Markets:

  • Gold down $2 to $1923
  • WTI crude oil up $0.11 to $90.14
  • S&P 500 futures up 11 points
  • Nikkei 225 down 0.5%
  • JPY leads, AUD lags

The new week has started off with a modest risk-off tone that's ramped up in the past hour or so. AUD/USD has slid down to 0.6427 from 0.6446 early as worries about Chinese real estate pickup. The restructuring of Evergrande appears to be going off the rails as bondholders balk at the terms of adjustment. In reaction, Chinese real estate stocks fell 2.5% on contagion fears.

So far the moves elsewhere in FX aren't noteworthy. Eyes are fixated on USD/JPY and it managed to take out last weeks high, albeit only by a single pip. It's since backed away from the highs but remains only a dozen pips away. The risks are tilted towards some kind of run on stops but I get the sense the market wants to see how Treasuries trade first. Early moves are towards higher long-end yields and that could mean a headache for the MoF.

Oil started the week with some bids but the gains have largely retraced. Eyes are on the product space with Russia banning diesel exports for an indefinite period.

Later we get he German IFO report but it's a quiet schedule for US traders. Note that we're getting into some serious quarter-end flows so they could be the real mover as the month ticks down.

FX news wrap Sept 24