Federal Reserve governor

Federal Reserve governor Jerome Powell and Commodity Futures Trading Commission Chairman J. Christopher Giancarlo, say they are confident regulators can come to an agreement on changing the Volcker rule ban on certain types of bank trading in the coming months. "We are going to be able to get to a five-agency rule on Volcker that is significantly less burdensome, that is faithful to the intent of Congress," Powell says. "But I'm not going to tell you that its going to be quick or easy."

The British pound has recorded considerable losses

The British pound has recorded considerable losses in the Monday session. In North American trade, GBP/USD is trading at 1.3267, down 0.97% on the day. On the release front, British Manufacturing PMI slowed to 55.9, but still fell short of the forecast of 56.3 points. There was better news in the US, as ISM Manufacturing PMI accelerated to 60.8, beating the forecast of 57.9. This was the indicator’s highest level since April 2011. On Tuesday, the UK releases Construction PMI, which is expected at 51.2 points. As well, the BoE will release the minutes of the quarterly Financial Policy Committee meeting.
With investors keeping a nervous glance on the slow pace of the Brexit negotiations, any key British indicators which fall short of expectations could send the pound sharply lower. This was the case on Monday, as British Manufacturing PMI softened and missed the forecast. Although the reading of 55.9 indicates respectable expansion in the manufacturing sector, perception is key in the markets, and negative sentiment about the British economy could spell trouble for the pound.

Societe Generale says

Societe Generale says at times when the U.S. dollar was falling this year, it is likely that the Chinese authorities were buying U.S. treasuries while buying EUR/USD at the same time to rebalance reserves. "That allowed USD/CNY to fall without the value of the yuan overall going up." SocGen therefore recommends buying EUR/USD, as well as emerging market currencies, if USD/CNY starts falling again. USD/CNY reached a one-month high of 6.6759 on Thursday. But since the beginning of the year, USD/CNY was on a downward path, falling to 6.44 in early September 8 from around 6.96 on Jan. 3

GBP/USD is down 0.5% at 1.3513.

GBP/USD is down 0.5% at 1.3513. Sterling is falling versus the U.S. below 1.35 to as low as 1.3489 because British Prime Minister Theresa May isn't giving much detail on how she sees the relationship between the U.K. and the EU after Brexit. Speaking in Florence, she did say that she doesn't see a deal similar to the one Canada has with the EU, or one similar to an European Economic Area membership. Mrs. May says she would want the U.K. to form its own type of deal with the EU. "Let us be creative," she says. This level of unpredictability is negative for the pound. However, sterling rebounded slightly once Mrs. May said there will be an implementation period of about two years, which gives more time for the U.K. and its currency to adjust to the new landscape.

Why Sterling's Fall Will Hurt

Why Sterling's Fall Will Hurt: The U.K. economy will perform better this year than expected. After that, the future's not so bright.
ECB Weighs Ending Stimulus as Fed Calibrates Its Easy Money Stance: The European Central Bank is likely to announce plans next month for phasing out the bond-buying program that has helped reinvigorate the eurozone economy, while the U.S. Federal Reserve is weighing how aggressively to retreat from its own easy money policies.
ECB Will Have Trouble Getting Out of Strong Euro Bind: The European Central Bank looks set to decide in October on how its bond-buying program will change in 2018. Looming over the proceedings is the surging euro.
France's Emmanuel Macron Takes EU Renewal Push to Greece: The European Union will crumble if it isn't overhauled, French President Emmanuel Macron said Thursday in Athens, attempting to reinvigorate his call for greater sharing of financial burdens in the eurozone.

A reading for business activity

A reading for business activity across the Midwest was unchanged in August from the prior month, remaining at its lowest level since April, according to a report Thursday.
The Chicago Business Barometer, also known as the Chicago PMI, or purchasing managers index, stayed at 58.9 in August. Indexes above 50 indicate expansion while anything lower indicates contraction.
Economists surveyed by The Wall Street Journal expected the gauge to come in at 58.
"Following a sharp rise in the barometer to a more-than-three-year high in June, it isn't too surprising to see activity subsequently ease somewhat," said Shaily Mittal, an economist at MNI Indicators. "The disappointment comes from the employment indicator which once again contracted, the sixth time in the last 12 months, with fewer firms expecting an increase in hiring."
The inventories indicator fell below 50 during the month, hitting the lowest level since the start of the year, as some companies struggled to keep up with demand.
While the majority of respondents said their inventory levels were just right and around a quarter said they had too much, 16% said they had too little. This is a significant increase from the 2% who reported limited inventory when the same question was posed in November 2015.

Japanese yen is considered a safe-haven

The Japanese yen is considered a safe-haven asset, with the currency often showing volatility following geopolitical tensions. This has been the case this week, as the yen initially posted gains after North Korea fired a missile over Japanese territory on Tuesday, drawing sharp condemnations from Japan and the US. The easing of tensions since the missile launch has enabled the US dollar to recover and push above the symbolic 110 level. Still, if North Korea decides to fire another missile towards Japan, it’s a safe bet that the yen will gain ground.
Like other Western economies, Japan remains gripped with low inflation. This has resulted in the Bank of Japan keeping in place its ultra-accommodative monetary policy. Unlike the US and Europe, however, the BoJ has given no indications of tightening policy anytime soon, insisting that that inflation must first rise closer to its target of 2%. The economy is headed in right direction, as GDP has expanded for six consecutive quarters. In the second quarter, GDP impressed with a gain of 1.0%, well above the forecast of 0.6%. Still, with inflation nowhere near the BoJ’s target, the bank’s radical stimulus program is likely to remain in place for the foreseeable future.