Asian Session – China growth concerns weigh on risk appetite, yen gains
June 25, 2013 9:38 am
China still dominates the news and is weighing on market sentiment as investors fear that a cash squeeze in the world’s second largest economy could affect economic growth.
Risk appetite was dampened as the Shanghai stock exchange tumbled more than 6 percent to the lowest since 2009, the worst in four years.
China’s short-term cash rates are rising after the People’s Bank of China (PBOC) allowed money market funding to tighten last week. The aim is to control the country’s speculative “shadow banking” sector.
The Japanese yen benefitted from risk aversion as investors rushed to safe haven assets. USDJPY fell to lows of 97.26 in the Asian trade where it found support, down from an early high of 98.05 yen.
The dollar has steadied today after much volatility recently due to remarks from Federal Reserve Chief Ben Bernanke who said last week that the Fed could begin to scale back on its bond-purchase program later this year if economic data continue to show an improvement in the U.S. economic recovery.
The ICE dollar index which gauges the dollar performance against six major currencies, was steady around 82.432, after rising to a three-week high of 82.841 on Monday.
The euro moved off two-week lows hit on Monday after weak German Ifo business sentiment data. EURUSD reached as lows as $1.3058 and climbed higher today to consolidate in a tight 15-pip range around $1.3125.
Sterling was also range-bound, with GBPUSD trading between $1.5426 and $1.5453 on the broadly stronger dollar.
The Australian dollar was hit hard by the China news since China is a major trading partner for Australia.
The aussie is also a commodity-linked currency so since commodity prices were affected by China, which is a major consumer of commodities, this weighed on AUDUSD. The pair was mostly range-bound between $0.9245 and $0.9275 until late-session trading when it finally broke below and fell around 30 pips to the key level of $0.9200.
China still dominates the news and is weighing on market sentiment as investors fear that a cash squeeze in the world’s second largest economy could affect economic growth.
Risk appetite was dampened as the Shanghai stock exchange tumbled more than 6 percent to the lowest since 2009, the worst in four years.
China’s short-term cash rates are rising after the People’s Bank of China (PBOC) allowed money market funding to tighten last week. The aim is to control the country’s speculative “shadow banking” sector.
The Japanese yen benefitted from risk aversion as investors rushed to safe haven assets. USDJPY fell to lows of 97.26 in the Asian trade where it found support, down from an early high of 98.05 yen.
The dollar has steadied today after much volatility recently due to remarks from Federal Reserve Chief Ben Bernanke who said last week that the Fed could begin to scale back on its bond-purchase program later this year if economic data continue to show an improvement in the U.S. economic recovery.
The ICE dollar index which gauges the dollar performance against six major currencies, was steady around 82.432, after rising to a three-week high of 82.841 on Monday.
The euro moved off two-week lows hit on Monday after weak German Ifo business sentiment data. EURUSD reached as lows as $1.3058 and climbed higher today to consolidate in a tight 15-pip range around $1.3125.
Sterling was also range-bound, with GBPUSD trading between $1.5426 and $1.5453 on the broadly stronger dollar.
The Australian dollar was hit hard by the China news since China is a major trading partner for Australia.
The aussie is also a commodity-linked currency so since commodity prices were affected by China, which is a major consumer of commodities, this weighed on AUDUSD. The pair was mostly range-bound between $0.9245 and $0.9275 until late-session trading when it finally broke below and fell around 30 pips to the key level of $0.9200.
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