China

It was a quiet trading session for the first anniversary of China’s Black Monday on the 24th of August 2015. One year ago, concerns about the health of the Chinese economy, the second economic power behind the United States, had caused a widespread sell-off.

Global markets opened 2016 in tense mood reminding investors that the big themes of last year haven’t gone away. The Chinese economic slowdown and the commodities story continue to have huge ramifications across global markets and currencies in particular.

ECB chair Mario Draghi’s forward assessment for the Eurozone proved to be far more downbeat than markets had expected. In his statement, Draghi predicted that that inflation will remain subdued for “some years” to come and that this is likely to be a threat to future growth in the Eurozone.

The euro was trading just off its recent high against the dollar as the greenback rebounded from sharp losses suffered at the beginning of the week.

Traders unnerved by a second Chinese market intervention abandoned the greenback and pushed the benchmark index down over one percent.

Data affecting the US dollar was relatively upbeat today. However the main tradable event was the devaluation of the yuan which continues to send ripples throughout the market.

The Canadian dollar regained ground on Monday – this came as markets anticipated that the latest batch of soft data out of China will press authorities into a more aggressive set of stimulus policies.

The dollar fell sharply after a mixed set of data and also as Chinese financial markets went into “free fall” again plunging over 8%.

The dollar gained today after unemployment figures showed a fall in the expected number of new claims. The data helped to confirm that the US labor market remains in good standing.

China was the main theme over the session once more. Markets drew some relief after the main Chinese stock indices rebounded sharply. This followed intervention by Chinese authorities blocking institutional selling.