EUR/USD soared by more than 1% for the second consecutive session and touched its highest level in about two months during a massive sell-off in equity markets all over the world as concerns of a recession in China rose.
EUR/USD traded between a range of 1.1229 and 1.1389 before it settled at 1.1384 marking an increase of 1.28%. In the most recent trading session, the euro closed higher against the dollar for the third consecutive session and moved to its highest as compared to its American counterpart since late-June. While EUR/USD remained in a holding pattern between 1.08 and 1.14 for most of the year, it is by approximately 4% since the start of the summer. EUR/USD gained support at 1.0808, the low from 20th July. It was met with resistance at 1.1411 which is the high from 22ndJune.
Stocks all around the world suffered a massive sell-off when the Federal Open Market Committee rattled the markets with the release of relatively pacifist minutes from its July meeting which indicated that the persisting weakness in the economy could cause it to delay a hike in the interest rate beyond September.
Manufacturing Shrunk in China:
Reports released in China indicated that the manufacturing production throughout the nation has shrunk at its quickest pace in a period of more than six years which illustrate the unrelenting listlessness in the factory sector of the nation. The People’s Bank of China (PBOC) has approved aa number of stimulus initiatives throughout the year in an effort of driving an economy that is experiencing a slowest level of growth in more than 10 years. Over the last several months, the government of China has lowered its benchmark interest rate twice, it has cut the Reserve Ratio Requirement (RRR) or the amount banks must hold in cash reserves and has relaxed rules on the margin financing or stock trading with borrowed funds in an attempt to spur activity.
The U.S. Dollar Index measuring the strength of the greenback as compared to a basket of six other major currencies fell by nearly 1% to 94.84 which is its lowest level since late-June.