US Markets were closed for the annual Labour Day long weekend. This allowed European markets to stage a recovery after last weeks Tech led correction, in the US. US/China relations continue to deteriorate, as US officials consider an import ban on China’s largest chip maker, Semi-Conductor Manufacturer International Corporation (SMIC). Meanwhile Chinas trade numbers continued to improve, with Exports jumping 9.5% on last year, while Imports contracted 2.1%. The Dollar continued to regain ground, with the EUR falling to 1.1810, while the GBP dropped to 1.3160.
The commodity currencies were negatively impacted by the US/China developments, with the AUD falling to 0.7270, while the NZD crashed below 0.6700. The rising tensions between China and the US, in the lead up to the US Presidential elections, are damaging to the existing supply chain and these trade exposed currencies.
The real test for last weeks ‘correction’ in equities will come when US markets re-open tonight.