Chinese market is in turmoil

October 14, 2016

The US Dollar index climbed to a 98 level on Thursday as the FED Minutes showed the decision to hold off and to raise rates had short odds, boosting chances the FED will raise borrowing costs at the next meeting. The US currency received an additional boost as the Chinese economic updates showed that the exports fell to the lowest level since March putting a dent in the raw material prices and Oil. The September exports fell by 10 percent compared to the same period in last year while imports decreased only 1.9 percent.

Gold futures for September delivery advanced by half a percent to 1,260.05 level after falling more than $50 in the recent two weeks on the speculations of a rate increase in November. Markets are pricing the hike to a more than 90% probability and expect that the Federal Reserve will make another two increases till the end of 2017.

The lackluster Chinese data spurred demand for a safe haven with the Japanese Yen rising 0.3 percent against the US Dollar to 103.97, Swiss Franc by 0.1% to 0.9897. Treasuries yield fell together with the German bond gains as investors seek safety amid signs of the economic instability in China.

The Crude Oil slipped on the concerns that weak exports will curb Chinese demand for fuels, the WTI fell 0.64% to 49.86 while the Brent benchmark lost 0.56%. Raw materials also fell as the mining companies’ shares dragged the stock gauges down, DAX fell by 1.10%, the FTSE 100 declined by 0.44%. The Russian RTS fell 0.94% to 986.54, with a Russian rouble yielding recent gains.

The British pound failed to sustain Wednesday gains amid the growing political tension between Europe and the UK, in turn, the GBP/USD fell by 0.08% to 1.2184, after a drop in the Asian session to a 1.21300 level.

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