Amid fears of a Eurozone slowdown, the euro (EUR) is bid. For trading this market – many are back to watching the USD as the overall risk barometer. Whether that works or not remains to be seen, writes Bob Savage Tuesday.
Avoid sudden change – good advice for sailors and traders today. That is the lesson for the day as the summer lull continues to bring out the bulls.
Risk on, dollar (USD) off. The rally up in China shares notable along with Chinese yuan (CNY) relative stability. Even Turkey got some relief.
Central banks and trade remain front and center today:
• RBA on hold noting China weakness and US trade uncertainty. The central bank hinted that CPI would be lower leaving the SOMP Friday in play along with tomorrow’s RBA Lowe speech.
• New Zealand shadow RBNZ board says rates should stay on hold as there is no urgency despite longer term seeing globally higher rates and inflation. Aussie/New Zealand dollar (AUD/NZD) shot higher through 1.10 resistance.
• BOJ still focus after Reuters article says plan to raise rates this year was scuttled by market turbulence and lower CPI.
• Turkey sees Turkish lira (TRY) bounces 1.5% early to 5.1720 from 5.4222 record lows, off 4.7% Monday, with relief trade following after a Turkish CNN broadcaster said that a “delegation of Turkish officials are to go to the U.S. in 2 days” after the two nations “reached pre-agreement on certain issues,” citing diplomatic sources.
The economic news remained negative for Europe with German industrial production missing and adding to fears of a slowdown there, but the EUR is bid.
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