The UK’s construction sector didn’t follow the manufacturing sector’s good example in August. Instead, it recorded a one-year low in growing pace and spread disappointment, since the result of the IHS Markit’s survey was very close to the mark that shows stagnation. The commercial construction sector received the strongest blow and job creation showed signs of a slowdown.

Asian and European markets dropped on news that North Korea tested its most powerful hydrogen bomb on Sunday. Gold hit a ten-month high, while investors and traders turned to the Japanese Yen and the Swiss Franc, which are considered safe-havens. The US Defence Secretary assured the US allies that any attack against them by North Korea will be met with a swift military response.

Pound Sterling – UK Markets

Today, the Pound slumped against the Euro with the exchange rate set at €1.08. Sterling also weakened against the US Dollar with the exchange rate set at $1.29.

IHS Markit published its UK Construction PMI data for August with the survey’s result being rather disappointing for the British economy. UK construction growth hit a one-year low in August, reaching the lowest level since the Brexit referendum vote. Markit’s index fell to 51.1 in August, while analysts were expecting it would rise to 52.0 from 51.9 in July. The report accompanying the data said that “concerns about the UK’s economic outlook had weighed on the commercial development sector.”

A poll conducted by ICM on behalf of the British Future thinktank found that 86% of the public want high-skilled EU-migration to stay at the same level as now or increase after Brexit. Surprisingly, 82% of Leave voters would prefer to see high-skilled migration remain at the same level or increase after Britain leaves the European Union (EU). However, 64% of the public would like to see the low-skilled migrants’ number decline in the next years.

US Dollar – US Markets

The US Dollar slumped against the Euro with the exchange rate set at €0.84. The US Dollar Index declined by 0.07%, coming in at 92.62. US markets are closed for the Labour Day holiday.

The US currency also dropped against the Japanese Yen, trading at ¥109.6, and against the Swiss Franc, trading at 0.96 CHF. The reason was the announcement from the side of North Korea that it successfully conducted a hydrogen bomb test on Sunday. This is the country’s sixth nuclear test and the weapon is the most powerful that the North Korean army has ever tested.

US President Donald Trump was asked in Texas, where he is visiting areas hit by Hurricane Harvey, if he is going to launch an attack against North Korea. The President replied that “we’ll see.” On Twitter, Trump said that Kim Jong Un’s country is a rogue nation, adding that “it has become a threat and embarrassment to China, which is trying to help, but with little success.” Defence Secretary James Mattis said that any threat against US territory or US allies will be met with a massive military response.

Euro – European Markets

The Euro jumped against the US Dollar with the exchange rate set at $1.19. Analysts at Danske Bank suggested in their report that the single market currency is strengthening thanks to “last minute” positioning ahead of the crucial ECB meeting on Thursday.

The bank’s analysts believe that Mario Draghi, the head of the ECB, will address the pace of the Euro’s appreciation in an effort to put a lid on the strengthening of the single market currency against its competitor from overseas. In other news, Sentix GmbH released its September Investor Confidence index data for the Eurozone, which surpassed market’s expectations. The index gave a 28.2 reading, instead of declining to 27.4 from August’s 27.7 figure. Sentix’s monthly survey shows the market opinion about the economic situation and the expectations for the next month.

Eurostat published its Eurozone’s producer price index for July, which came in below expectations. On a year-to-year basis, producer prices increased by 2.0% in the second month of the summer, instead of 2.2% as it was anticipated. Producer prices in the Eurozone remained stable, on a monthly basis, in July, worse than a 0.1% increase that economists were expecting.

Other Currencies – Highlights

Sterling gained ground against the Australian Dollar, trading at 1.62 AUD. A Reuters report revealed that the announcement of a formal investigation against the Commonwealth Bank of Australia’s (CBA) by US regulators is only a matter of time. Regulators want to investigate into CBA’s apparent failure to monitor transactions for money laundering and, possibly, terrorism funding. An anonymous Australian financial investigator told Reuters reporters that “the bank is in serious trouble because there are internal reports talking about these things from several years ago.”

The Pound dipped against the New Zealand Dollar, trading at 1.80 NZD. Westpac’s analysts stressed that the Kiwi was the worst performing currency last week. They suspect that the New Zealand Dollar is affected by uncertainty, coming out from polls indicating that the election results on 23rd September will be close. The Monthly Economic Indicators report by New Zealand’s Treasury showed that economic growth remains strong with retail spending increasing in the second quarter of the year and the trend, likely, continuing in the third quarter.

Sterling dropped significantly against the Japanese Yen, losing 0.65% in value, trading at ¥141.7. North Korea’s aggression has made traders turn to the Japanese currency, which is considered a safe “harbour” in times of crisis.