Aussie Dollar Drops on China Economic Weakness

By: Regent_Markets

While European politicians bicker, another global worry flashed in the small hours of this morning. China has been the engine of global growth in recent years but today's economic data came in below expectations in many areas. As a major supplier of China, Australia has been hit hard by this so far with the AUD/USD down 0.70% and the NZD/USD down by a similar margin.

The euro is only slightly weaker however as we move into the European summit to end all summits (until the next one) through the weekend. The EUR/USD is down 0.14%.

US Stock markets closed down around 2% last night, but S&P 500 futures are slightly higher. The FTSE has opened down 0.66%, but this is primarily due to playing catch up with the late session US swoon.

Today we have the European economic summit which will no doubt cause some unexpected news bombs to drop throughout the day. Politicians have been keen to play down expectations, but markets are looking for something substantive by Monday (even if it is unpicked within days).

· At 09.30 we have UK PPI Input, UK trade balance and PPI output.

· At 13.30 we have Canadian trade balance data with the US data released at the same time.

· Preliminary US UoM Consumer sentiment comes out at 14.55 with a slight increase expected.

The headlines are filled with news that David Cameron is now isolated in Europe following his demands for safeguards to UK interests. Despite a lot of noise on this front in recent days, the pound is still very much trading in line with the euro. The UK may go its own way in the future, but its currency is yet to do so.

Could this weekend see the EUR/GBP break out of its trading range as a consequence of the weekend's political summit? Possibly. The UK economy will still be tied to the success of Europe, but at the very least, the EUR/GBPs tight trading range may not last too long.

A good way to play this at (http://info.betonmarkets.com/marketoracle) might be an IN/OUT trade predicting that the EUR/GBP closes outside of either 0.8500 or 0.8600 in 3 days’ time (Monday) for a potential return of 127%.

Summary:

Dave Evans
Email: editor@my.regentmarkets.com
Url: www.BetOnMarkets.com

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