Risk Aversion Dominates the Markets, Japanese Yen Strengthens

Market Reviews

Japanese yen rises as risk aversion dominates the markets. While euro is the second weakest one, the British pound is even worse, as Brexit optimism is put into question again. Meanwhile, Australian dollar is the second strongest, then New Zealand dollar.

The euro weakens against the US dollar due to continued concerns about the situation in Italy. Statistics released today also failed to provide support for the single currency. Eurozone Sentix Investor Confidence Index turned out to be weaker than forecast, while German industrial production data for August reflected an unexpected decline.

Germany’s industrial output decreased in August for the third consecutive month. The volume of industrial production fell by 0.3% in August after falling by 1.3% in July, although economists had forecast a growth of 0.4%. On an annualized basis, industrial production declined by 0.1%, in contrast to the expected growth of 0.1% and after a growth of 1.5% in July.

Eurozone Sentix Investor Confidence dropped to 11.4 in October, down from 12, matched expectations. The expected reading was 11.8. Meanwhile, the current situation index came in at 33.0, the lowest since April 2017, and down from 35.0 in September. The expectations indicator rose to -8.3 from -8.8 in the previous month.

The British pound weakens notably today, as Brexit optimism is put into question again. It’s reported that Brexit Minister Dominic Raab is not going to Brussels this week for the talk on Irish border. And, Prime Minister Theresa May’s office doesn’t expect a deal at the European Council next week.

Global stocks continue to fall. CAC fell by 1.13%, DAX lost 1.05% FTSE dropped by 0.87%. Earlier today, China Shanghai SSE showed a 3.72% fall. Hong Kong HSI ended down 0.80%, Singapore Strait Times fell by 0.88%.