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Chinese stock market turmoil hurts risk sentiment
Posted On 08 Jul 2015
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USD/JPY fell in the Asian session due to risk off sentiment after Chinese stock markets tumbled. USD/JPY fell from 122.55 to 121.96. EUR/JPY was down from 134.92 to 133.96 and GBP/JPY from 189.46 to 188.16.
Fresh turmoil hit Chinese equity markets today and shortly after the market open on Wednesday morning, China’s benchmark Shanghai Composite index was down as much as 8%. Many companies halted trading. Beijing attempted to stem the rout and responded with further measures to steady the market. The People’s Bank of China said it was helping state-owned China Securities Finance Corporation (CSFC) access liquidity through “interbank lending, financial bond issuance, collateral finance, and re-lending”. The central bank will also continue to help the fund “hold the line against the outbreak of systemic or regional financial risk”, it said.
EUR/USD opened in Asia at 1.1012, just off a 1.1053 rebound high. Greece headlines shortly after the Asian open led EUR/USD to fall back to 1.0974.Euro remains vulnerable ahead of the EU Summit on Sunday. Greece was given five days to reach a deal with its creditors or face bankruptcy.
GBP/USD was on the back foot with EUR,on risk-off sentiment. It traded from 1.5465 to 1.5427.EUR/GBP was steady in Asia, 0.7112-21.Focus turns to the UK Budget later today. Risk also lies ahead with Thursday’s Bank of England policy meeting.
USD/CHF was steady between 0.9460-76 and EUR/CHF was soggy between 1.0399-1.0410.
AUD/USD opened in Asia at 0.7451, traded off from 0.7459 to 0.7390.The aussie has been impacted by the crashing Chinese stock markets since China is a major trading partner for Australia.
NZD/USD closed in New York at the lowest in five years at 0.6651. It traded in Asia between 0.6622-72 with a strong downside bias.
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