Forex news from the European trading session - 21 September 2021
Headlines:
- Fear and anxiety cast aside for the time being
- UK September CBI trends total orders 22 vs 15 expected
- The flip-flop continues in the bond market
- ECB's de Guindos: Inflation could peak around November
- ICYMI: ECB's Stournaras says APP could benefit from higher purchase volumes
- Switzerland August trade balance CHF 5.06 billion vs CHF 5.25 billion prior
- S&P 500 to stick with bounce of key technical level?
Markets:
- CAD leads, USD lags on the day
- European equities higher; S&P 500 futures up 0.7%
- US 10-year yields up 1.5 bps to 1.324%
- Gold up 0.1% to $1,766.19
- WTI up 1.2% to $71.16
- Bitcoin flat at $43,531
Fears surrounding Evergrande and China have been cast aside - at least for now - as risk trades come roaring back on the day, paring some of the losses yesterday.
The dollar and yen are the laggards as commodity currencies push higher, with sentiment bolstered by a bounce in equities.
European indices are posting solid gains of over 1%, slowly creeping higher on the session while US futures are also seeing modest gains ahead of the cash open later.
EUR/USD stuck around 1.1725 early on but is trading at the highs around 1.1740-45 currently as the dollar stays on the backfoot today.
USD/JPY was higher initially too around 109.60 but is seen tracking back a little to 109.35 as we look towards North American trading. 10-year Treasury yields were much higher earlier around 1.34% but have fallen back slightly in a bit of a choppy session.
The loonie is the top performer as USD/CAD tracks lower back under 1.2800 and sticking around 1.2740-50 levels for the time being. AUD/USD also kept a decent advance, hovering around 0.7260-70 levels for the most part in European trading.
As much as the market is shrugging off Evergrande risks as being not comparable to the Lehman Brothers collapse, it is worth being reminded that there are many moving parts at play in China right now and Evergrande is just but one of them.
The shift in paradigm in China is perhaps something that warrants more attention, considering that Evergrande fears perhaps not stroking contagion risks but rather risks of a correction in equities after having kept at such lofty levels for quite a while.
But for now, dip buyers are doing what they do best. Ignorance is bliss, at least for now.
