Calling a EURUSD reversal is premature

Much to consider after the break

Markets will return from holidays this week with a lot to digest from last week as well as with a much to consider about the run into the end of the year. That said US markets are closed tomorrow for Labor Day, so liquidity is still likely to be thin, a situation that may not change much until the middle of September. 

Geopolitics is likely to overshadow economics and data at the start of the week. Tension on the Korean peninsula ratcheted up over the weekend with North Korean announcing it had conducted a sixth nuclear test on Sunday. This will favour safe haven trades such as the JPY and the CHF in the first instance, but it may also help the USD against other major currencies although much will also depend on President Trump’s response.

Congress will return from the summer break on Tuesday and will have to tackle the fallout from Hurricane Harvey as well as increasing the debt ceiling to avoid a government shut-down at the end of this month. The devastation from Hurricane Harvey may actually serve to increase pressure on Capitol Hill and the White House to reach an agreement on the budget and debt issues, or otherwise they will appear aloof from the from the day to day issues affecting millions of Americans.

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