The euro was trading up against the US dollar on Monday. Friday’s US employment figures proved to be unspectacular and gave little support to the greenback. At 173,000 the headline figure for the nonfarm payrolls was firmly at the low end of forecasts.
ECB chair Mario Draghi’s forward assessment for the Eurozone proved to be far more downbeat than markets had expected. In his statement, Draghi predicted that that inflation will remain subdued for “some years” to come and that this is likely to be a threat to future growth in the Eurozone.
The US dollar was down more than half of one percent against a basket of currencies. The yen as usual strengthened sharply as a risk-off play. The euro and Canadian also climbed against the dollar but sterling lost ground on disappointing economic data as did most commodity currencies.
Some upbeat economic data out of the US and a rebound in Chinese shares helped ease market tension today. Volatility measures including the VIX and Euro VIX (EVC) dropped off considerably as risk aversion fell back to more orderly levels.
Both the euro and sterling took heavy losses as markets withdrew into crisis mode. The VIX, seen as a global barometer of fear in the market spiked overnight for a second time and precipitated a brutal selloff in Sterling and other risk assets.