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North Korea appears to have resumed operation of its plutonium-producing reactor

  
Analysis, Politics
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Producing plutonium will allow the country to expand its arsenal of nuclear weapons.

Wall Street Journal report on findings of the UN Atomic Agency:
  • “Since early July, there have been indications, including the discharge of cooling water, consistent with the operation of the reactor,” said the report by the International Atomic Energy Agency.
  • and there are indications that North Korea is also using a nearby laboratory to separate plutonium from spent fuel previously removed from the reactor.
The agency described the twin developments as “deeply troubling” and a clear violation of United Nations Security Council resolutions.
North Korea’s plutonium-producing reactor is at Yongbyon
  • appeared to have been inactive from December 2018 until the beginning of July 2021
Producing plutonium will allow the country to expand its arsenal of nuclear weapons. 

Why the US dollar continues to rebound and what’s next

  
  Analysis
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The pressure is on

Dollar
The US dollar has extended its gains as market participants get caught wrong-footed in a rebound after multi-month lows.
The dollar looked to be breaking down yesterday and today but stabled itself and is making a move to the upside. There are two near term factors to watch:
1) The 20-year auction
The US is selling $25B in 20-year bonds at the top of the hour. Last week there was a strong 10-year sale and a very weak 30-year sale so the bond market is off balance. A higher-than-anticipted yield could boost the dollar further.
2) The FOMC minutes
The Fed is a below-the-radar risk at the moment. The strong belief in markets is that they’re creeping towards doing more for the economy but an improvement in US virus cases, decent economic data, higher inflation and the stock market at record highs might make them slow their roll. If so, the dollar could climb further
Overall, this looks like a position-squaring squeeze in a quiet mid-August market to me but you can’t take anything for granted. If it spills over into a broad risk-off move, then the dollar could have a lot of room to run.
The EUR/USD chart to me looks like a retest of the range break before a further breakout but a close over 1.19 today would add confidence.
EURUSD chart

ICYMI – Yonhap on North Korea’s up to 60 nuclear weapons & world’s third-largest stockpile of chemical weapons

  
Analysis, Politics
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Yonhap (South Korean media) cited a U.S. Department of the Army report, “North Korean tactics” published in July.

  • “Estimates for North Korean nuclear weapons range from 20-60 bombs, with the capability to produce 6 new devices each year” 
  • “North Korea sought nuclear weapons because its leaders thought the threat of a nuclear attack would prevent other countries from contemplating a regime change” 
ps. I am expecting something from NK today:
  • North Korea says it will convene a high level meeting on Wednesday – matter of ‘crucial significance’
Kim’s ‘Mission accomplished’ grin:
Yonhap (South Korean media) cited a U.S. Department of the Army report, "North Korean tactics" published in July. 
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