Last week’s devaluation of the Chinese Renminbi has continued to keep the foreign exchange markets on edge this week, though the CNY seemingly has stabilized for the moment. Continued fears regarding China’s growth have sustained the risk-off posture of the markets this week and, along with somewhat dovish Fed minutes released Wednesday, have helped to push the dollar lower from last week’s levels. The persistent sell-off in crude oil, now at six year lows, has also darkened the cloud over the global economic outlook.
The Euro opened the week stronger within an overall risk-off context climbing from an opening level of 1.0975 to surpass 1.1100 despite better than expected Durable Goods Orders out of the US. EURUSD was also underpinned by a strong German IFO survey for July and profit taking ahead of Wednesday’s Fed policy decision.