The tone of 2015 continued yesterday with a bout of Euro strength as the market turmoil in China worsened. Shares across Europe fell yesterday after trading was suspended on the Chinese markets again this week. Shares in China fell by 7%, triggering a “circuit-breaker” rule which is designed to stop panic selling. The Euro strengthened after this news as uncertainty drove investors to the Euro. Investors continue their risk averse tone after the PBOC moved to weaken the Chinese Yuan, for the eighth day running, sparking fears of another currency war.
The economic calendar was relatively light yesterday, however the US and Eurozone did release two pieces of second tier data to keep economists’ entertained. Eurozone unemployment added to yesterday’s bout of Euro strength after posting a better than expected 10.5%, its lowest reading in five years. US unemployment claims followed shortly after and dropped less than forecast to 277k.
Dominating the docket today will be the all-important employment data from the US. This could set the tone for price action for the remainder of the month. A good figure will spark speculation of an early rate hike in the US whilst a poor number could taper hopes.