QE3 Gains of EURO against USD Wipeout due to weak Data


As the HSBC flash PMI index shows that manufacturing industry of China is still facing decline this month as well as other major signs of slowdown of Chinese economic growth has greatly impacted the currencies with risk appetite.

After the last week’s announcement of Fed, the dollar index has risen to its highest level of 0.6.

On the other side of the story, the Japanese economy is still struggling hard because of its decline in exports by 6 percent in August contrasting to the figures of previous years. This situation has further strengthened Japanese Yen on risk aversion.

While, at the same time, a low of Y78.04 was hit by dollar against Yen resulting in a wipe out of the  gains resulted by adding to the monetary easing program by the Bank of Japan on the previous day, although it was flatten to Y78.34 later on.

Furthermore, as a response to the flash purchasing managers’ indices from Market revelation of decline in the growth of Eurozone to its minimum level since June 2009, the euro fell further below 1 percent and thus hit a one week low of $1.2919.

There is no significant impact of thriving Spanish bond auction (that was expecting to have sufficient fund raising from investors) on Euro. The reason for this is the warning by the analysts to investors on the expected bailout request by Spain. Citigroup Analysts stated, “This has reduced the prospects of bailout petition”.

The pound came down incurring a loss of 0.2 % against the USD to $1.6196 because of this risk appetence and also demolishing the gains maintained after the UK retail sales which mounted in August.

In the meantime, analysts gave a warning that was signaling the investor’s attitudes towards the Eurozone which was due to decline of 0.1 percent of Euro to Swiss Franc 1.2090.

Commerzbank Analysts stated that the recent movements in the euro- franc are beneficial indicative of the sensitivity of Eurozone catastrophe.

“The euro- franc received a little bit of revitalization when the catastrophe comforted. At present, that apprehension about south is going up and the pair is directing towards South once again.”


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