China’s foreign exchange reserves saw record drops in August, falling $93.9 billion to $3.557 trillion, central bank data reported on Monday. This marks the largest monthly slump for the currency and indicates Beijing’s attempts to stabilize the yuan. The country’s exports also declined in August, further compacting the country’s growth pressures.

In July Chinese exports dropped 8.9 percent, followed by a 6.1 percent decrease in August. Imports fell 14.3 percent, creating a trade surplus of $57.8 billion, or 368 billion yuan. While this announcement caused many traders to worry about China, some have noted that this may not be the bottom, and that a surplus of up to $200 billion wouldn’t be out of the question. A report from China on Tuesday reflected the tenuous nature of global demand, a report which was not surprising but did cause Asian stocks to slip and the dollar to weaken against 15 of its trading partners during the day’s Asian session. Traders flocked to safe haven assets after the announcement including the Swiss franc, U.S. Treasuries and the yen.

Return to US Trading

The dollar’s slump during today’s Asian session once again has traders and analysts questioning whether the U.S. Federal Reserve will raise interest rates later this month. An assumption that was, as recently as this spring considered a relatively ‘sure bet’ is now under fire, as the recent stock crash and weakened dollar are likely to cause the Fed to postpone this move which was last made in 2006.

U.S. trading resumes today after taking a short holiday for the Labor day weekend.

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