Oil has risen to levels not seen since July 2015

Christin Tuxen Danske Bank A/S

Market movers today

It is a fairly thin data release calendar today, which means that market focus will be on the situation surrounding North Korea after the country’s leader claimed yest erday that the US had declared war on the country.
In the US, the only major data release today is the Conference Board consumer confidence indicator for September. We estimate that the indicator should fall in tandem with the preliminary Michigan consumer confidence number to a level of around 121.5. Note that despite the fall, both indicators will st ill be at very high levels, indicating continued support for consumer spending.
Several Fed speakers are due to speak, including Neel Kashkari (voter, dovish), Loretta Mester (non-voter, hawkish) and Fed chair Janet Yellen (voter, neutral).
In Sweden, the August PPI data set is released for August . From a market perspect ive, there is usually limited focus on these numbers. PPI data is for natural reasons st rongly influenced by exchange rate gyrations but the feed through to consumer prices is normally quite small. Looking at for instance consumer goods (PPI for domestic supply) , the latest y/y rate runs at 4.2% while CPI for goods rise at 0.8% y/y. The krona has appreciated against the EUR and USD recent ly, so PPI inflation will probably come down again relatively soon.

Selected market news

Focus has returned to the tensions surrounding North Korea after Pyongyang said yesterday that it sees recent US communicat ion and act ions as a ‘declarat ion of war’ and t hat , as a result , it deserves its right to take counter measures. Equit ies are lower in both Asian and US sessions as a result .

Separately, oil has risen to levels not seen since July 2015. with Brent crude t rading just off the USD60/bbl mark this morning after the product ion out of Iraqi Kurdistan looks increasingly under t hreat aft er T urkey sharpened it s rhet oric against t he region following Monday’s independence vote.

EUR/USD cont inues to hover around the 1.1850 level after the cross fell yesterday following a muddier-than-expected outcome of the German general election. Otherwise, focus today is likely to cont inue to be on cent ral bankers with the Fed’s Janet Yellen due to speak. The ECB’s Mario Draghi lifted the pair only temporarily by acknowledging that the st ronger currency reflect s a st ronger eurozone out look. We st ill see any further dip in the cross as likely to be shallow and short -lived.

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Christin Tuxen

Danske Bank A/S

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