Forex news from the European trading session - 22 September 2021
Headlines:
- China cabinet says will ensure economic operations stay within reasonable range
- ECB's Muller: Not sure if increasing APP purchases would be best to avoid cliff effect
- US MBA mortgage applications w.e. 17 September +4.9% vs +0.3% prior
- What to expect from the Fed later today?
- China government to take control of Evergrande?
- Fed day sees renewed focus on the bond market
- ECB's Muller: ECB will discuss raising regular QE when PEPP ends
- BOJ's Kuroda: Household spending remains weak due to state of emergency measures
- BOJ's Kuroda: Nervous moves are going on in global financial markets
Markets:
- CAD leads, JPY lags on the day
- European equities higher; S&P 500 futures up 0.5%
- US 10-year yields up 1.2 bps to 1.336%
- Gold down 0.1% to $1,772.20
- WTI up 1.5% to $71.50
- Bitcoin up 2.5% to $41,913
The market is sticking with the calmer tones since Asia Pacific trading, as Evergrande fears abate slightly after the firm said that it will be able to make bond repayments due tomorrow on 23 September earlier today here.
Equities are running with the perceived calm as European indices are posting decent gains while US futures are also seen up around 0.3% to 0.5% during the session.
FX was little changed overall as major currencies tilt slightly in favour of a more risk-on mood but did not stretch any boundaries in European morning trade.
EUR/USD is stuck in a narrow range around 1.1720-30 while USD/JPY did creep a little higher to 109.60 early on before sticking around 109.40-50 levels.
USD/CAD is pressured slightly lower, sticking around 1.2775-90 for the most part as commodity currencies keep light gains on the day amid the better mood.
AUD/USD is up a little and trading around 0.7250-60 levels with NZD/USD likewise up 0.3% and sticking around 0.7010-20 levels for the most part on the session.
As much as Evergrande fears may be cast aside for now, do be reminded that there are many more moving parts still at play when it comes to China and those risks are not ones that will settle down any time soon.
Evergrande may be a big name due to the focus on debt and credit risks but the cultural, political and economical shifts in China are perhaps bigger things to be wary about.
That aside, the market focus will now turn towards the Fed where we could be seeing taper hints come by Powell & co. in teeing up a move before year-end.
As much as equities may be looking comfortable now, best be reminded that sentiment can quickly turn as we saw with what happened in US trading yesterday.
