Monday September 20th, 2021

The US$ rises, oil is down, equity markets are weaker while US yields are lower. The dollar rallied to a 1-month high as market focus on both China’s real estate developer Evergrande’s (world second largest) potential failure to meet interest payments and Fed’s interest rate decision/press conference on Wednesday. In other news, Senior House Democrats concede they will likely scale-back of $3.5 trillion Biden spending bill. Yellen plead with congress to raise the debt ceiling saying it would trigger a historic financial crisis. Russian ruble sinks to near two-week low after parliamentary election COVID, Brazil reports over 150,000 COVID-19 cases in one day. Lowest rise in daily COVID-19 cases in more than three weeks in Sydney. New Zealand eased coronavirus restriction in Auckland, as the government expressed confidence that there was no widespread transmission of the Delta variant. Former UK PM Brown says Biden must come up with a plan this week to transfer 100 million stockpiled COVID-19 vaccines to poorer countries before they expire. In currency markets, the USD is benefiting from a flight to safety as uncertainty hits the market. Federal reserve is expected to leave rates unchanged but may signal its intention on the timing of the taper program.

The C$ remains under pressure hovering near a 1-month low. This recent move is attributed to the fact that there is no clear front-runner in today’s election coupled with weaker oil, Hawkish Fed expectations and equity market sell-off. Support moves to 1.2720, while resistance moves up to 1.2875.

EUR/USD has extended its decline as the crisis around China’s Evergrande deepens. Market eyes August lows of 1.1665. While Scholz remain the front runner in Sunday’s election the uncertainty is negatively affecting the Euro. Support resets to 1.1685, while resistance holds at 1.1775.

EURGBP bounced off its lows as the GBP remains under pressure. EURGBP Support holds at .8500 (1.1765) while resistance resets to .8600 (1.1628) if breached look to .8650 (1.1560).

Sterling hit a one-month low as a global sell-off prompted by China’s struggling Evergrande hit risk-oriented currencies while uncertainties about the Bank of England’s monetary policy and surging gas prices also weighed. Support holds at 1.3600 (1.3570 Y-T-D low) and while resistance resets at 1.3755.