September 24th Morning Update

The US$ is lower, oil is flat, equity markets are down while US yields are flat. Dollar hovers above one-week low as Evergrande questions persist. The battered Chinese real estate company has missed a US dollar bond interest payment deadline. While it has a 30-day grace period it a stark contrast to the how they handled the domestic bond payment. In other news, Fed’s Powell remains favored for renomination by the White House. China’s central bank says all cryptocurrency-related activity are illegal and vows harsh crackdown. COVID, CDC backed a booster shot of the Pfizer. Japan’s COVID infection situation is improving such that emergency conditions could soon be lifted. More than half of Australia’s adult population were fully vaccinated. In currency markets, Japan’s factory output likely fell again in August as manufacturer’s faced a supply chain disruption driven by a global chip shortage. Expect some headlines as Fed’s Powell, Clarida and Bowman speaks this morning. Asian currencies are weaker this morning JPY & CNY down 0.10% while AUD and NZD are down 0.40%. In other movers MXN is down 0.47% and ZAR down 1.35%.

The C$ has been able to consolidate its recent gains partly due to bullish oil prices and the fizzling out of US$ flight to quality related to Evergrande. Support remains at 1.2625, while resistance holds at 1.2720.

ECB’s Lagarde says many causes of inflation spike are temporary. German IFO surprised to the downside is caping the Euro at 1.1750. Market is now focusing on Sunday’s German election. Support resets to 1.1720, while resistance raises to 1.1840.

EURGBP had strong reversal from the 0.8500 (mid-July lows) expect some range trading until the results of the German elections. Support holds at .8500 (1.1765) while resistance resets to .8600 (1.1628) if breached look to .8650 (1.1560).

GBP relinquished some of yesterday’s gains from the Hawkish BoE statement yesterday. Support holds at 1.3610 and while resistance resets at 1.3770.