Today several reports in China brought equities and commodities markets down as exports and loan conditions deteriorated in the Asian country, raising concerns that one of the key-world economies may face an extended period of recession, affecting emergent market currencies like the South Korean won and the Brazilian real, which is at the lowest level since the beginning of August.
The yen gained versus most of the 16 main traded currencies today after reports in China posted a worse-than-expected rise for the national industrial output also indicating negative exports and new loans numbers, raising risk aversion among traders this Tuesday. The South Korean won was one of the biggest losers versus the yen as the Asian nation’s affirmed that it will maintain an accommodating monetary policy, damping demand for the won. The Australian and the New Zealand dollar also posted sharp falls versus the yen as stocks markets went down worldwide, which is negative for commodity-linked currencies like the Aussie and the kiwi.
Analysts suggest that the falling Chinese lending numbers will make it harder for equity markets to be sustained at high levels, and the yen benefits from this negative scenario in stock exchanges around the world. Volatility still remains extremely high as levels of risk appetite and risk aversion are changing overnight during the past few weeks, now, with a renewed risk aversion, investors are choosing the yen to invest.
The Australian currency lost the most in a week today after Chinese banking data came worse-than-expected by economists, showing a slide in new lending figures and a disappointing rise for fixed-assets investments, indicating that one of the main global economies may still face further months of recession. The New Zealand dollar as well as its Australian counterpart are considered high-yielding currencies despite the current low interest rates in both countries, and these negative reports in China affected the Aussie and the kiwi today, paring much of last week’s gains versus the yen and the greenback.
FXstreet.com (Barcelona) - The Pound launched an assault to 1.7000 resistance area during European session, buoyed by encouraging UK services and manufacturing data, although its rally from 1.6950 was capped at 1.7005, before pulling down to levels around 1.6970 at the time of writing.
According to technical analyst at Charmer Charts, the Pound could break above 1.7000 heading to 1.72: "Now today the market does remain looking as though it could trade higher back to 1.7005. Here will be quite crucial. The sellers failing to hold off buyers will see this then trade higher with 1.72 targeted. 1.72 is the measured target from the continuation pattern we experienced all through June and July."
On the downside, failure to break 1.7005 would shape a double top on the hourly charts, says . "If today 1.7005 holds there will be a double top on the hourly charts. This suggests that given the overbought scenario Cable will retrace some of the recent gains to at least its break point of 1.6830. Buyers will be waiting here, but there is scope for the sellers to take them on and drive this lower for 1.6740."
