Risk Aversion Dominates the Markets, Canadian Dollar Expects BoC Rate Decision

Market Reviews

New Zealand dollar is trading as the strongest one, while Canadian dollar also recovers in anticipation of Bank of Canada’s rate statement. The central bank of Canada will most likely stand pat today and save the anticipated H2 rate hike for October. The US dollar is also firm. Meanwhile, the Japanese yen and Swiss franc are the weakest ones, despite risk aversion. 10 year bond yield drops sharply by -0.1351 so far today 2.896. German 10 year bund yield rose 0.009 to 0.368.

The British pound declined against the US dollar, pressured by uncertainty associated with the Brexit negotiations Pound ignored positive data on business activity in the services sector of Great Britain. UK Services PMI rose 54.3 in August, up from 53.5 July.

Euro is trading without a single dynamics against the dollar, amid mixed data on retail sales and business activity in the services sector of the euro area. Eurozone Services PMI rose to 54.4 in August from 54.2 in July. PMI composite was revised up to 54.5, up from July’s 54.3. Eurozone retail sales fell by 0.2% month-on-month and rose by 1.1% year-on-year in July. Economists had expected the same 0.2% drop and a 1.3% yoy growth. German PMI composite hit 6-month high at 55.6.

The Australian dollar rose sharply after the publication of data on Australia's GDP for the second quarter, which turned out to be higher than the forecast. However, the later weaker data on the index of activity in the services sector of China, forced the Australian currency to decline slightly.

Australia Q2 GDP rose 0.9% qoq, 3.4% yoy, comparing to expectation of 0.8% qoq, 2.8% yoy. That’s marked the 27th year without recession, and it’s the strongest in almost six years. China PMI services dropped to 51.5 in August, down from 52.8.

The global stocks were lower today. FTSE lost 0.37%, DAX dipped by 0.68% and CAC fell by 0.98%. Earlier today, Hong Kong HSI closed down 2.61%, China Shanghai SSE dropped by 1.68%, Nikkei decreased by 0.51% and Singapore Strait Times fell by 1.69%.