It was a surprise to see the Euro benefiting as investors sought safer assets amidst the Chinese market drama. As stock markets dropped, the Euro gained strength at one stage by 3% against both the US Dollar and Sterling. Since the Chinese move on 17th August the Euro has risen by 5% against both US Dollar and Sterling.

When stock indices collapse, commodities soften leading to a rout in commodity currencies (have a look at the Australian Dollar and NZ Dollar yesterday for evidence of this). Now the markets want the Chinese authorities to restore some order but can they? Are we are on the verge of something similar to the Asian collapse of the 1990’s?

2 years ago, GBP/AUD was at it’s lowest ever rate (or strongest ever rate if you look at AUD/GBP) at just 1.40 per Pound. Today we are close to 2.20; over 35% higher. Looking at this move, you can start to understand the severe downgrading that commodities have suffered.

With all this turmoil it is very difficult to see the US FOMC raising interest rates next month so unless we see an unbelievable rally in stocks and commodities, the Federal Reserve would be crazy to raise interest rates in the face of such economic uncertainty.

Data wise there was nothing yesterday. This morning Germany has confirmed that second quarter GDP growth was indeed 0.4% for the quarter and 1.6% year on year. Provided that Tsipiras wins his election and that Chinese contagion becomes isolated it is likely that German GDP will improve as we head toward 2016 and QE has a positive impact on the economy.

The greatest (luckiest?) investors often buy into panic so is now a good buying opportunity or not? Certainly volatility bring opportunity so it looks good to take advantage. Last week Euro sellers were looking at £/€ 1.43. Yesterday you could have got £/€ 1.35.