Wednesday September 22nd, 2021

The US$ is lower, oil is up, equity markets are up while US yields are flat. China’s central bank injected $14 billion into the banking system to support the country’s financial markets. Evergrande said it would pay the bond interest due on Thursday. Talk of the Chinese government taking control of Evergrande in imminent deal. US Democrats in the House of Representatives passed a bill to fund the U.S. government sending it to the Senate where Republicans have vowed to block it. Market awaits US key rate decisions and policy statement out later this morning. In other news, Iran wants to resume nuclear talks leading to removal of sanctions. Biden pledges to double U.S. climate change aid. COVID, China’s northeastern city of Harbin, population 10 million, went into semi-shutdown after reporting new COVID-19 cases for the first time since early February. Locked-down Melbourne tightens security due COVID-19 protests. In currency markets, The Bank of Japan offered a bleaker view on exports and output but maintained that robust global growth will keep the economic recovery on track. Polish zloty sinks to 5-month low. Asian currencies are mixed with CNY flat, JPY down 0.3% while AUD and NZD are up 0.2%.

Rising crude oil prices acted as a tailwind for the Canadian dollar however further moves are limited as investors await the results of the 2-day FOMC policy meeting. Support remains at 1.2720, while resistance holds at 1.2875.

EUR/USD managed to bounce off fresh lows while market awaits FOMC policy decisions. Ifo lowered Germany’s growth forecast for 2021 sharply from 3.3% to 2.5%. But 2022 growth forecast was upgraded by 0.8% to 5.1%. Support resets to 1.1700, while resistance holds at 1.1800.

EUR/GBP climbs to two-week highs, looks to build on momentum beyond 0.8600. BoE meeting and upcoming German election uncertainties could limit the upside move. Support holds at .8500 (1.1765) while resistance resets to .8600 (1.1628) if breached look to .8650 (1.1560).

GBP/USD struggles near one-month lows, around 1.3635 region ahead of FOMC. Cross-selling continue to put some pressure on the GBP. Support lowers to 1.3610 and while resistance resets at 1.3740.