The recent rout in Asian equities negatively impacted growth currencies, including the Aussie and Kiwi Dollars. And though in times of uncertainty safe haven appeal usually favors the Japanese Yen, recent trade data indicates the likelihood that a recession is brewing in Japan which sent the safe haven Yen broadly lower. Exports in Japan slumped, falling to the slowest pace in more than a year, largely as a result of China’s overall weakness. For analysts, that is likely to mean that the Bank of Japan will keep additional easing measures on the table.
As reported at 11:48 am (BDT) in London, the AUD/USD was trading at $0.7225, a drop of 0.49%. Meanwhile the NZD/USD was trading at $0.6729, a fall of 0.32%; the pair had earlier traded at a session low of $0.6700, a decline of 0.60%. The Kiwi Dollar is also being weighed down by the recent fall in dairy prices; dairy is a key industry in New Zealand.
Euro Gains Strength as QE Outlook Wanes
In the Eurozone, the Euro added to Tuesday’s gains, however any additional gains are likely to be tempered by investor wariness. Traders expect some volatility as the ECB meeting looms, though sentiment has now swung to a less dovish mood. The latest EU data showed that banks within the Eurozone had increased their lending over the past several months, to an extent greater than expected. That allowed the ECB to put the brakes on the QE program, even if only temporarily. The EUR/USD was trading higher at $1.1355, a gain of 0.7%; earlier the paid had hit a session peak of $1.1378 before easing back.