The Chinese stock market erased all year-to-date gains! Brent oil price at a 6 ½ year low!
AUD-USD at the lowest level since April 2009! CAD on an 11 year low! It is very rare for a
day that is characterised by “no market relevant data due for publication” to be so eventful.
However, this morning one psychologically important level after the next was taken out, and
each new record made the market more nervous. CAD, AUD and NZD are easing notably,
JPY and EUR are able to record considerable gains. It is obvious what is going on: risk off is
at the helm. That has been pretty rare in times of low liquidity like this. However, what was
the market expecting? That everything would be alright after a few far reaching interventions
on the part of the Chinese government and central bank and that the difficulties in China
would evaporate into thin air? The reaction to the collapse on the stock market and the
changes to China’s exchange rate regime had been far too relaxed so far. And now the
market is paying the price. Despite all the nervousness one should not lose sight of the
longer term fundamental factors.
View further market information in the FXWW Chatroom with a free trial.