FXStreet (Guatemala) – Analysts at ING explained that things could easily get much worse before they get better.
Key Quotes:
“There is no telling exactly where this China move ends, or whether the PBOC response will work.”
“Maybe it will require some G5-7 co-ordinated action, though we feel that markets can slide a long way yet before conditions could be seen to merit anything like this.”
“At this stage, the moves can still arguably be described as a somewhat disorderly, but not entirely unmerited correction following a long period of gains, supported by a remarkably benign monetary backdrop.”
Without a further decline, the macroeconomic story, whilst dented somewhat, will not be entirely sunk, though marginal central bank decisions, like that for the Fed, could get shelved for a considerable time.”
The risk to this benign view is that the correction, though not inherently apocalyptic, eventually unmasks a systemic problem, much like the Russian debt crisis did with LTCM. And given that risk, policy makers are likely to err on the cautious side.”
(Market News Provided by FXstreet)