Tuesday September 15th, 2020

Optimistic Chinese data and vaccine hopes increased risk-on sentiment rallying markets. The Chinese Industrial production data and Retail Sales data both exceeded expectations and provided an upbeat economic picture of China’s recovery efforts. A Chinese company announced it hopes to be able to distribute vaccine doses by November, joining Pfizer and AstraZeneca in the race to produce a viable vaccine. CNY rallied on the positive date hitting a fresh 16-high vs US$ up 0.6% intraday. The US$ index continues to weaken, while Asian currencies are up 0.3% on average vs US$, but Indian Rupee fell 0.3% due to Covid increases. Trade related currencies AUD, NZD, NOK, MXN are up ½% on average vs US$. ZAR rallied 1% vs US$ as investors continue to focus on its higher yields and vaccine hopes, whilst ignoring its current weak economic performance.  No key US$ data out today, expect the markets risk on mood to continue intraday. The FOMC starts its first day of its two-day meeting, with statements due out on Wednesday.

Oil prices rebounded +1.5% despite repeated industry comments over bleak demand outlooks and anticipated longer recovery timelines. C$ boosted by strong oil prices edged higher, but trail’s its peer’s performance vs US$. Investors will wait for Canadian CPI and FOMC on Wednesday for direction. C$ continues to weaken vs other major currencies and this trend could continue. Bias remains to buy C$ crosses on any dips. Support at 1.3120, with minor resistance at 1.3210, if breached 1.3270 next.

Euro extends its gains boosted by positive Chinese data, vaccine hopes and an exit from safe haven US$. Both European & German Economic Sentiment showed a positive growth, giving Euro an additional boost this morning. Investors are also more confident in buying Euro after the ECB basically inferred that it wouldn’t intervene in a strengthening Euro. Brexit remains a concern, a no deal Brexit could see GBP weaken and have a negative knock on impact to Euro. Intraday expect EURO to hold near 1.1930 resistance level ahead of the FOMC statement tomorrow. Support at 1.1800, with resistance remaining at 1.1930, if breached 1.2010 (2020 highs)

GBP holds near 1.29 vs US$ as the Internal Markets Bill passes and UK Jobless rate rise. The British parliament passed the Internal Markets Bill, breaching the Brexit treaty and leaving many law makers concerned at the breach of international law. Now the Bill has passed the 2nd reading, it will face 4 days of debate on its fine print where changes can be made or possibly kill the bill altogether. The EU has demanded Britain scrap or amend the bill by the end of the month, or the UK will likely face a “no-deal” Brexit. UK jobless rate rose to 4.1% (previous 3.9%) with many warnings of greater losses to come as the UK furlough scheme scales back in Sept & Oct, asking employers to contribute more to their employee’s salaries. Support 1.2780 with resistance at 1.2910, if breached 1.3020 next.