While the ongoing situation in Greece is clearly dominating market sentiment, investors are also pondering another possible troubling situation which is escalating in China. The equities market in China continues to slide with one benchmark index, the MSCI EM, losing more than 12% over the past three months. Analysts say that that is a combination of investors concerns over the situation in Europe, specifically Greece, and the possibility of an interest rate hike from the Federal Reserve. This past month alone, the overall selloff in Asian stocks rose by 30%. Loss of confidence in China has a tremendous impact on commodity-linked currencies like the Australian and New Zealand Dollars, as their economies rely on China to a very large extent.
As reported at 11:35 am (BDT) in London, the AUD/USD was trading lower at $0.7422; today’s trading band ranged from $0.7416 at the low end to $0.7501 at the high. Meanwhile, the NZD/USD was down 0.63% to trade at $0.6633; the pair ranged from $0.6621 to $0.6684. The USD/CAD, another commodity-linked currency pair, was higher at C$1.2716, a gain of 0.53%.
Beijing’s Omission of Possible Grexit Worrying
The recent statement on the Chinese economy given by Li Keqiang, the Chinese Premier, did not make mention of the market turmoil and that has unnerved investors who felt that that should have been addressed by Beijing. There is little doubt among investors that the possibility of Greece’s departure from the Eurozone is broadly weighing on currencies.