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Summary
The Day So Far…
No I did not misquote the 1986 classic “Big Trouble in little China”, rather I refer to my feelings as to what the news overnight means for financial markets. Moody’s downgraded the sovereign rating of China for the first time since 1989 due to the growing amount of debt being accumulated in order to maintain the current pace of economic growth. Although the local equity markets and AUD fell overnight the currency has since rebounded and the read across into the European open has been muted. To me this news is unsurprising as the China of 1989 compared to the China in 2017 is a starkly different beast and so a change was warranted sooner or later. Secondly, in the context of the other rating agencies the move to Aa3 at Moody’s puts them on par with where Fitch is already and just one notch below S&P, so in reality the downgrade is not massive news.
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Editors’ Picks
AUD/USD: Some profit-taking should not be ruled out
AUD/USD has quickly faded Wednesday’s strong advance despite climbing to new multi-year highs around 0.7150 earlier on Thursday. The pair’s decline comes amid a marginal uptick in the US Dollar, while investors gear up for US CPI data and relevant Chinese releases on Friday.
EUR/USD faces next resistance near 1.1930
EUR/USD has surrendered its earlier intraday advance on Thursday and is now hovering uncomfortably around the 1.1860 region amid modest gains in the US Dolla. Moving forward, markets are exoected to closely follow Friday’s release of US CPI data.
Gold plunges on sudden US Dollar demand
Gold drops markedly on Thursday, challenging the $4,900 mark per troy ounce following a firm bounce in the US Dollar and amid a steep sell-off on Wall Street, with losses led by the tech and housing sectors.
Ripple collaborates with Aviva Investors to tokenize funds as XRP interest declines
Ripple (XRP) exhibits subtle recovery signs, trading slightly above $1.40 at the time of writing on Thursday, as crypto prices broadly edge higher. Despite the metered uptick, risk-off sentiment remains a concern across the crypto market, as retail and institutional interest dwindle.
A tale of two labour markets: Headline strength masks underlying weakness
Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.
Here is what you need to know on Friday, February 13:
The US Dollar (USD) holds around 97 in the American session on Thursday after Wall Street fell sharply on fresh AI-related fears, as the tech sector is far from generating decent profits.