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Aussie Dollar Sinks, Yen Gains as Risk Aversion Grips the Markets

Aussie Dollar Sinks, Yen Gains as Risk Aversion Grips the Markets

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Aussie Dollar Down, Yen Higher as Chinese PMI Compounds Risk Aversion
  • S&P 500 Futures Point to Respite in Market Liquidation into the Week-End
  • See Economic Releases Directly on Your Charts with the DailyFX News App

Risk aversion defined currency market price action in overnight trade. The sentiment-linked Australian Dollar underperformed while the Japanese Yen rallied as traders unwound carry trades funded in terms of the perennial low-yielder. Asian stock exchanges are on pace for the worst week since 2012, with the MSCI Asia Pacific regional benchmark index recording a drop of over 2 percent.

Continued turmoil in the emerging markets space and strong negative carry-over from a dismal US trading session were compounded by a disappointing Chinese Manufacturing PMI figure. The index dropped to 47.1 in August, missing expectations calling for a print at 48.2 and pointing to the fastest pace of factory-sector contraction in at least three years (records go back to August 2012).

Looking ahead, S&P 500 index futures have notably recovered after hitting a six-month low in early Asian trade, suggesting sentiment may stabilize into the week-end and offer a brief respite from market-wide liquidation. Augusts’ preliminary US Manufacturing PMI print headlines the economic calendar. Consensus forecast call for the index to register at 53.8, unchanged from the prior month.

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Asia Session

GMTCCYEVENTACTEXPPREV
22:45NZDNet Migration SA (JUL)5740.0-4900.0
01:35JPYNikkei Japan PMI Mfg (AUG P)51.9-51.2
01:45CNYCaixin China PMI Mfg (AUG P)47.148.247.8
03:00NZDCredit Card Spending (MoM) (JUL)1.7%-0.3%
03:00NZDCredit Card Spending (YoY) (JUL)9.7%-6.6%
05:00JPYSupermarket Sales (YoY) (JUL)1.9%-0.3%

European Session

GMTCCYEVENTEXP/ACTPREVIMPACT
06:00EURGerman GfK Consumer Conf (SEP)9.9 (A)10.1Low
07:00CHFMoney Supply M3 (YoY) (JUL)1.9% (A)2.1%Low
07:00EURMarkit France Composite PMI (AUG P)51.3 (A)51.5Low
07:00EURMarkit France Mfg PMI (AUG P)48.6 (A)49.6Low
07:00EURMarkit France Mfg PMI (AUG P)51.8 (A)53.8Low
07:30EURMarkit/BME Germany Composite PMI (AUG P)54.0 (A)53.7Medium
07:30EURMarkit/BME Germany Mfg PMI (AUG P)53.2 (A)51.8Medium
07:30EURMarkit Germany Services PMI (AUG P)53.6 (A)53.8Medium
08:00EURMarkit Eurozone Composite PMI (AUG P)54.1 (A)53.9Medium
08:00EURMarkit Eurozone Mfg PMI (AUG P)52.4 (A)52.4Medium
08:00EURMarkit Eurozone Services PMI (AUG P)54.3 (A)54.0Medium
08:30GBPPublic Finances (PSNCR) (JUL)-3.0B (A)15.4BLow
08:30GBPCentral Government NCR (JUL)-0.2B (A)17.8BLow
08:30GBPPublic Sector Net Borrowing (JUL)-2.1B (A)8.6BLow
08:30GBPPSNB ex Banking Groups (JUL)-1.3B (A)9.4BLow

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EURUSD1.09221.10601.11511.11981.12891.13361.1474
GBPUSD1.54741.55701.56301.56661.57261.57621.5858

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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