The doom and gloom mood has escalated: Chinese stock markets were closed for the day after a short period of time (14 minutes and 17 seconds) and oil fell even further, now at the $32 handle. The outcome for currencies is more “risk off”. The winners are the euro and the yen, while commodity currencies are on the back foot, especially the C$.
Stocks in Shanghai traded only for a short while before trading paused at -5%. When levels crossed -7% it was a day off. The failure of the authorities to stop the sell off despite lots of efforts and the ongoing fall of the Chinese yuan all shout: China is in trouble and so is the rest of the world.
Oil: The black gold has entered a third year of declines. The tensions between Saudi Arabia and Iran early in the week lifted the price, but this was only temporary. There’s just too much supply (as we’ve learned yet again from yesterday’s inventories report) and not enough demand: China among others.
WTI Crude Oil is trading at $32.60 at the moment, around the crisis lows sees around 7 years ago. Brent Oil is already at levels last seen in 2004, over a decade ago.
- EUR/USD is on the rise, reconquering 1.08. It isn’t a big gain but we can see that the euro is re-testing its safe haven appeal, after shifting away from it earlier this week.
- USD/JPY has lost another round number with the slip below 118. The big level below is 115, but the pair is hesitating as well.
- GBP/USD is an island of stability: it just already fell a lot and is now at 1.4630.
- USD/CAD: Weak oil weighs on the Canadian dollar, and we’re at 1.4130 – the sky seems to be the limit.
- AUD/USD lost another support line, trading at 0.7030.
- NZD/USD is doing better than its neighbor, but also under pressure at 0.6633.
Here is how the recovery of EUR/USD looks on the hourly chart. Note that it isn’t going too fast. Is the dollar about to recover?
For USD/CAD, the picture is clearer – the only way is up (which means a lower loonie). Can the Canadian jobs report save the C$?
AUD/USD, which sees lower commodity prices and of course the intensifying worries about China, is getting closer to breaking below 0.70. The current low is 0.7024.
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