Yesterday was a day when markets were clearly on the defensive, with the trigger (the fall in China PMI) in some ways not justifying the moves, but nevertheless highlighting the fact that markets were perhaps becoming a little too complacent. As such, we saw stocks sell off, with US indices closing around 1% lower, but in FX the moves were also indicating a more conservative approach. Once again yen bears were frustrated as risk aversion took hold and further underlining our view that further yen weakness is going to be difficult to see without concerted action from the Japanese authorities. The pain was most felt in the Aussie, which has followed through in Asia trade to push below the 0.87. We’ve said before that the Aussie is becoming less linked with the fortunes of China and that remains true, but its trade dependence remains high and the losses reflect the fact that investors were reacting to the consequences of a China slowdown, which in a relative sense will still affect Australia the most.
The other standout from yesterday was the UK and the Bank of England governor’s reaction to the latest employment data see on Wednesday, the unemployment rate having moved decisively towards the Bank’s 7.0% ‘intermediate target’ which was introduced in August last year and was seen taking nearly 3 years to hit (now looking like 6 months). He undermined his own forward guidance policy by suggesting that there was “no immediate need” to increase rates. Nevertheless, sterling has remained firm, managing further highs vs. the dollar for the year above the 1.6650 level. For now, markets are not quite believing him, pricing in a rate hike by the early part of next year.
FxPro UK Limited is authorised and regulated by the Financial Services Authority, registration number 509956. CFDs are leveraged products that incur a high level of risk and it is possible to lose all your capital invested. Please ensure that you understand the risks involved and seek independent advice if necessary.
Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing, investment advice or an investment recommendation or, an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. FxPro does not take into account your personal investment objectives or financial situation. FxPro makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any employee of FxPro, a third party or otherwise. This material has not been prepared in accordance with legal requirements promoting the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of FxPro. This communication must not be reproduced or further distributed without the prior permission of FxPro. Risk Warning: CFDs, which are leveraged products, incur a high level of risk and can result in the loss of all your invested capital. Therefore, CFDs may not be suitable for all investors. You should not risk more than you are prepared to lose. Before deciding to trade, please ensure you understand the risks involved and take into account your level of experience. Seek independent advice if necessary. FxPro Financial Services Ltd is authorised and regulated by the CySEC (licence no. 078/07) and FxPro UK Limited is authorised and regulated by the Financial Services Authority, Number 509956.
Recommended Content
Editors’ Picks
AUD/USD keeps range above 0.6700 after Chinese macro data
AUD/USD keeps its range above 0.6700 in the Asian session on Friday. The pair fails to benefit due to mixed Chinese GDP and activity data, although it continues to draw support from hawkish RBA expectations and a broad US Dollar retreat. Fedspeak is next in focus.
Gold price conquers $2,700 for the first time on record
Gold price breaks through $2,700 for the first time on record in Friday's Asian trading. Gold price capitalizes on Middle East tensions and the expected rate cuts by major central banks, including the Fed. Further, the uncertainty around the US Presidential election benefits the safe-haven.
USD/JPY weakens to near 150.00 after Japanese verbal intervention
USD/JPY is off the highs, trading close to 150.00 in Friday's Asian trading, undermined by the Japanese verbal intervention and a broad-based US Dollar pullback. A tepid risk sentiment aids the safe-haven Japanese Yen, keeping the pair on the backfoot ahead of Fedspeak.
XRP gains as SEC’s appeal faces jeopardy over deadline confusion in lawsuit
Ripple gains on Thursday as traders digest the uncertainty in the Securities & Exchange Commission’s appeal in the lawsuit. A spokesperson from the US-based financial regulator has confirmed that the process has been followed and the relevant documents will be available publicly soon.
Retail Sales post broad advance in September
Despite worries about the financial health of the consumer and potential weakening in the labor market, U.S. retailers had a solid month in September. Control group sales rose more than twice the expected amount, pointing to stronger Q3 consumer spending.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.