Traders are pointing to this article from Xinhua as a further factor in today’s rising risk aversion. Even though China vowed to keep monetary policy “appropriately loose” over the weekend, it will not repeat the credit flood seen this year.
This has implications for all the commodites as well as the dollar. One more sign that the reflation trade is set to unwind further.
EUR/USD has fallen back to 1.4734 so far and is showing no signs of a quick snap-back. Cable is approaching the key 1.6250/60 area.
