The dollar stumbled against the yen but headed north against the euro as traders grew anxious after the release of the Chinese manufacturing activity report. Disappointing Chinese manufacturing data sparked concerns about global uncertainty, which is already heightened after Britain’s shocking decision to leave the European Union last week.
Markets shrug-off China’s data
At the same time, weakness in China is likely to influence the Federal Reserve’s take on an interest rate hike, which further contributed to the diminished outlook for the greenback. The Bank of England has already expressed its intention to announce more stimulus over the summer, which may include a rate cut, despite the pound falling to 31 year lows earlier this week. During Asian trade, EUR/USD (EURUSD) plunged 0.09% to 1.1094 while GBP/USD (GBPUSD) fell 0.05% to 1.3303. USD/JPY (USDJPY) nosedived 0.67% to 102.52.
Despite the setback on the economic front from China, Asian markets succeeded in wrapping up the week on a high note. The general belief that central banks around the world will actively participate to boost growth following the Brexit fallout kept up the momentum in equities. South Korea already honoured those beliefs by committing $17 billion in stimulus while BoE too reassured to embark on monetary stimulus measures. Hang Seng (INDEXHANGSENG:HSI) surged 1.75% to 20,806.21 and Taiwan TSEC 50 Index finished 0.83% higher at 8,738.24. European stocks also displayed similar optimism as they opened broadly higher. FTSE 100 (INDEXFTSE:UKX) advanced 0.29% to 6,523.35 and EURONEXT 100 (INDEXEURO:N100) added 0.40% gains to 849.86.
Oil erases early day gains
Oil retreated from earlier day Asian gains in what appears to be a delayed reaction to China’s weak economic report. It is to be noted that the slowdown in China could directly affect oil demand. Brent Crude slipped 0.34% to $49.54 and West Texas Intermediate Crude oil dipped 0.33% to $48.17. Growing Nigerian output also weighed on the oil outlook. Goldman Sachs has already warned that Nigerian output can prevent oil from climbing further.