A rebound in Chinese shares and a rally in Italian bonds failed to keep Europe’s spirits up on Tuesday, as a renewed burst of dollar strength and news South Africa had slumped into recession ramped up the pressure on emerging markets again.
The sight of European shares at a two-month low , a 2.3 percent thumping for South Africa’s rand and fragile Facebook shares meant Wall Street was facing a choppy restart after a long holiday weekend.
India’s rupee and Indonesia’s rupiah had both slumped to new lows overnight in Asia too and the Turkish lira, Mexican peso and Russian rouble were all deep in the red again to complete a turbulent EM picture.
Major FX pairs such as the euro and yen were knocked back too.
The euro fell 0.5 percent to a 10-day low at US$1.1558 while the yen dropped to 111.30 per dollar having strengthened during Asian trading.
“The general sentiment is that the dollar has not done too badly out of the trade war concerns, with concerns the U.S. might signal a fresh escalation in the trade conflict,” said Kenneth Broux, an FX strategist at Societe Generale in London.
The public comment period on a U.S. proposal for new tariffs on Chinese goods is set to end on Thursday, after which U.S. President Donald Trump can follow through on plans to impose levies on US$200 billion more of Chinese imports, though it is unclear how quickly that will happen.
Channel NewsAsia
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