Safe haven currencies were the beneficiaries of investors growing fears, a result this time of the new evidence which shows that China’s economy continues to significantly slow. The latest rout in Asian equities has also led to the rising likelihood that the Federal Reserve Bank could be compelled to postpone its plans for an interest rate hike in light of global economic uncertainty. It was expected that September could finally be the month that the Fed would announce that it was tightening monetary policy, but now that view has dimmed considerably. As a result, the US Dollar Index, which many investors use to gauge the Dollar’s weighted strength relative to its major peers, fell to a 2-month trough.
As reported at 11:25 am (BDT) in London, the USD/JPY was trading at 120.60 Yen, a decline of 0.89% while the EUR/JPY is also lower at 138.2700 Yen, well off the session high of 138.9300 Yen and nearer to the daily low at 138.0600 Yen. The USD/CHF is lower at 0.9415 Swiss Francs. The US Dollar Index is down at 94.187 .DXY, a loss of 0.86%.
Germany Not Worried
Looking ahead to a relatively slow economic week, the highlights will include tomorrow’s release of the Eurozone’s GDP results for the second quarter and Germany’s IFO business survey results. Germany, as the economic driver of the Eurozone, is seen as key to the Eurozone’s overall economic health. While the situation in China has, of course, come to the attention of Germany’s finance minister, the government says that they see little fallout as a result, given that Chinese exports only account for a very small percentage of their trade.