Risk appetite soured yesterday with equities in the red following disappointing data from China, with the downgrading of 10 small to midsize American lenders as well as a new tax being levied on the profits of Italian banks. To no surprise, USD benefitted on safe haven demand. The disappointing data from China put antipodean currencies under pressure with both GBPAUD and GBPNZD now at fresh 40-month highs.
* Daily move - against G10 rates at 7:30am, 09.08.23
** Indicative rates - interbank rates at 7:30am, 09.08.23
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The higher start on equity futures following China deflation data is pointing to higher risk appetite for Wednesday, causing GBP to start the day higher and USD to be weaker. Nothing notable on the calendar today, and risk flows will continue to dictate FX direction.
With data continuing to show that economic growth in China continues to disappoint, antipodean currencies, the NZD and AUD have suffered as a result. Both pairs are now at over three-year highs.
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