Good morning

  High Low     High Low
EUR/USD 1.0773 1.0718   USD/ZAR 15.8444 15.6123
GBP/USD 1.4683 1.4618 GBP/ZAR 23.22 22.88
EUR/GBP 0.7345 0.7319 USD/RUB 74.64 71.93
GBP/EUR 1.3663 1.3615 USD/ILS 3.9485 3.9224
USD/JPY 119.17 118.34 S&P 500 2021 1992
GBP/CHF 1.4814 1.4759 Oil (Brent) 37.04 35.87
GBP/AUD 2.0685 2.0453 Gold 1086.0 1074.0

The Stock rout continues unabated. The Dow and S&P had their chance to shine this morning falling over 1% with European stocks not far behind. It has been a horrible 48 hours with Chinese worries (Services PMI fell to a 17 month low from 51.20 to 50.20) being the main reason for the stock rout. To add salt to the wound, reports overnight that N.Korea tested a hydrogen bomb sent stocks lower and CNY weakened as a result. You remember when the USDCNY was trading at 6.3600 and I said further CNY devaluations were guaranteed – well here is the proof that I was right, with USDCNY falling to 6.5350 overnight. And as expected, the US have said nothing. They seem to accept that the CNY has to continue falling to boost exports and thus the economy or else face a real dilemma when they have to decide whether or not to raise rates again. Remember back in October 2015 the FED delayed raising rates as a result of the Chinese GDP woes. Well we are back where we started and should China continue to experience woeful economic data, the FED will have no other option but to delay raising rates further.

The USD continues to trade strongly with EURUSD fast approaching 1.07 barrier and GBPUSD 1.4600 barrier. Cast your mind back a couple days, I wrote the USD was heading to PARITY (EURUSD) and GBPUSD towards 1.4565 (low of 2015) – this seems to be gathering pace with each passing day. As a result of the strong USD, EM currencies have continued to be sold off with investors all heading for the door at the same time.

Have a good day ahead


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