- Chinese Shanghai Composite Index down by nearly 8% for the day
- Japan’s Nikkei index hit its 5-month low
- Chinese government allows state pension fund to invest in stocks
And the bloodbath continues! After the gruesome selloff last Friday, equities continued to tumble in today’s Asian trading session, prompting risk-off moves in the forex market. Most dollar and yen pairs even gapped down over the weekend, indicating that traders are reacting to the gloom and doom.
AUD/USD is down 81 pips (-1.11%), NZD/USD is down 83 pips (-1.25%), GBP/USD is down 24 pips (+0.15%), but EUR/USD is up 65 pips (+0.56%). So far, the euro seems to be enjoying its rallies against its rivals, as the shared currency has gotten a lot of support from the release of the third bailout package for Greece.
In China, stock indices also opened lower this week, with the Shanghai Composite down by more than 8% in morning trading. Word through the Great Wall is that the Chinese government relaxed its rules when it comes to allowing its main state pension fund invest in the stock market. Their goal was probably to halt the Chinese equity decline but this seems to have caused more panic in the market.
Meanwhile, Japan’s Nikkei touched its 5-month low before making a quick bounce, ending a little over 4% down for the day. USD/JPY is down 95 pips (-0.79%) and is testing the support at 121.00, EUR/JPY is down only 32 pips (-0.23%), GBP/JPY is down 192 pips (-1.00%), and AUD/JPY is down 173 pips (-1.93%).
No economic reports were released in the past few hours and none are lined up for the rest of the day. With that, forex junkies could continue to pay close attention to stock price action all over the globe to see if risk aversion is likely to extend its stay in the financial markets.
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