US Dollar Recovers

The absence of any North Korean belligerence over the weekend came as a relief to dollar bulls, who were expecting a repeat of the prior week, when the regime conducted its biggest nuclear test to date. Last week, the dollar tumbled to a two and half year low against a basket of major currencies as investors cast doubts over whether the US Federal Reserve would be able to deliver another rate hike this year amidst the economic impact of Hurricanes Harvey and Irma.

Furthermore, concerns over political unrest in Washington have also fed into the greenback’s recent weakness. A deal to postpone debt ceiling talks until December, which coincides with the Fed's policy meet, has further decreased the likelihood of a rate increase. EURUSD is trading flat after the weekly reopening, with the pair last seen trading around the 1.2010-mark.

British manufacturing picked up in July, but overall industrial output fell shy of market expectations, indicating economic activity remained sluggish despite consistently optimistic confidence surveys. Data compiled by the Office for National Statistics showed that on a monthly basis factory output grew by 0.50% in July to record its first monthly increase this year.

The monthly growth exceeded expectations of a 0.30% expansion, however, overall industrial production increased by a modest 0.20% in July, falling short of consensus expectations of 0.40% growth. Separate data from the ONS showed the UK's July goods trade deficit came in at GBP 11.60 billion, nearly unchanged from the previous month's revised figure of GBP 11.50 billion. A fall in outbound shipments to non-European Union countries was offset by an increase in exports to the monetary union. After dipping on Friday, FTSE 100 futures surged higher overnight, with the equity index retaking the 7400-level.