China Smoothed Out The Market Reaction

China remains the focus of markets, shaping the agenda. It should be noted that the People’s Bank of China helped markets to recover after a shock at the start of the week. The PBoC set the USDCNY rate below the market.
Alexander Kuptsikevich

Such actions often have serious consequences – all the more, given that for the first time since GFC, the official dollar exchange rate was above 7 yuan. On this news, global stock indices began to add on Thursday morning, reducing fears around possible currency wars. It is likely that the PBoC will continue to restrain the onslaught of national currency sellers, gradually weakening the renminbi, in response to fears of a sharp slowdown in economic growth. In fairness, it has not loomed on the horizon: fresh data showed that Chinese exports in July grew by 3.3% y/y, contrary to forecasts predicting a decline. On this news, Asian markets continued a neat recovery, although they are still far from wrecking the failure of the beginning of the week. It looks like this wound will take a long time to will heal.

Stocks

The US markets closed Wednesday trading in diverse directions: S&P500 and Nasdaq added 0.1% each, Dow lost the same amount. ChinaA50 rose 1.3% this morning, cutting this week’s losses to 2%. Creeping market recovery suggests that the situation remains under control, and the recent collapse of stocks was in the hands of investors, making them attractive for purchases. S&P500 confidently rebounded from the 200-day average, and now continues to develop growth.

S&P500 components quickly felt customer support after the recent failure, which is a signal of the prevalence of bulls, as was the case in March and May. Still, investors remain wary.

EURUSD

The single currency has stabilised at 1.1200 since the end of the day on Monday. The pair sharply added during the period of increased market volatility, but now it is in no hurry to decline, despite the restoration of purchases on stock exchanges. Market participants paused in anticipation of further signals of where the market would move. The recent episode of the EURUSD surge in the escalation of trade conflicts seems to be an exception to the general rule. Since the announcement of Trump’s intention to revise the trade agreement with China, the pair has dropped from 1.23 to 1.10.

Brent

Oil added 0.7% to 57.60 at the beginning of trading on Thursday after drop up to 4% on Wednesday. The sale was reinforced by the fact that the bears managed to sell Brent at once to several important levels under $60, which automatically goes down towards the bears’ territory. Fundamentally, the price of oil is undermining the daily worsening forecasts for the global economy. World central banks soften policies in order to support economic growth. However, that has a delayed effect of 3-9 months, while the wariness of regulators and politicians now only increases the nervousness of the market.

This article was written by FxPro

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US