The US Dollar is trading around the strongest levels of the year as risk-off market sentiment stimulates increased demand for safe-haven assets such as the Dollar.
The risks around China’s Evergrande, Europe’s energy crisis and the US debt ceiling worries have all caused concern amongst investors.
Anxieties remain over the situation with China’s second largest property developer, Evergrande, which have a large bond interest payment due shortly. It seems likely that at some point the Chinese government will help restructure their debt but things are still up in the air, although there’s a 30-day grace period for making these payments.
Sterling has been struggling this week as panic buying of fuel has led to petrol stations running out of fuel and long traffic jams. A large rise in gas and fuel prices across Europe has only added to the concerns over this situation and the impact it will all have on UK growth and inflation levels.
In other news, the US Senate Republicans have blocked an attempt by US President Biden to prevent a potential paralysing US credit default. This has caused further fear amongst investors and markets will be closely watching how things develop across the pond over this fractious (and recurring) issue.
As a result, the GBP/USD had dropped nearly 1.5% in the last 24hrs and trades at the lowest levels since the beginning of January. The EUR/USD has moved to the lowest levels since November last year after steadily losing 2-cents this month. The GBP/EUR has lost over 1% in the last 24hrs and now trades around a 10-week low.
