September 21, 2012
With risk aversion back in tow, the euro was slapped around in yesterday’s trading matches. EUR/USD fell 87 pips to finish at 1.2968, while EUR/JPY closed at 101.48, down 83 pips on the day.
The euro took a hit thanks to poor Chinese data that hit the markets. The HSBC manufacturing PMI came in below the 50.0 mark for the 11th consecutive month, indicating potential weakness in the Chinese economy. Naturally, this didn’t bode well for risk sentiment, and that’s why we saw risk aversion take over.
Meanwhile, the French and German manufacturing and services PMIs had contrasting results.
The French editions came in worse than expected, with its manufacturing and services PMIs printing at 42.6 and 46.1 respectively. However, the German versions landed surpassed expectations, with the manufacturing PMI coming in at 47.3 and the services PMI clocking in a reading of 50.6.
The underperformance of the French sector was a little alarming, as France has the second largest economy in the euro zone. If it appears that it too is starting to struggle, it could trigger more fears of the future of the euro zone.
For today, we’ve got no biggies on tap, so we may not see as big a move as we saw yesterday. Nevertheless, stay on your toes as you never know what might rock the markets!
"The only cable I watch is the pound baby."