Euro Rallies to $1.15 for 1st Time Since Feb

The dollar index, which measures its performance against a basket of six major currencies, fell 0.9pc to its lowest in two months.

If the kiwi extends its downtrend, it is likely to find support around 0.76 against the euro, 79.00 against the yen and 0.65 against the greenback.

Worries about a slowing Chinese economy, and in turn global growth, flared up last Friday after a survey showed a further deterioration in China’s manufacturing activity.

There was also talk of dollar-buying by Japanese players.

The dollar had made big gains as the Federal Reserve plans its first interest rate hike since 2006 this year, lifting the benchmark federal funds rate off the zero level where it has been parked since the 2008 financial crisis.

The Australian and New Zealand dollars dropped to two-year lows against the yen as worries about the Chinese economy sent investors rushing to safe haven assets.

“Heightened concerns about a global slowdown have triggered the recent moves…Since there’s no change to the view that China is not doing well, the key becomes the U.S.”, he said. European stocks opened more than 3 percent in the red after their Asian counterparts slumped to three-year lows as a rout in Chinese equities threatened to get out of hand.

“The yen and euro are gaining from both emerging-market risk hostility that is caused by China’s devaluation this month and from dipping expectations that the Fed will increase the interest rates”, said Mansoor Mohi-uddin, a high ranked markets strategist at Royal Bank of Scotland Group Plc in Singapore.

The euro fell 0.6 percent to $1.1552. That resistance now lies roughly around 120.70 yen.

The Mexican peso hit a fresh record low (http://www.marketwatch.com/story/mexican-peso-hits-record-low-vs-dollar-could-go-lower-2015-08-24) against the dollar Monday, but has since recovered slightly.

“These are important because the minutes specifically noted that, “some members continued to see downside risks to inflation from the possibility of further dollar appreciation and declines in commodity prices” and “several” noted uncertainty about the relationship between labor market slack and inflation”, Barclays said. “I don’t think sentiment is that bad, but the next few days could determine how it pans out”, said Bart Wakabayashi, head of foreign exchange at State Street in Tokyo. It last stood at $1.1480, up 0.9 percent on the day.