The situation in China, in spite of the infusion of cash funds from the Peoples Bank of China, has whetted investors’ appetite for carry trade and safe haven currencies, i.e. the Euro and Japanese Yen. Worries continue to escalate as the PBOC attempts to shore up the flailing Chinese economy with liquidity, with analysts seeing little in the way of a positive outcome. Currencies that are closely linked to the Chinese economy are also seeing some volatility as a result of the situation there. The Australian Dollar, and to a lesser extent the New Zealand Dollar, have been under relentless pressure.
As reported at 11:34 am (BDT) in London, the AUD/USD was trading lower at $0.6999, a loss of 0.23% and off the day’s low at $0.6982. Yesterday, the Reserve Bank of Australia kept rates unchanged but said that data would drive future decisions. The NZD/USD just managed to ease into positive territory, trading at $0.6334, only a few pips from yesterday’s close. The USD/JPY was trading higher at 120.0500 Yen, a gain of 0.54%.
European Central Bank Decision Ahead
Ahead, markets will focus their attention to tomorrow’s policy decision of the European Central Bank. Analysts polled do not expect any change to the current low interest rate but are anxious to hear how Mario Draghi perceives the threat of China’s economic decline.