INVESTORS TRACK HURRICANE IRMA AMID QUIET RELEASE SCHEDULE
Deadly Hurricane Irma ripped through Florida on Sunday, causing widespread damage to the state. The storm ravaged the Caribbean region last week before making its way north toward the Florida Keys.
The storm, which has been downgraded to a Category 2 hurricane, is expected to cause more than $135 billion in damages. Some estimates show the total damages could reach $200 billion. Irma is expected to make its way through Florida in the coming days en route to Georgia.
US stock futures were surprisingly buoyant amid the storm, with the Dow Jones mini gaining more than 100 points in Asian trading. The US benchmarks finished mixed-to-lower on Friday.
Demand for riskier assets triggered a sharp slide in precious metals on Monday, with gold prices falling 0.7%. Silver was also down more than 1% on the Comex division of the New York Mercantile Exchange.
Gold has been one of the best performers in recent weeks, as geopolitical unrest and a plunging dollar boosted demand for bullion.
The US dollar index (DXY) was up 0.2% at the beginning of the week after crashing to more than two-and-a-half year lows. The DXY basket has shed 10.5% since the start of 2017.
The economic calendar has a light release schedule on Monday. The Japanese government begins the day with its Tertiary Index, which provides a snapshot of the country’s vast services sector. Separately, the Japan Machine Tool Builders’ Association will report on machine orders for the month of August.
In Europe, Portugal will release its latest batch of inflation data at 10:00 GMT. The consumer price index (CPI) fell 0.7% month-on-month in July.
Shifting gears to North America, the Canadian government will report on August housing starts at 12:15 GMT. Currency traders will likely brush off the report.
Europe’s common currency was a chief benefactor of the dollar’s multi-week slump. The EUR/USD pair has come off its recent highs, but continues to trade above 1.2000. The market remains strongly bullish, with long positions aiming for 1.2100.
The USD/CAD retook the 1.2100 handle on Friday after a precipitous decline earlier in the week that was stoked by a surprise rate hike by the Bank of Canada. The pair is holding on to immediate support at 1.2130. While a short-covering rally is expected to continue, the pair could face strong resistance at 1.2200.
Bullion has been on a tear in recent weeks, with prices reaching 12-month highs on the heels of a plunging US dollar. Spot gold prices were last seen trading around $1,337.00 a troy ounce. The precious metal faces immediate resistance at $1,350.00, a level that it failed to penetrate last week. The general trend shows strong support for bullion. However, the path higher is expected to be choppy.