Home Asian stocks slide

Asian equity markets were not a pretty sight overnight, with losses seen across most markets as the overall risk environment remains negative. Losses were concentrated in the commodities/mining sector, with the fall in Glencore seen yesterday (nearly 30%) proving impossible for the rest of the sector to ignore. The impact on currencies was seen via the further appreciation of the yen and also the euro later in the day. As proved to be the case last month, the traditional safe havens are not behaving in the same way, with the Swissie still under negative interest rates and the dollar being impacted by the shift in expectations surrounding the Fed. Expectations for a move next month are just less than 20% according to interest rate futures. Meanwhile, market based measures of inflation expectations have fallen to the lowest level for the year, the favoured 5Y5Y breakeven inflation rate in the US down to 1.77%.

Against this environment, it’s perhaps not surprising that the Indian Central Bank chose to increase rates by a greater than expected 50bp, the weakness in commodity prices being cited, together with the need to stimulate domestic demand against the weakening global backdrop. Naturally the Rupiah was weaker as a result, this being one of the currencies that has held up better than most against its emerging market peers. There are no major data releases to cause any major upset today, with just German CPI data at 12:00 GMT together with US consumer confidence data later in the day at 14:00 GMT. Worth noting the outperformance of the euro vs. sterling, which has put EURGBP above 0.74 and to levels last seen in early May of this year. This reflects more the safe haven appeal of the euro (unwinding of carry trades), together with a further hollowing out of rate expectations for the UK (no rise seen until well into 2016).

Further reading:

5 reasons for the fresh global gloom boosting EUR, JPY and hitting the rest

Gloom guides currencies – Live Europe Market Open from 8:00 GMT

 

FxPro - Forex Broker

FxPro - Forex Broker

Forex Broker FxPro is an international Forex Broker. FxPro is an award-winning online broker, offering CFDs on forex, futures, indices, shares, spot metals and energies, serving clients in more than 150 countries worldwide. FxPro offers execution with no-dealing-desk intervention and maintains a client-centric business model that puts customer needs at the forefront of our operations. Our acquisition of leading spot FX aggregator, Quotix, enables us to offer access to a deep pool of liquidity, as well as top-class order-matching and some of the most competitive spreads in the market. FxPro is one of only few brokers offering Negative Balance Protection, ensuring that clients cannot lose more than their overall investment. FxPro UK Limited is authorised and regulated by the Financial Conduct Authority (registration number: 509956). FxPro Financial Services Limited is authorised and regulated by the Cyprus Securities and Exchange Commission (licence number: 078/07) and by the South Africa Financial Services Board (authorisation number 45052). Risk Warning: Trading CFDs involves significant risk of loss.