China shakes markets after comments on US Treasuries and the Dollar falling against all currencies
Everything was going well in terms of market movements, with no big movers and the early-market movers, until the Chinese decided to shake things up a bit by throwing a piece of news that drastically changed the movement in the market.
China officials have come out with a statement in which they said that China should reconsider its U.S. treasury holdings. The report by Bloomberg said that the Chinese Officials said to recommend slowing or halting purchases of US Treasuries.
The reaction on the dollar was very much evident, as it along with US Treasuries sold off on the report, while spot gold spiked higher.
In global markets, the Stoxx Europe 600 Index headed for its first down day in six, following moves lower in a handful of Asian equity gauges. In commodities, WTI extended gains from the highest close in more than three years as U.S. industry data signaled crude stockpiles dropped for the eighth week.
Meanwhile, in Brexit news, EU Brexit Negotiator Michel Barnier said that the risk of a disorderly Brexit has decreased and that the UK is ready to take responsibility for its choice. However, separate reports suggest that the EU is said to warn UK companies of being shut-out should a no-deal Brexit occur.
The US session takes over for the European session as investors will not have much to focus on this time as well. There is some rather medium impact news being reported from Canada and US (Building Permits and Import Prices respectively). Both of these figures have fewer expectations as forecasts show a dip in both. Moreover, Crude Oil inventories are to be released today showing their 8th week straight of drawdowns.
The dollar pared its weekly gains as the yen extended a rally on bets that the Bank of Japan may wind back part of its unprecedented monetary easing. Treasury yields resumed their climb as Chinese officials reviewing foreign-exchange holdings are said to have recommended slowing or halting purchases of Treasuries. Volumes in the euro and the pound remained low initially before jumping on speculation central banks might shift reserve allocation out of the dollar. Oil continued to rise while equities traded mixed.
GBPUSD – The pair has once again entered last Wednesday’s price range (1.3613-1.3495) after exiting today on bearish sentiment on the pound. The Chinese report gave enough to cover the losses and send back into the range.
USDJPY – The pair is experiencing the largest down-move in almost one month as it broke through the strong support at 111.74-72.
EURUSD – The Euro takes out the 1.2000 after the Chinese officials released their report on the UST holdings.
AUDUSD – The Aussie explodes to the upside reaching a high of 0.7870 which has been a target resistance.
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