Swings and Roundabouts
As the unsettlement in Chinese markets continues to upset global appetites and risk, there is more disruption and exposure to its neighbour’s weaknesses as well. The GBPUSD has pushed upwards with the strength favouring the Pound, but in most other currency pairs involving the States, the Greenback has gained ground. As the Yuan is devalued, money has flooded to the US currency.The Malaysian Ringgit has lost a lot of ground as an entrenched trading partner and neighbour (of course, the political crisis taking place there currently will not be helping the value either) and Turkey seems to be receiving jitters as well.
The GBPEUR has moved up again, extending the ongoing swings of late. The undertone of talks from the end of last week is that the Eurozone has not been able to restore faith in its growth prospects despite all the best laid plans by Mario Draghi, the European Central Bank President. With around one trillion Euros fed through the economy at super low costs to borrowers and a reduction to the currency rate, exports should be helped. However, observers still feel very lukewarm toward improvements. There has been a number of forecasts both internal and external that have not been achieved by the bank in terms of GDP growth and this is hard to escape as a measure.
In terms of data to be produced today, we expect the Eurozone Trade Balance this morning, which will show the difference between the value of imports and exports. A positive number for the export part of the figure is generally viewed as, well, positive. Apart from this, there is not a great deal to report on as far as news goes. We have quite minor data from the US and that’s all to expect today. The volatility still coming from China will be playing on the markets today again, so we may well still see some movements today.