With a flurry of data releases that have missed expectations and a GDP growth figure that only just met policymaker’s soft 7% GDP target, all eyes were on China overnight, as trading in Asian equities kicked off today’s session. As the world’s second largest economy contends with a slower growth trajectory in its transition from growth based on continuous investment in fixed assets to a more balanced growth model, equities in Japan, China and Australia are posting losses. With its economic fortunes closely tied to China, the Aussie dollar has taken quite a knock in response, trading sharply weaker versus the buck.
After yesterday’s rebound, the euro has given up about a half cent against the dollar and is trading lower prior to opening of the North American session. With yesterday’s price action in the common currency largely attributable to broader weakness in the US dollar, today has seen a return to the status quo of relative European underperformance. Today’s movement in the euro is set against a backdrop of continuous strength in European equities as the FTSE Eurofirst trades at 15-year highs as investors shift to equities in a scramble for returns in an environment of meagre bond yields. With the ECB having effectively committed to maintain the course on its asset buying program during today’s policy decision meeting, it is likely that current trends in the performance of European equities and relative weakening in the euro are set to continue.
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