Tuesday September 21st, 2021

The US$ is lower, oil is up, equity markets and US yields are up. While default fears continued to stalk China’s Evergrande Group, the markets are looking for possible intervention by Beijing. U.S. stock futures are higher in Europe as investors shake off the Evergrande news and are focusing on the Federal Reserve’s meeting and clues on a timeline to taper its stimulus. Housing starts/building permits are out this morning, but focus remains on Wednesday’s interest rate decision and Fed’s press conference. In other news, European Union foreign ministers expressed support for France after the cancellation of Australia’s $40 billion submarine order in favor of the US submarines. Travel restrictions lifted by the US for vaccinated foreign air travelers in November but extended restrictions at Canada, Mexico borders until October 21st . COVID, J&J says COVID booster is 94% effective given 2 months after the first dose. US regulators expected to approve boosters for older Americans. Some Singaporean health expert are calling for mandatory vaccination with growing cases of COVID among unvaccinated people. Pfizer/BioNTech say data shows COVID-10 vaccine safe and productive in kids. In currency markets, The U.S. dollar stepped back from a one-month high as equity market futures moved higher. CNY & JPY down 0.12%, AUD and NZD up 0.20%

Liberals retain power but still with minority. The Canadian dollar strengthened in part due to the election results as it reassured investors that economic support would continue and with the digestion of the Evergrande news. Support moves to 1.2720, while resistance moves up to 1.2875.

ECB policymakers acknowledge growing inflation risk. Inflation hit 3% last month, well above the ECB’s 2% target and could even climb to 3.5% by November, however ECB VP de Guindos said in a statement that the majority of inflation rise is technical, temporary. Support resets to 1.1685, while resistance holds at 1.1775.

EUR/GBP has seen a strong rebound from the mid-July lows at 0.8500 level. EURGBP Support holds at .8500 (1.1765) while resistance resets to .8600 (1.1628) if breached look to .8650 (1.1560).

Sterling pinned at one-month lows before central bank meeting. The safe-haven dollar is taking a breather from gains as investors seem less fearful about the fate of Evergrande. Support holds at 1.3600 (1.3570 Y-T-D low) and while resistance resets at 1.3755.