Once again, jittery sentiment surrounding China’s sputtering economic recovery is driving investors into the arms of the United States Dollar this morning, and the Buck starts the week on the front foot.
Overview
Asian equities lost substantial ground overnight, while US stocks are set to open close to flat, and traders are searching for their traditional safe bets. This latest bout of news comes yet again from China’s property sector – developer Country Garden Holdings Co. is seeking to extend a maturing bond for the first time, a sign the property sector’s cash flow crunch is getting worse. With little in the way of data releases from most G10 economies to speak of today, this news is having a rather outsized impact on markets, and USD is stronger across the G10 board.
The data calendar picks up later this week with inflation readings due out of the UK and GDP and CPI from the Eurozone. These figures will be closely watched as traders attempt to discern future moves from both the Bank of England and the European Central Bank; both banks’ September decisions are up in the air as of now. The narrative we’ve seen recently of US outperformance compared to other major economies continues to gain strength and is keeping USD afloat, even as it becomes increasingly less likely that the Fed will raise interest rates one final time this year.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
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EUR ⇓
The single currency continued to lose steam against the Buck this morning, continuing last week’s trend. CPI releases from Finland and Slovakia this morning showed that inflation may not be slowing in those two nations. Though not traditionally considered “top-tier” Eurozone economies, with little else to speak of in terms of data and no ECB speakers over the last week, investors are searching for even minor indications from the region. A combination of sentiment and technical factors will continue to drive pricing until GDP and CPI data are released later this week.
JPY ⇓
Japanese Yen once again finds itself the victim of negative Chinese sentiment this morning, weakening a further third of a percent against the USD this morning. This pushes JPY dangerously close to the level at which the Bank of Japan chose to intervene on behalf of the currency last fall. Though the central bank has not said explicitly that it will take on such an intervention again, continued JPY weakness does make this a possibility, and all eyes will be on Governor Kazuo Ueda.
