Dollar goes up as shares in China fall
Posted on: 02/Sep/2015 12:09:03 PM
As the dollar and global equities dropped, gold rose in the market in China on Tuesday. This shows signs of economic weakness in the country.
In August, China`s factory sector work reduced considerably, the fastest in three years. This was due to the reduction in domestic and export orders. This also increased investor concerns in the world’s second largest economy.
The spot gold in the XAU was at $1,140.51 per ounce (up by 0.6%); US gold was at $1,140.30 which is up by 0.7%. Says a market analyst, `As long as the Chinese growth anxieties are there, the Fed will have to find some other remedy for their itching to raise the interest rate. All in all, in the short term we could see another leg up for gold, but nothing mammoth.`
The dollar fell 0.3% in the DXY. This is mainly due to investors preferring low yielding currencies like the Euro and the Japanese Yen for better results. There have been doubts about the Federal Reserve and if it will raise its rate in the upcoming Sept. policy meeting. The US Central Bank has said that a rate hike in September is still an option.
Investors are also looking at a survey conducted by the U.S. on its manufacturing activity. The biggest concern, however, is the non farm payrolls from August that will be announced later this week. Said experts, `The importance of this week`s employment report is somewhat elevated given the lack of clearer signals from the recent Jackson Hole symposium - comments from Vice Chairman Fischer seemed to focus on trying to keep the Fed`s options open.`
