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Thomson Reuters
Jun 29 - 06:12 AM
EUR/USD - COMMENT-Risk-On EU Impact And Risk-Off CNY Support EUR/USD
First appeared on eFXplus on Jun 29 - 04:20 AM

The euro should gain support from the relief of the EU migrant deal but also support from the risk aversion warranted by a further fall for China's yuan.
Risk aversion in respect of the EU has dissipated following a hastily arranged deal nL4N1TV1FF.
However, the risk aversion stemming from a collapse in the yuan's value is set to intensify thanks to a further drop in the Chinese unit.
China stocks which, have reacted positively to the EU news, may well come under pressure next week thanks to the rapid CNY decline that's going unchecked by the authorities.
The yuan has fallen as much as 3.07% in just 10-days on a trade weighted basis and hit a new low at 95.75 today.
Starkly contrasting the message from stock markets the yuan fall has far exceeded the 2015 devaluation and its destabilising effect is very likely to spark capital flight.
This will support the euro as a safer asset and the CNY dump will also support big components of the trade weighed basket of which the euro is the largest.

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Source:
Thomson Reuters IFR Markets

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