Euro sold off in mini market meltdown

The Euro was able to recover late in yesterday’s trading session around the $1.1720 mark after hitting a monthly low of $1.1699 as financial markets were sold off across the globe over concerns of the health of one of China’s biggest companies.

All eyes were on the Evergrande Group, one of the biggest property development companies in China whose shares tumbled by more than 10% as news surfaced it would be unable to pay its upcoming debts and could face a possible default. Evergrande currently sits on $305 billion of liabilities and any default is likely to severely damage China’s financial system.

The news not only affected the Chinese economy and the Dow Jones Index tumbled by over 600 points and at the same time, investors piled into the US dollar as a safe haven and all major currencies including the Euro were sold off as a result.

Regarding this scenario, markets are likely to be on edge until Thursday when a deadline is reached for an interest payment of $83.5 million interest payment is due by Evergrande and unless the Chinese government steps in to help we may see another round of selloffs in financial markets and further losses for the Euro

Looking ahead to today’s trading session, the European calendar is basically news free so we may get a bit of movement in the Eur/USD currency pair with the release of the building permits and housing starts figures from the US although this is likely to be overshadowed by concerns surrounding China.

After yesterday’s recovery towards the end of the trading session, the Eur/USD currency pair is struggling to move higher as we enter today’s European session, and the feeling is the pair will move lower as the day unfolds as investors move further into the US dollar as a safety net.

The latest interest rate decision and monetary policy statement is due out from the US Federal Reserve tomorrow which will be a real market mover and the market will be focused on a possible start date for the Fed to begin tapering.