The jobless number in Germany increased for the second consecutive month in July by over 4,000, according to the latest unemployment data released yesterday, 29 August. In addition, consumer price data showed a 0.2 per cent decline for the month and inflation slowed by 0.2 per cent.
The latest figures from Europe’s largest economy fuelled the unease around German and wider European economic trends, partly stemming from a slowdown in global growth.
Incoming ECB President Christine Lagarde said the European Central Bank had not reached its lower limit of interest rates but that it has a broad toolkit to act appropriately.
Lagarde’s comments sparked a Euro sell-off, with the single currency declining to an overnight low of 1.1035 against the Dollar.
In Asian markets, the Australian Dollar continued to slide overnight towards a 10-year low as hope of a breakthrough in the Sino-US trade war began to fade. The Australian currency, which is closely linked to the Chinese economy, fell 0.31 per cent to 0.67095 against the US Dollar. This news came alongside building approvals data that unexpectedly plunged to a six-year low.
Despite China’s Ministry of Commerce stating that Beijing and Washington were discussing the next round of talks, positivity was short lived as investors’ fears that the trade dispute will lead the US into a recession, particularly as the US bond yield curve inverted this week again, intensified.
Geopolitical risk factors are now the main talking point, with faltering Brexit negotiations, riots in Hong Kong and a dim outlook of the Sino-US trade war. Subsequently, risk-off sentiment has prevailed yet again, with the Japanese Yen being the main benefactor, which moved to an overnight high of 106.68 against the Dollar.
Eurozone yearly inflation data is due at 10:00 (BST), followed by Canadian monthly GDP data and US personal spending figures at 13:30.
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