The US dollar rose against the commodity currencies and currencies of countries with emerging markets, as concerns over the global economic growth is currently reduced demand for riskier assets.
Disappointing data on foreign trade of China and a weak report on economic expectations in Germany has become a regular signals from the second and fourth, respectively, of the world economy of worsening prospects for global economic growth.
The weak data led to a decline recently increased the demand for more assets, which investors generally perceived as more risky, including equities, high yield bonds, commodity currencies and currencies of countries with emerging markets. Countries exporting primary commodities began to experience difficulties after China slowed the growth in demand for raw materials.
Recall, the Customs Administration of China reported that China's exports fell by 3.7% in September after declining 5.5% in August. Imports fell by 20.4% per annum after a reduction of 13.8% in August, while oil imports thus increased. It was the most significant rate of decline since June 2009, excluding the February distortion caused by the holiday season. Although exports fell by a smaller percentage than analysts had expected, this trend still threatens to undermine China's target for growth of about 7% this year. It is worth emphasizing, GDP data for the third quarter should come out next week.
As for data on Germany, at the Center for European Economic Research (ZEW) said that the level of economic confidence fell to an annual low in October. The index of investor confidence declined in October to 1.9 versus 12.1 in September. The last value is the lowest since October 2014, when the figure was -3.6. At the same time, the index of the current situation on October deteriorated. The corresponding index fell to 55.2 from 67.5 in September. The reading was the lowest since March 2015, when the index was at 55.1. "The scandal with the automaker Volkswagen and weak growth in emerging markets had a negative impact on the economic outlook for Germany, - said ZEW President Clemens Fyust. - Nevertheless, the performance of the domestic economy is still good, and the euro zone economy continues to recover. With this in mind, rather unlikely that the German economy will slide into recession. " We also learned that the indicator of economic sentiment in the euro area fell in October by 3.2 points to 30.1 points. Meanwhile, the current situation index fell 1.5 points to 11.2 points at the same time.
The pound has fallen more than 150 pips against the US dollar came under pressure of inflation data in Britain. The Office for National Statistics said that inflation in Britain unexpectedly turned negative in the last month, which was mainly due to a decrease in prices for fuel and clothing. According to the report, the consumer price index fell by 0.1 per annum in September. Experts expect that figure will remain unchanged. The last reading was the lowest since March 1960. Last week the Bank of England, said he did not expect that inflation will reach 1 percent until next spring. In view of this, economists are increasingly revising forecasts about the terms of the Central Bank rate hike. Also in today's report it reported that core consumer price index, which excludes changes in the value of energy, food, alcohol and tobacco, remained at 1.0 percent against 1.1 percent forecast. Prices of goods showed the largest annual decline in history (-2.4 percent), while inflation in the services sector accelerated to the highest since October 2014.
In focus were also statements by the new member of the Bank of England's MPC Gertjan Vlikhe. He noted that the risks to the economy of Britain remain bearish, but the exchange rate is "unreasonably high". He added that the next rate change soon "will be upward than decrease," adding that the effectiveness of QE has decreased over time.