Top Stories Thursday: North Korean Tensions and Natural Disaster Threat Looms

At least eight people have died after Hurricane Irma ravaged Caribbean islands, including Saint Martin and Barbuda. More than 1 million residents of Puerto Rico were left without power but the Category 5 storm stayed just out to sea before moving towards the Dominican Republic early Thursday. Hurricane Irma is expected to hit Florida on Sunday.

South Korean Prime Minister Lee Nak-yon anticipates another possible North Korea intercontinental ballistic missile (ICBM) launch on September 9th.  Speaking to defense ministers in Seoul he described the situation as “very grave”. Four launchers for a US missile defense system arrived at a base in South Korea on Thursday amid protesters and a heavy police presence. The US Dollar Index remains near its recent lows as geopolitical tensions continue to mount.

Cryptocurrencies showed signs of recovery on Wednesday after dropping significantly earlier in the week. Before rising on Wednesday prices of both Bitcoin and Etherium were slammed as China cracked down on initial coin offerings (ICOs). Bitcoin prices (view chart) fell by over $1,000 after the news but have since recovered more than half of the loss. Etherium staged a similar reaction.

The value of Bitcoin has soared 643% in the past 12 months and over 4,000% in 5 years. The FT describes an interesting trade for Bitcoin skeptics using the Grayscale Bitcoin Investment Trust (GBTC). Today the market capitalization of the Bitcoin Investment Trust is $971 million, representing a hefty premium over the value of its Bitcoin holdings. The trade would involve short selling GBTC while buying a corresponding of amount of Bitcoin as a hedge in case the trust rises further in value.

Nissan unveiled the 2018 Leaf electric car at an event in Japan. The Leaf features a sleek design, autonomous technology and a competitive price of around $30k. Critics of the Leaf point to its relatively low range battery. The 2018 Leaf has a 150 mile range up from 107 miles on the previous model. Meanwhile, the Chevy Bolt has a range of 239 miles and the Tesla Model 3 has a range of up to 310 miles. The Leaf will be available in the US in early 2018.

On Wednesday, the Bank of Canada unexpectedly raised interest rates for the second meeting in a row. The 25 basis points rate hike triggered a slide of over 200 pips in USD/CAD to its lowest levels in two years. In a statement on Wednesday the Bank of Canada (BOC) noted that recent economic data has been stronger than expected.

Focus now shifts to the European Central Bank (ECB) meeting scheduled for today. Analysts doubt that the ECB will move on interest rates and plans for QE. However, there is likely to be acknowledgement of the strong euro. Any hint of tapering QE could boost the euro substantially higher.