Greenback Recovers Lost Ground
Meantime on FX markets, the euro saw some reversal of its recent ‘risk averse’ gains, while the dollar managed to recover some lost ground. However, it must be noted that the main pairs showed less sensitivity to rising equity markets than they did to falling markets.
US Dollar
The dollar this week has witnessed a loss of it previous strength compared to the Euro due to China’s stock market problems, currency devaluation, and fifth interest rate cut and reducing the banking reserve ratio. All these movements meant that the S&P 500 has fallen back to 1890 levels which it began the week at.
In US Dollar terms it opened the week at €0.86363 and this morning it is at €0.87174 at 10 AM Irish time.
Fed Interest Rates
Today attention will turn to FOMC member, William Dudley as the markets will seek insights towards the Fed’s thoughts on China and the potential impact of September/October rate increases will have on US economy. Expectations have been pushed back to early 2016 for lift off as at the start of the week a rate lift off in December had a probability of over 50%.
Dennis Lockhart this week stated “I expect the normalization of monetary policy — that is, interest rates — to begin sometime this year…”. While the markets now factor in for a potentially later than expected interest rate rise, this could be premature however todays speech by William Dudley will help considerably.
Financial markets volatility is separate to economic instability which is currently the main focus of the Federal Reserve. Fed’s major objectives include price stability, full employment and financial stability.
Euro
The dollar traded above 125 yen while the euro was below $1.10 just two weeks ago, before widespread risk aversion drove investors to buy back the yen and euro. With the longer-term sustainability of China's latest supporting steps still in doubt, these currencies are expected to advance.
The Euro trades today at $1.14695.
Pound
The Sterling has not witnessed the level of gains against the Dollar as has been experienced for the Euro this week. This is due to the level of exposure the UK has to China where Chinese imports account for just 8.7% of Britain’s total and British exports are even less.
Additionally the Pound is flat against the dollar as traders are unsure how to price the possibility of interest rates moves from Bank of England and Federal Reserve. Recent report this week even suggest that some money markets have pushed an BoE rate move to the third quarter of 2016.
Today the Pound trades at $1.56707 and opened this week at $1.57586 which demonstrates a decline which could be due to money managers moving to the Euro and Yen. 
Australian Dollar
A very brief sense of relief for the Australian dollar was overshadowed by the AUD falling as much as a cent-and-a-half as more questions than answers emerged from China's decision to cut interest rates. The Aussie reached US$0.7250 because of the People’s Bank of China cutting interest rates to 4.6$.
The Aussie started the week at US$0.71711, today it trades at US$0.71256 which demonstrates in holding ground slightly.
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New Zealand Dollar
The New Zealand dollar has withheld the 65 US cents level this week. Despite investors worries in relation to China, the kiwi rose to 64.93 US cents at 5pm in Wellington from 64.78 cents yesterday.
Today the Kiwi trades at US$0.64800.