Eurozone debt concerns returned to the forefront of investor focus in yesterday’s session, sending EUR tumbling and stock markets lower. Germany’s DAX was one of the worst hit bourses, closing the day -5.3%, with France’s CAC 40 index -4.7% and even the UK’s FTSE100 rounding out the session -3.6%. German Chancellor Angela Merkel, fresh off the back of her 5th straight defeat in German local elections, said that Greece would not receive aid payments this month if its rescue package conditions are not met – a statement that crystallized the fears of many market participants and spurred further selling of both EURUSD and European sovereign bonds.
The Labor Day holiday in the US ensured that indices across the Atlantic were shielded from the sell-off for now, but the futures are unsurprisingly deep into negative territory. At the time of writing, the major Asian indices are all trading in the red, with the Nikkei -2.2%, Hang Seng -1.4% and Shanghai Composite -0.3%.
Overnight we had the latest monetary policy decision from the RBA, and as expected the Australian central bank opted to keep rates unchanged at 4.75%, with the assessment that it would be prudent to maintain current policy in light of the uncertainty going on in the global economy. Australian net export (of GDP) data for Q2 was also released early this morning, and worryingly it revealed a -0.5% impact, compared to consensus expectations looking for +0.1%.
Looking ahead to today’s calendar, Swiss CPI is expected to show another month of contracting price pressures (consensus looking for -0.2% MoM, 0.3% YoY), but we doubt this will affect the strong demand for CHF given the wealth of other problems in the Eurozone which seem to be the main driver for franc appreciation. We also expect the latest revisions to Eurozone Q2 GDP to be a non-event (consensus looking for no change to the last reading at 0.2% QoQ, 1.7% YoY). With the return of the US market from the holiday, we also have the release ISM non-manufacturing where markets are looking for a 51.0 print compared to last month’s 52.7 read.
By
M.Zohaib Gadit
Forex Trading Consultant
The Labor Day holiday in the US ensured that indices across the Atlantic were shielded from the sell-off for now, but the futures are unsurprisingly deep into negative territory. At the time of writing, the major Asian indices are all trading in the red, with the Nikkei -2.2%, Hang Seng -1.4% and Shanghai Composite -0.3%.
Overnight we had the latest monetary policy decision from the RBA, and as expected the Australian central bank opted to keep rates unchanged at 4.75%, with the assessment that it would be prudent to maintain current policy in light of the uncertainty going on in the global economy. Australian net export (of GDP) data for Q2 was also released early this morning, and worryingly it revealed a -0.5% impact, compared to consensus expectations looking for +0.1%.
Looking ahead to today’s calendar, Swiss CPI is expected to show another month of contracting price pressures (consensus looking for -0.2% MoM, 0.3% YoY), but we doubt this will affect the strong demand for CHF given the wealth of other problems in the Eurozone which seem to be the main driver for franc appreciation. We also expect the latest revisions to Eurozone Q2 GDP to be a non-event (consensus looking for no change to the last reading at 0.2% QoQ, 1.7% YoY). With the return of the US market from the holiday, we also have the release ISM non-manufacturing where markets are looking for a 51.0 print compared to last month’s 52.7 read.
By
M.Zohaib Gadit
Forex Trading Consultant
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