Risk aversion prevails

24 August, 2015

The Asian session has largely carried through the negative tone that was seen towards the end of last week, with the Shanghai Composite index down another 8%, with other equity markets in Asia down by around 4-5% as a result. A similar picture is emerging in Europe. Last week, the dollar was lagging behind more favoured safety plays, such as the yen, Swiss franc and gold. This pattern has largely been repeated in overnight trade, with USDJPY touching the 121.00 level, which has not been seen on a sustained basis since May of this year. Those underperforming the US dollar are the commodity currencies (kiwi, Aussie and Canadian dollar) together with cable, where interest rate expectations are reflecting the adjustment seen on dollar rate expectations. The performance of commodities in recent sessions underlines why related currencies have been pressured, with Brent crude now trading below the USD 45 level and nearly all other commodities heading in the same direction.

There is little else scheduled today to take away from the bearish and risk averse tone being seen in markets globally. There were expectations of some sort of action from the Chinese central bank overnight and markets are likely to remain on edge for some action, either in the form of a rate cut or a cut in the reserve ratio for banks. Otherwise, it’s going to be a case of watching equities and the extent to which the sell-off follows through from Europe into the US, together with the weakness in commodity prices. The prospects of an increase in rates from the Fed in September look very slim indeed at this point in time.


Source link  
USD Suffers on Subpoena News

The Trump Administration is back in the spotlight with news of a report that Special counsel Robert Mueller’s investigators have issued a subpoena...

Positive data negated by tax plan opposition

The US Labor Department released data on Wednesday showing the consumer price index edged up by 0.1% in October after climbing by 0.5%...

Data Boosts EUR Can CPI Boost USD?

EUR received a boost on Tuesday, as data from Destatis showed German Preliminary GDP climbed to 0.8% in Q3, beating forecasts of 0.6%. In addition...


Chinese Data Disappoints

China’s economy has been robust throughout 2017 as a continued recovery in manufacturing and industrial sectors, a healthy property market...

Data & Polls Pressure Sterling

Sterling suffered downward pressure on Tuesday as the latest monthly report from the British Retail Consortium showed non-food sales slumping...

Closing the Year on a Strong Note

Data released on Monday indicates that the Eurozone economy is on target to close out 2017 strongly. The latest Markit composite PMI fell...


Sterling Falls on Rate Rise

In line with market expectations, the Bank of England raised the UK base rate to 0.5% (from 0.25%) on Thursday. The rise, the first in 10 years, was widely...

Another Political Headache for Trump

USD gave up some of its recent gains on news that investigators had charged President Trump’s former campaign manager regarding...

US Jobless Claims Lowest Since 1973

US Department of Labor released Initial Jobless Claims for the week ending October 13th that showed a resilient and stable labor market...

  


Share: