September 23rd Morning Update

The US$ is lower, oil is flat, equity markets and US yields are up. Yesterday’s Fed meeting shed some light as to taper timing. Powell said that a scale back of asset purchases could begin in November and be completed by mid-2022. Half of Fed policy makers (9 of18) project a rate increase in 2022. The dollar slipped off one-month highs. It’s reported that the Chinese government told Evergrande to avoid near-term bond default and asked local governments to prepare for a possible collapse. Yesterday, Powell downplayed the risk of market contagion from Evergrande’s financial problems. In other news, French ambassador set to return to Washington after Macron and Biden spoke yesterday.  COVID, America’s health agency sees COVID outbreaks continuing into 2022. United States will buy 500 million more doses of the Pfizer-BioNTech vaccine to donate to countries around the world for delivery by next September. The FDA clears Pfizer COVID-19 booster for older and at-risk Americans. In currency markets, Chinese yuan near one-month low after Fed signals quicker end to stimulus. Norway raises interest rates, says another hike likely in December. AUD up 0.37%, NZD up 0.53% while CNY is flat and JPY off by 0.1%.

C$ stronger this morning as oil prices remained well supported. Reports showed last week’s US crude stocks fell to the lowest level since fall 2018. USD selling picked up during the early European session and dragged the USD/CAD pair to fresh weekly lows. Market’s focus now switches to today’s July retail sales figures and US Jobless claims. Support lowers to 1.2625, while resistance resets at 1.2720

Euro zone business activity grew at its weakest pace in five months. Business cost rose at their fastest pace in more 20 years, in the latest sign that supply chain shortage. Spain’s Q2 GDP growth revised down to 1.1% from 2.8%. Support resets to 1.1660, while resistance is now at 1.1780.

EUR/GBP off it’s high after today’s BoE decision to maintain their key interest rate at 0.1%. Support holds at .8500 (1.1765) while resistance resets to .8600 (1.1628) if breached look to .8650 (1.1560).

As expected, the BoE maintained interest rate this morning. The GBP consolidated its earlier gain and pushed towards 1.3700. Support holds at 1.3610 and while resistance resets at 1.3740.