The euro and yen fell across the board on Tuesday as stronger-than-expected German data and rising European stock prices prompted investors to wind back some of the risk aversion that has recently dominated currency markets.
We have the "all clear" as Chinese authorities have told us their correction is over. Now we learn the Chinese central bank burned $93.9 billion in reserves last month, a record and double what they did in July.
Looking at the U.S. dollar side of the equation, upward pressure on the world’s reserve currency has been easing lately as traders have discounted the possibility of tighter interest rates in the United States this month.
The release of this morning’s European Central Bank (ECB) monetary policy statement was predictably uneventful, with the central bank leaving its main refinancing rate at 0.05%, its deposit rate at 0.20%, and its marginal lending facility at 0.30%.
While this week’s U.S. data doesn’t have a massive direct influence on GBP/JPY, the pair is still a good barometer of risk sentiment in the market and should react to changes in traders’ risk appetite. GBP/JPY has clearly taken a turn for the worse over the last few weeks.