The US dollar was struggling to regain some poise during Tuesday’s Asian trading following heavy losses overnight as risk assets such as stocks continued their decline.
The benchmark US stock index S&P 500 posted a significant decline in excess of 1% during the previous day’s Wall Street trading, after it broke two important technical levels – the early August low of the previous correction and the 200-day moving average. The declines took place amid worries about global economic growth.
Dollar / yen was trading at 107.07, after trading as low as 106.75 late in the previous day, while euro / dollar was at 1.2712, having made a high of 1.2767 in the early Asian session. The Australian dollar rebounded to all the way to the 0.8807 mark following a low of 0.8650 the previous day after China slightly reduced the interest rate it charges on repurchase transactions (a form of liquidity provision to banks). The aussie was last at 0.8780.
Looking ahead, it will be a relatively busy European session, with Eurozone industrial output expected to drop by 1.6% during August. The ZEW German investor sentiment survey will also be awaited, while UK consumer prices are expected to show inflation dipping to 1.4% in September from 1.5% the previous month. This development may take some pressure off the Bank of England, although core inflation is expected to come in higher at 1.8%.