By FX Empire.com
Risk aversion gained momentum today and more losses were seen across the broad markets as new concerns emerged about the viability of the European rescue plan, while data from Asia proved that regional economies are slowing down.
In China the manufacturing PMI grew by its slowest pace since 2009 by in Oct. raising concerns that the Chinese economy is slowing down, threatening the global recovery even more. In South Korean exports rose only by 9.3% in Oct. from 18.8% in Sep.
In Taiwan the economy grew 3.37% during Q3, the slowest in two years. In Australia the reserve bank decided to cut its interest rates by 25 basis points to 4.50% for the first time since April 2009 as the economy is threatened by the weaker global growth.
In Europe the Greek Prime Minister George Papandreou proposed to hold a referendum on the latest bailout plan for his country ahead of the G20 meeting on Nov. 3-4 inCannes,France, which ignited fears about the viability of the plan and increased demand on safe haven.
So the USD gained considerably against major currencies as risk aversion increase during the Asian and European session. Nikkei closed lower by 1.70%, while Hang Seng closed lower by 2.49%. In Europe FTSE 100 dropped as of this writing by 2.34%, DAX fell 3.79%, while CAC 40 fell by 3.98%.
More losses are expected throughout the day as traders will be eyeing the ISM manufacturing index from the US later today, while the main focus remains on the two-day FOMC meeting that starts on Tuesday and the ECB rate decision scheduled for Thursday.
While Europe lacks the fundamentals for today, the economic data from UK was mixed. While the GDP form Q3 rose to 0.5% prom the previous 0.1%, the PMI manufacturing contracted to 47.4 in Oct. from 51.1 in Sep. raising fears of a possible downside revision to growth in Q3.
The US dollar rose today from the lowest of 76.16 to the highest of 77.32 and as of this writing is trading around 77.24. The yen weakened this morning reaching the highest of 78.99, however as demand for safe haven increased is fell towards today’s opening around 78.15.
The euro fell today to the lowest of 1.3673 from the highest of 1.3870 and now is trading around 1.3690. The pound fell from the highest of 1.6092 to the lowest of 1.5922 and now is trading around 1.5930. The AUD fell sharply trading as of this writing around today’s lowest at 1.0300 from the highest of 1.0565.
The signs showing economies around the globe are slowing triggered more fears and brought more losses to the commodity markets. Oil prices were down today to $91.00 per barrel from the highest at $92.85, while gold fell to $1701.50 per ounce from the highest $1723.97.
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