Primark owner Associated British Foods, which will be publishing its Q4 figures.

A host of companies also are due to release interim results, with protein research tool maker Abcam, Hgcapital Trust, John Laing Infrastructure Fund, support services firm Restore, LED specialist Luceco, Starwood European Real Estate Finance and marketer XLMedia among the firms due to report results.