Overnight risk aversion continued to rise on the back of falling global growth expectations. It appears that rising China related worries have been weighing on investors demand for risk assets.
This is especially true as the latest manufacturing PMI suggests further contracting manufacturing sector related business activity.
This in turn suggests that more is needed in terms of stimulus in China in order to compensate for muted growth prospects.
All of the above suggests that caution remains warranted. Considering the risk further deteriorating sentiment, currencies such as the EUR are likely to remain well supported, at least until monetary policy expectations become a more dominant market driver anew.
However, for that to happen the next ECB monetary policy announcement & press conference should be waited for.
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