 Yen surges broadly today as risk aversion dominates the markets. Italy is at the center of storm as yield spread with Germany stays above 300 alarming level, on concerns over budget deficit. Despite criticism from EU and risk of credit rating downgrade, the populist government doesn't appear to be interested in backing down. While Euro is the second weakest one, Sterling is even worse as Brexit optimism is put into question again. Meanwhile, Australian Dollar follow Yen as the second strongest, then New Zealand Dollar. Then lack of reaction in Aussie and Kiwi suggests that today's moves are not too much related to Asia. At the time of writing, CAC is trading down -1.13%, DAX down -1.05% FTSE down -0.87%. German 10 year yield is down -0.042 at 0.535. Italian 10 year yield is up 0.188 at 3.594. Earlier today, China Shanghai SSE ended down -3.72% at 2716.51. Considering that Chinese markets were on holiday for the whole of last week, today's fall, which large, isn't something unexpected. If not for the PBoC's RRR cut, the decline could be worse. Hong Kong HSI ended down -0.80%, Singapore Strait Times down -0.88%. Nikkei was on holiday today. Technically, EUR/USD's break of 1.1463 temporary low suggests decline resumption. For now, recovery is EUR/GBP is far rather weak. GBP/USD is held well above 1.3002 minor support, GBP/JPY well above 145.67 support. Thus, there is no clear sign of reversal in the Pound yet, despite today's sharp "pull back". The question is rather on how far the Japanese could go. |
