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Trading was restrained yesterday due to the closure of U.S. markets for Labour Day. The US dollar lost ground to the Japanese Yen as Japanese and Chinese shares declined and dented risk appetite. This reversed nearly all earlier gains as Asian equities stumbled and put the safe-haven Japanese Yen in favour of the usual suspects.  The Japanese Yen has not only benefited from risk aversion but has been fast becoming the safe-haven tender of choice.

The single currency also attracted some safe-haven status before, but it has now lost its polish after indications of more easing from the European Central Bank.  Sterling managed to pull away as bargain-basement hunting set in after it plummeted to a four-month low, driven by last week’s poor services sector report that added to worries over whether the Bank of England would be able to increase interest rates any time soon.

Sterling shifts are forecasted on Chinese Data due for release on Wednesday evening. Also Sterling versus AUD, NZD, CAD movements are being predicted and priced in this week. This could therefore be market-moving for several other leading currency pairs, with three tier one data releases due out of China. The New Loans data from Asia’s number one economic superpower is always closely-monitored, with analysts expecting the August number to show a pronounced reduction from July’s. If this forecast turns out to be correct, then we could expect the high-yielding Commodity Dollars to receive further support.

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