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MongiIG

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  1. MongiIG
    BRITISH POUND, GBP/AUD, GBP/CAD, GBP/NZD - TALKING POINTS
    GBP/USD volatility took off as sterling plunged and now scopes new lows The move lower in GBP/CAD might have momentum but wider range is intact GBP/NZD has avoided Sterling weakness of late and consolidated. Will it last?
     
    GBP/USD TECHNICAL ANALYSIS
    The recent move down in GBP/USD saw 2 previous lows breached at 1.3600 and 1.3572. These 2 levels are pivot points and could offer resistance. Previous highs of 1.3751, 1.3913 and 1.3982 may also offer resistance.
    The recent low of 1.3412 moved outside of the 2 standard deviation lower Bollinger Band, based on the 21-day simple moving average (SMA). It has since moved back inside the lower band, which could be bullish.
    The low of 1.1410 was in March last year and GBP/USD then rallied to 1.4251 in June this year. Below the market, the 61.8% Fibonacci retracement is 1.3166, a level of potential support. The recent low of 1.3412 is also a possible level of support.

    Chart created in TradingView
    GBP/CAD TECHNICAL ANALYSIS
    The GBP/CAD has been in broad range since earlier in the year. The recent move down saw GBP/CAD break below previous lows and a couple of ascending trend lines. The previous lows of 1.70239, 1.70166 and 1.68716 might provide support if tested as the cross approaches the lower bounds of the wide range.
    The Death Cross of the 10-day SMA moving below the 21-day SMA remains potentially bearish. Topside resistance could be seen at the recent high of 1.71900.

    Chart created in TradingView
     
    GBP/NZD TECHNICAL ANALYSIS
    In December, GBP/NZD made a low at 1.8524 and then moved up to a high of 2.0075 last month. The Fibonacci 50% retracement lies at 1.9300, which might provide support. There is a short-term ascending trend line, currently at 1.9385, that could also be a support level. The 2 previous lows of 1.93302 and 1.9175 may also provide support.
    The 55-day simple moving average (SMA) crossed below the 100-day SMA. This formed a Death Cross, which could be bearish. The 100-day SMA is currently flat. If the gradient rolls over to be negative, like the 55-day SMA, this may also be bearish.
    On the topside, there is a pivot at 1.9610 and a previous high at 1.9625 that are possible resistance levels.

    Chart created in TradingView
    Written by Daniel McCarthy, Strategist for DailyFX.com. 1 October 2021
  2. MongiIG
    Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 27th September 2021. These are projected dividends and likely to change. IG cannot be held responsible for any changes made.
    Dividends highlighted in red include a special dividend, therefore some or all of the amount will not be adjusted. Amount in brackets is the expected adjustment after special dividends excluded (where shown on major indices). Dividend adjustments due to be posted on a bank holiday will usually be posted on the previous working day. 
    If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect  your positions, please take a look at the video.
     

    NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a 
    cash neutral adjustment on your account.
     
     
     
    Special Dividends
            Index
    Bloomberg Code
    Effective Date
    Summary
    Dividend Amount
    RTY
    ACRE US
    29/09/2021
    Special Div
    0.02
    RTY
    PJT US
    01/10/2021
    Special Div
    3
    RTY
    LAUR US
    05/10/2021
    Special Div
    7.01
    SPX
    WY US
    04/10/2021
    Special Div
    0.5
     
     
     
    How do dividend adjustments work? 
    This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  3. MongiIG
    FTSE 100 TECHNICAL HIGHLIGHTS:
    The FTSE is coming off strong support, but… Has a fairly strong ceiling to punch through.
     
    The FTSE 100 is making a strong comeback these days after hitting the bottom of a multi-month range and the 200-day moving average. The spring back has in focus a trend-line running lower from the January 2020 high created just before the pandemic roiled markets.
    In confluence with this trend-line, and perhaps more importantly, is the top-end of the range that has been developing since June. The two combined could create a ceiling that proves too difficult to climb through, at least on an initial attempt.
    A turnabout in momentum after thoroughly testing resistance from around 7172 up to 7225 could provide a decent risk/reward opportunity for those looking to play for a continuation of range conditions. A quick turn lower looks likely, at the least.
    If we see momentum pick up as resistance comes into play, then perhaps we will see a breakout scenario unfold. It would take a daily and maybe even a weekly close outside the range to garner further interest from the long-side of the tape.
    For now, risk/reward from either side of the tape doesn’t appear favorable until we see how resistance is handled.
      FTSE DAILY CHART

    FTSE Chart by TradingView
    Resources for Forex Traders
    Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.
    Written by Paul Robinson, Market Analyst, 30 September 2021. DailyFX
  4. MongiIG
    TALKING POINTS:
    Built-up hawkish expectations cause Sterling sell-off as sentiment stagnates. EUR/GBP and GBP/USD key levels to watch.
    EUR/GBP is trading at a two-month high as the Pound has seen its worst performance against the Euro since April. Sterling has been the clear underperformer this week as positioning for a hawkish BOE has caused a position unwind on risk-off sentiment. The moves were also intensified in GBP/USD as the US Dollar has surged over 1.2% this week to its highest level in a year.
    Central bank expectations have become a core focus of FX markets as the unwinding of pandemic-induced stimulus gets underway, with expectations about rate hikes being the main driver in positioning. Last week’s FOMC meeting was a key selling point for USD bulls as messaging suggested the central bank was primed to start reducing its bond purchasing program in November, with the updated dot-plot suggesting a rate hike could come by the end of 2022, which was more hawkishness than markets were expecting, causing a surge in the Dollar and shifting positioning against those pairs that were pricing in more hawkishness from their central banks, like the Pound and the New Zealand Dollar.
    As mentioned by Justin, the Pound was positioned for disappointment with a 15 bps rate hike priced in for February 2022 at a time when data is likely to get slightly worse. The end of the furlough scheme this week is likely going to see unemployment rise but the Bank of England will want to see the extent of the impact on the jobs market before acting, which doesn’t leave much wiggle room without disappointing hawkish expectations. There is also likely to be a dip in sentiment-based data on the back of ongoing supply bottlenecks and Brexit drags.
    The Pound is likely to remain sensitive to upcoming data releases as positioning unwinding continues but further bearish pressure is hard to envision in the short-term as the oversold conditions make it less appealing to attract new shorts. GBP/USD has found good support around 1.34 with an RSI shortly breaching the 30 mark so I would expect to see bearish pressure hold off for now as further direction is determined. A bounce above the 23.6% Fibonacci at 1.3577 is likely to see some follow-through above 1.3720 but we may see some sideways trading before another move is achieved.
    In EUR/GBP, the move higher has started to reverse but we may see further follow-through if the pair holds above 0.86 throughout the day. Its 200-day SMA (0.8644) lies up ahead and is the main resistance going forward, so a weekly close above this level would be a good bullish signal for a new 5-month high above 0.87.
    GBP/USD Daily Chart

    EUR/GBP Daily Chart

     
    Written by Daniela Sabin Hathorn, Market Analyst, 30 September 2021. DailyFX
  5. MongiIG
    Gold looks at risk of a protracted period of decline, as rising yields highlight the potential for long-term weakness for the precious metal.
    Source: Bloomberg  Joshua Mahony | Senior Market Analyst, London | Publication date: Wednesday 29 September 2021. IG Gold at risk if yields continue to rise
    US 10-year treasury yields have kick-started after a prolongued period lull that saw yields fall back from the peak in March.
    The Federal Reserve (Fed) appears ready to start tapering in the coming months, and the premise of 2022 rate hikes brings expectations of further upside in yields as we go forward.
    The chart below highlights why the trajectory of yields is crucial for any gold trader. Invariably, we have seen yields track a downward path over the long-term, which has also helped bring about a long-term uptrend for gold.
    The chart below highlights exactly that, with the ongoing downtrend in 10-year yields bringing strength for gold (inverted on the chart).
    Source: TradingView Rate hikes often bring higher yields
    Nonetheless, yields often rise during periods of monetary tightening. The image below points towards this trend, with yields starting to rise often slightly ahead of those periods of monetary tightening.
    Meanwhile, that rise in yields also seems to fall off as the rise in rates draws to an end.
    Source: TradingView  
    With both those factors in mind, we can draw a conclusion that in the event the Fed continues to move towards monetary tightening, yields will likely rise and gold will suffer.
    The long-term downtrend for yields does still hold, meaning that any such downside for gold could be another long-term retracement within its uptrend. Nonetheless, it does highlight the risks ahead for precious metals.
    Gold technical analysis
    Looking at the gold chart in isolation, we can see that the monthly chart signals how we could be within another prolongued retracement period alike to 2012-2015.
    Notably, it was in 2012 that the US 'taper tantrum' occurred. Thus while it took many years beyond 2012 for the Fed to raise rates, tapering of asset purchases can also play a role in damaging sentiment around gold.
    Crucially, this current phase does look strikingly similar to the beginning of the decline in 2013. That highlights just how important the $1677 support level could become.
    Source: ProRealTime  
    From a daily perspective, the recent rally failed to break through $1834 resistance. Instead we have seen price reverse lower over the course of this week.
    This raises the possibility of us continuing the bearish trend seen in recent months. When yields start to ease back, gold is likely to find support. However, as long as the Fed remains steadfast over its monetary tightening plans, gold is likely to suffer.
    Source: ProRealTime
  6. MongiIG
    THE EURO, US DOLLAR, EUR/USD, NIKKEI 225, STAGFLATION - TALKING POINTS:
    The Euro languishes as energy prices raise concerns. APAC equities went lower as yields continue to rise. Stagflation threatens global recovery. Where will EUR/USD go?
    The Euro continued to threaten lower levels today as equity market routs continued on from the US lead. APAC shares went lower, except for a couple of Chinese indices buoyed as the PBOC added liquidity for the ninth day in a row.
    Japan’s Nikkei 225 is down more than 2% as the ruling LDP party elected a new leader, Fumio Kashida. JGBs and JPY were little moved on the news.
    EUR/USD continues to drift near yearly lows as soaring energy costs continue to raise concerns about the Continent economies’ ability to deal with the oncoming winter.
    Overnight, Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen gave testimony to the US Congress. Both raised serious concern about the looming debt ceiling. Powell came under attack from Democratic Senator Elizabeth Warren, who called him a “dangerous man”.
    Several commentators have raised the spectre of stagflation, whereby an economy has high inflation and stagnating growth at the same time. If energy prices maintain lofty levels, this may contribute to higher costs throughout society and undermine some businesses’ ability to operate, hampering growth.
    China today announced that it is looking at measures to assist power generators with price adjustments. Currently, the generators are paying high costs for coal and other energy sources, while the price they are able to charge businesses is regulated far below these costs.
    The EIA/DOE Weekly Petroleum Report due out later today may have more attention than usual. OPEC+ will be meeting next week, 4th October.
     
    EUR/USD TECHNICAL ANALYSIS
    EUR/USD has moved close to the August low of 1.1664 and the November 2020 low of 1.16026 is not far behind. These levels might provide some support on approach, but a break below there could see some bearish momentum emerge.
    On the topside, resistance could be offered at the previous highs of 1.17557 and 1.19087. The 21-day simple moving average (SMA), currently at 1.17777, may also offer resistance, but a break above that level might be bullish.

    Chart created in TradingView
    Written by Daniel McCarthy, Strategist for DailyFX.com. 29 September 2021.
  7. MongiIG
    KEY TALKING POINTS:
    Oil demand picks up as economies recover from the pandemic shutdowns. Power crunch in China unsettling oil traders.  

    Brent crude has dipped this morning after a 5-day rally ran out of steam after hitting a 3-year high just shy of $80 a barrel. It’s likely that profit-taking is behind yesterday’s rejection after a good rally but we may have some stagnation around this level as investors weigh up where to go next. The run-up in prices is leading on from beliefs that oil-producing countries will decide to keep supply tight when the Organization for Petroleum Exporting Countries (OPEC) meets next week.
    This is in addition to growing demand as nations recover from the pandemic, with US crude oil inventories dropping for a seventh week in a row last week, and forecasts expecting another 1.65 million drop in today’s reading. But the market may face headwinds from a power crunch in China, potentially driving down economic activity as power rationing is in force. That said, the shortage in coal supplies may see incremental use of diesel in power generation, which would keep demand for oil supported.
     
    The market may also be in a bigger deficit than expected as struggling supply meets growing demand and so forecasts for Brent to reach $100 by year-end have resurfaced again. So far, the daily chart is showing overbought conditions in the short-term but yesterday’s rejection at $80 is helping to settle the market for another leg higher. There seems to be plenty of support around its current levels, with the simple moving averages grouping up between $75 and $72.
    Its US counterpart (WTI) has also seen a steep rally over the past few weeks but has faced rejection at its 2018 high (76.82). The 20-week SMA seems to be trailing the lows and so we may see a pullback towards $70 for support before we see momentum build higher again, whilst the area between $76.80 and $80 is likely to offer increased resistance.
    BRENT CRUDE DAILY CHART

    WTI CRUDE WEEKLY CHART

    Fibonacci Confluence on FX Pairs
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    Traders of all levels and abilities will find something to help them make more informed decisions in the new and improved DailyFX Trading Education Centre
    Written by Daniela Sabin Hathorn, Market Analyst, 29 September 2021. DailyFX
  8. MongiIG
    The dollar has been on the rise as the Fed plots an increasingly hawkish path. With Powell stepping up once again, there is a good chance we could see months of dollar outperformance
    Source: Bloomberg  Joshua Mahony | Senior Market Analyst, London | Publication date: Tuesday 28 September 2021. IG Hawkish Fed stance builds case for dollar strength
    Federal Reserve Chair, Jerome Powell, steps up to make yet another appearance today, following last week’s hugely significant Federal Open Market Committee (FOMC) meeting.
    That meeting signalled a likely move to commence tapering in November, with the Federal Reserve (Fed) expected to start raising rates in 2022.
    From a dollar perspective, the fact that the Fed appears to be leading from the front brings the potential for a carry trade to appear. Interestingly, the recent rise in 10-year treasury yields highlights a somewhat mixed relationship with the dollar. At times of economic crisis, the dollar haven role comes into play as treasury demand drives down yields.
    However, the chart below highlights how we often see the two markets move in tandem. As such, the recent push higher for yields (driven in part by hawkish Fed comments) also drives up the dollar.
     
    Source: TradingView Dollar index reaches crucial double bottom support
    The dollar index has enjoyed a bullish four months, with the greenback pushing into a fresh 10-month high this week.
    The recent drive through 93.47 brings a double bottom into play, highlighting the potential for a bullish breakout. The subsequent retracement looks to be over, with price back through the 93.73 resistance level today.
    With Powell stepping up to provide yet another outlook this afternoon, there is a chance we will see another leg higher for the dollar if he reiterates last week’s comments.
    Source: ProRealTime  
    The intraday charts highlight this recent outperformance, with the latest drive higher bringing fresh long-term highs.
    This push through resistance provides us with a fresh bullish outlook, with a break below 92.96 required to negate that positive dollar view.
    Source: ProRealTime
  9. MongiIG
    Continued pressure on Boohoo shares comes even as the outlook for revenue and earnings is beginning to improve.
    Source: Bloomberg    Chris Beauchamp | Chief Market Analyst, London | Publication date: Tuesday 28 September 2021. IG Boohoo is one company where the fundamentals and technicals do not seem to align.
    Earnings this week are expected to show a 28% rise in revenue to £1.05 billion for the first half of its year, and adjusted earnings to top the £100.5 million mark from £89.8 million a year earlier.
    However, pressures on margins are expected to bite, hitting headline pre-tax profit.
    Boohoo may find that the current market environment is no longer conducive to further gains for growth stocks. Recent rises in yields have put pressure on the more pricey end of the spectrum, and with Boohoo trading at around 36 times earnings it falls into that category for a UK company.
    While not at the lofty levels of many US companies, Boohoo may find it struggles to attract new inflows from investors.
    Boohoo share price technical analysis
    Boohoo shares have suffered since the beginning of the year, remaining in a steady downtrend, and despite a recent bounce towards the 50-day simple moving average (SMA), currently 270p, the overall negative view remains in place.
    A rally above 290p would be needed to suggest a change in direction, since for now the sellers are firmly in control.
    Source: ProRealTime
  10. MongiIG
    Brent Crude Oil Price, Chart, and Analysis
    Brent crude rallies on increased global demand. Natural gas prices hits a multi-year record high.
    Keep up to date with all market-moving data releases and events by using the DailyFX Calendar
    The price of Brent crude oil continues to soar, touching highs last seen three years ago as demand outstrips supply. The continued rollback of covid-19 restrictions in economies around the globe is driving demand ever higher with supply struggling to keep up. OPEC+ will meet next – October 4 – and they may need to increase production further to help alleviate the market shortage. Brent crude touched $80/bbl. earlier and may now set its sights on the October 2018 high at $86.65/bbl. if the OPEC+ leaves production at its levels. The Organization of the Petroleum Exporting Countries will also release its World Oil Outlook next week and this now takes on increased significance as prices rally hard.
    BRENT CRUDE OIL WEEKLY PRICE CHART SEPTEMBER 28, 2021

    Natural gas prices are also heading ever higher as supply remains unable to meet demand in Europe as inventory levels crumble. The severe shortage of natural gas in Europe is in part due to heavy demand from Asia and a cut back in supply from Russia and markets are now anticipating further demand as the winter months near. The monthly natural gas chart shows the recent sharp rally with the February 2014 high at $64.93 the next level of resistance. The move higher is given further credibility by the confirmed break above the long-term simple moving average.
    Natural Gas Monthly Price Chart September 28, 2021

    What is your view on Oil and Gas – bullish or bearish?
     
    By Nick Cawley, Strategist, 28 September 2021. DailyFX
  11. MongiIG
    GBP/USD Analysis and News
    GBP/USD on the Backfoot. UK OIS Markets Price In Aggressive BoE Tightening. Room for Disappointment. UK Data to Slow Down.
    GBP/USD on the Backfoot
    A modest pullback in the Pound this morning, breaking back below the 1.3700 handle. Reminder that today is corporate month end (two days before actual month end), which typically coincides with USD stength throughout the session. Addtionally, the sizeable pick up in US yields with the 10Y once again reclaiming 1.5% has also underpinned the greenback.
    That being said, my view is that the Pound is moving into a rather precarious situation for several reasons. Firstly, OIS markets have priced in BoE tightening rather aggressively, a 15bps rate hike has been fully priced in by February with a second hike seen by August 2022. There is an argument that the rates market is priced for perfection at a time where UK data is expected to get gradually weaker. Therefore, the room to disappoint hawkish BoE expectations has increased.
    UK OIS Markets Price In Aggressive BoE Tightening. Room for
    Disappointment

    Source: Refinitiv
    UK Data to Slow Down
    The furlough scheme will expire this week, which as of August covered 1.6-2mln jobs and thus greater attention will be placed on the labour market. Now while this is expected to see the unemployment rate tick higher, the uncertainty lies with how much and for how long. Additionally, ongoing supply bottlenecks are likely to be reflected in sentiment-based surveys, such as PMIs. Elsewhere, the UK government will tighten fiscal policy where the GBP 20/week uplift to universal credit and working tax credits will come to an end at the beginning of October, while National Insurance will be raised from next April. As such, less stimulative fiscal policy will also weigh on the economic recovery.
    BOE BAILEY RECAP: Yesterday saw some slightly dovish comments made by BoE’s Bailey, discussing the hard yards that the UK economy faces. The Governor noted that the rate of recovery has slowed in recent months, while also making a mention of the fact that the current supply-chain issues have been broadening out, in which tightening monetary policy to supply shocks could make the situation worse by adding pressure on a slowing recovery.
    GBP/USD Eyes Key Support
    Taking a look at the chat, key support resides at 1.3600 and 1.3570 below, which marks the recent lows in the pair, where a closing break through the latter leaves GBP/USD vulnerable to a move towards 1.3450-1.3500.
    GBP/USD Chart: Daily Time Frame

    Source: Refinitiv
    At the same time, the USD is edging towards YTD highs (93.73) whereby a break above opens the doors to 94.50-60.
    US Dollar Chart: Daily Time Frame

    Source: Refinitiv
     
    By Justin McQueen, Strategist, 28 September 2021. DailyFX
  12. MongiIG
    US 10-year treasury yields break higher, with USD/JPY and value stocks expected to gain in prominence as a result.
     Joshua Mahony | Senior Market Analyst, London | Publication date: Monday 27 September 2021. IG Fed tightening expectations lift treasury yields
    Treasury yields have finally taken flight over the past week, with the latest Federal Reserve (Fed) meeting highlighting the pathway towards lower asset purchases and higher interest rates.
    That economic confidence from the Fed does invariably feed into yields, with the expectation of rising rates in 2022 giving ground for optimism around yields. The chart below highlights how the effective Fed Funds rate typically moves in lockstep with the 10-year yield, particularly when rates are rising or falling.
    With the Federal Reserve moving towards a phase of tightening, it is perhaps unsurprising to see yields start to rise. The uncertainty around whether we will see the Fed growing in confidence over their next move appears to be fading after last week’s meeting, and that brings optimism around yields.
    Source: TradingView Value stocks could gain prominence over growth
    The upward trajectory expected for yields does provide a number of different potential plays in other markets.
    For one thing, rising yields also often go hand-in-hand with outperformance for value or pro-cyclical stocks. Growth and momentum stocks have enjoyed a bountiful 2020 and 2021 thus far, yet the potential rise in yields could bring some concerns around the possibility that those valuations could be somewhat inflated.
    Instead, traders will look towards those value and pro-cyclical stocks as potential benefactors. Notably, we have seen small-cap stocks suffer of late, and thus there is a chance we could see traders shift funds towards such companies as the economy continues to recover.
    The image below highlights this fact, with the ratio between the Russell 2000 and Nasdaq clearly starting to rebound as yields break higher.
    Source: TradingView USD/JPY likely to push higher as yields rise
    Another area to watch when yields rise is the USD/JPY currency pair.
    While both represent havens, the growth in expectations around a Fed rate hike provides the basis for upside in USD/JPY. The chart below highlights how rising US 10-year yields should bring gains for the pair.
    Source: TradingView  
    With yields pushing higher last week, we have seen USD/JPY break through the key 110.44 resistance level. Coming off the back of a triangle formation, this break brings expectations of further upside from here.
    A break below 109.11 brings a more bearish outlook, with further upside expected until that occurs.
    Source: ProRealTime
  13. MongiIG
    USD TECHNICAL OUTLOOK:
    DXY trading towards important resistance test. A sustained breakout is possible, but conviction lacks. Price action may continue to contract through the rest of the year.
     
    US DOLLAR TECHNICAL OUTLOOK: NEARING AN IMPORTANT TEST
    The US Dollar Index (DXY) is trending higher and on the verge of testing an important set of resistance levels as we head towards the final frame of the year. The August high at 93.72 and top-side trend-line running over from March stand in the way.
    A breakout above these thresholds could keep the DXY running higher, but conviction lacks with a low volatility environment dominating the tone of trading these days. But should we see a breakout occur with conviction, then the next big level of resistance arrives at the March 2020 low. This is a level that was quick to act as resistance back in September.
    It is quite possible that the 2020 level is important again as it began during a historical time for the market. We will monitor momentum should we see price run to that point to determine the extent to which the dollar may or may not want to continue beyond there.
    First up, though, is getting behind the near-term threshold mentioned to start the discussion. If we see a turnabout, a rejection of some sort around the 93.72/85-area then look for the narrowing price action to continue as the DXY retreats. In this scenario, the trend-line from May could come into focus as support.
    For now, simply watching how price action behaves as resistance nears. From a tactical standpoint, existing longs with near-term objectives may want be on alert for some type of reaction to occur soon that would call for buttoning up trailing stops. For would-be longs, a breakout doesn’t ensure a path higher, but will add conviction that maybe a sustained move to at least the March 2020 low in in the works. For would-be shorts, a reversal off near-term resistance may provide a trade lower towards the May trend-line.
     
    US DOLLAR INDEX (DXY) DAILY CHART

    DXY Chart by TradingView
    Resources for Forex Traders
    Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.
    Written by Paul Robinson, Market Analyst, 27 September 2021. DailyFX
  14. MongiIG
    EUR/USD Analysis & News
    SPD Wins Majority of Votes The Greens & FDP to Decide Between Traffic Light or Jamaica Coalition Euro Sees Muted Impact After Election Sees Status Quo Maintained
    German Election Shows Victory for Centre-Left
    The results: According to preliminary results, the SPD led by Olaf Scholz won the largest share of votes with 25.7% (+5.2ppts). The main opposition, the CDU/CSU were runners up with 24.1% (-8.9ppts), marking a poor night for the conservatives. Meanwhile, there was a big win for the smaller parties with the Greens winning 14.8% (+5.8ppts) of the vote and the FDP on 11.5% (+0.7%ppts).
    German Election Results

    Source: The Guardian
    Coalition Scenarios: Following the election result, this paves the way for several outcomes, in which the Greens and FDP will decide who will become the next chancellor. The two possible outcomes are a trafflic light coalition, involving the SPD, Greens and FDP or Jamaica coalition with CDU/CSU as opposed to SPD. That said, SPD’s Scholz has claimed election victory, noting that a coalition agreement is possible between his party, alongside the Greens and FDP.
    German Election Potential Outcomes

    Source: The Guardian
    Market Reaction: As the election essentially confirms the status quo will be maintained, the Euro has seen a relatively muted reaction. While the most fiscally expansive outcome of the SPD, Greens and the Left has meant that German yields are also relatively stable. Looking at the chart however, key support sits at 1.1665 with the 1.16 handle below.
    EUR/USD Chart: Daily Time Frame

    Source: IG
    What Happens Next?: Reaching an agreement to form a coalition is unlikely to be found any time soon and instead take several months. As a reminder, following the 2017 Federal Election, a coalition had not been reached until 6 months later. I suspect the impact on European assets from the election will remain limited with instead near term focus on the current uncertainties pertaining to Evergrande, alongside the mini-tantrum in the fixed income space, in which US 10yr yields have hit 3-month highs.
    IG Client Sentiment Shows Mixed Outlook for EUR/USD
    Data shows 62.12% of traders are net-long with the ratio of traders long to short at 1.64 to 1. The number of traders net-long is 4.19% higher than yesterday and 0.24% lower from last week, while the number of traders net-short is 2.85% higher than yesterday and 1.75% higher from last week.
    We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall.
    Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/USD trading bias.

    Source: DailyFX, IG
     
    By Justin McQueen, Strategist, 27 September 2021. DailyFX
  15. MongiIG
    GBP/USD Price, Chart, and Analysis
    Fuel shortages across the country need to be rectified immediately. BoE and Fed speakers will help steer GBP/USD this week.
     
    The UK government is to suspend competition laws between oil firms to help get fuel to the parts of the country suffering most from the petrol shortage. Over the weekend long lines of traffic blocked UK roads as drivers queued to buy petrol before forecourts ran out of fuel, sparking fears that the supply chains may suffer further, dampening UK growth prospects. The government also announced that it would issue around 5,000 temporary visas for foreign lorry drivers to help ease the problem although this looks like a case of ‘after the horse has bolted’ as companies suffer across the country.
    The latest ONS covid-19 data continue to show the number of new cases and fatalities rising on a weekly basis despite the high numbers of one and two case vaccinations. Nearly 90% of the population over the age of 16 have had one vaccination dose, while just over 82% have had two shots.

    This week’s economic calendar is full of US Fed speakers and commentary from UK BoE governor Andrew Bailey, leaving GBP/USD at risk. Cable has struggled to break higher of late despite money markets indicating that the BoE will hike rates by 15bps in February 2022 and by another 25 bps over the course of the year. It now looks likely that the UK central bank will hike rates at least once, and most probably twice, before the Fed moves as UK inflation remains above target.
    Keep up to date with all market-moving data releases and events by using the DailyFX Calendar
    GBP/USD looks as if it has found a supportive base around the 1.3600 level with recent prior highs and the 20- and 50-day simple moving averages around 1.3780 the next level of resistance. Cable may find itself trading sideways between these two levels this week unless disrupted by any central bank speak.
    GBP/USD DAILY PRICE CHART SEPTEMBER 27, 2021

    Retail trader data show71.67% of traders are net-long with the ratio of traders long to short at 2.53 to 1. The number of traders net-long is 3.13% higher than yesterday and 22.70% higher from last week, while the number of traders net-short is 0.13% higher than yesterday and 18.29% lower from last week.
    We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall.Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bearish contrarian trading bias.
    {{SENTIMENT|GBP/USD}} What is your view on GBP/USD– bullish or bearish?? 
     
    By Nick Cawley, Strategist, 27 September 2021. DailyFX
  16. MongiIG

    Is Alibaba’s share price a buy?

    By MongiIG,


    Market News
    With Alibaba’s share price falling close to 35% year-to-date, will it stage a recovery in the coming months?
    Source: Bloomberg   Shares Alibaba Group China Price E-commerce Risk  Yeap Jun Rong | Market Strategist, Singapore | Publication date: Friday 24 September 2021. IG Brief overview
    The ongoing theme putting a cap on Alibaba’s share price continues to be the tightening of regulations by Chinese authorities, bringing about some near-term impact on profitability and operational restructuring. Alibaba has also pledged US$15.5 billion in support of "common prosperity", raising questions of whether there will be further ‘sharing’ of profits to align with the government’s long-term goals.
    What may we expect?
    China’s data protection law requires Internet companies to obtain customer consent for more targeted feeds and ads. While the rate of opt-out remains to be seen, the broad-based implementation levels the playing field for all. The impact on the e-commerce space, however, may potentially be softer, considering that consumers may be more willing to be fed with relevant product ads for shopping comparison.
    While the ‘common prosperity’ theme will continue to linger, it may be aimed at promoting a more sustainable economy by increasing the contribution of household consumption to economic growth. While pledging of huge investment amounts may reduce shareholder return in the near term, markets participants may have to be in for the long haul for it to crystalise.
    Alibaba’s retail marketplaces may potentially lead to some stickiness by vendors, having a massive scale of 828 million annual active consumers. While China’s aim to open up competition is a concern to some, it can come as a double-edged sword. Sharing of content with rivals’ apps, such as Tencent’s WeChat, may bring about opportunities to tap on the 1.25 billion monthly active users for expansion or monetisation.
     
    Source: Alibaba Policy support for China’s slowing retail sales?
    Recent China’s retail sales data revealed only a 2.5% year-on-year increase in August, far short of the 7.0% expected, with Covid-19 restrictions and supply constraints singled out as the main culprits. That said, online retail sales of physical goods post a relatively smaller decline, coming in at a 15.9% increase from the previous year. That may suggest some resilience for online consumer demand, potentially cushioning any slowdown in retail sales for the e-commerce players.
     
    Source: National Bureau of Statistics of China  
    While contagion risks from Evergrande remain a threat to economic growth, recent injection of short-term funds into the financial system by China’s central bank provides an optimistic signal that they are ready to step in if the economy comes under risk. Further growth slowdown over the coming quarters may reinforce the stance for more policy support, with expectations for another reserve requirement ratio cut to support growth. Along with Covid-19 measures largely being temporary, subsequent easing of restrictions may provide a positive backdrop for consumer spending.
    Price performance and valuation
    Forward profitability metrics may carry some uncertainties near-term from regulatory risks. That said, its price-to-book currently trades at 2.70, more than two standard deviations below its five-year average. That marks its lowest level since listing, also trailing behind its e-commerce peers such as JD.com (3.51) and Pinduoduo (12.03).
    Compared to other Chinese big techs, Alibaba also carries a weaker year-to-date price performance, as markets seem to be pricing higher regulatory risks on its businesses. Greater clarity on the impact to its profitability over the next few quarters may potentially lead to a re-rating of its valuation ahead.
    Technical analysis
    Alibaba’s share price continues to trade in a downtrend, with a series of lower highs and lower lows since October last year. A downward trendline has weighed on its share price on five occasions since June, which will be a key resistance to overcome for a longer-term upside move.
    Recent lower low for share prices is met with a higher low on the moving average convergence divergence indicator, which may suggest weakening downside momentum and increasing chances of a short-term rebound. Immediate resistance may be at HKD150.00, where a breakdown of previous support level will now serve as resistance.
     
    Source: IG Charts
  17. MongiIG

    The Week Ahead On The Markets

    By MongiIG,


    Market News
    The Week Ahead
    Read about upcoming market-moving events and plan your trading week
                                                                      
        Week commencing 27 September
    Chris Beauchamp’s insight
    US durable goods and Chinese PMI figures are the key events next week, as markets continue to look for signs of ongoing recovery in the global economy. Meanwhile, UK corporate reporting includes retailers Boohoo and Next, and pub group JD Wetherspoon.
      Economic reports
    Weekly view Monday
    1.30pm – US durable goods orders (August): orders to rise 0.6% overall, and 0.4% excluding transportation orders. Markets to watch: USD crosses
    Tuesday
    7am – German GfK consumer confidence (October): index to rise to -0.8 from -1.2. Markets to watch: EUR crosses
    3pm – US consumer confidence (September): index to rise to 114.5. Markets to watch: USD crosses
    Wednesday
    3pm – US pending home sales (August): sales fell 8.5% in July. Markets to watch: USD crosses
    3.30pm – US EIA crude oil inventories (w/e 24 September): stockpiles fell by 3.5 million barrels in the previous week. Markets to watch: Brent, WTI
    Thursday
    2am – China mfg PMI (September): index to rise to 51. Markets to watch: China indices, CNH crosses
    2.45am – China mfg PMI (September): expected to rise to 50.2. Markets to watch: China indices, CNH crosses
    7am – UK GDP (Q2, final): QoQ growth expected to be 4.8%. Markets to watch: GBP crosses
    8.55am – German unemployment rate (September): expected to hold at 5.5%. Markets to watch: EUR crosses
    1pm – German CPI (September, preliminary): forecast to rise to 4%. Markets to watch: EUR crosses
    1.30pm – US initial jobless claims (w/e 25 September), GDP (Q2, final): claims rose to 351K in the previous week, GDP to grow 6.6% QoQ. Markets to watch: US indices, USD crosses
    2.45pm – US Chicago PMI (September): index to fall to 66.7. Markets to watch: USD crosses
    Friday
    10am – eurozone CPI (September, flash): prices to rise 0.2% MoM. Markets to watch: EUR crosses
    3pm – US ISM mfg PMI (September): index to remain at 59.9. Markets to watch: USD crosses
      Company announcements
     
     
    Monday
    27 September
    Tuesday
    28 September
    Wednesday
    29 September
    Thursday
    30 September
    Friday
    1 October
    Full-year earnings
     
    Smiths Group,
    Ferguson,
    Close Brothers   Go-Ahead JD Wetherspoon Half/ Quarterly earnings
      Card Factory,
    AG Barr Next Boohoo,
    Avacta,
    H&M  
    Trading update
      Grainger,
    Pennon,
    United Utilities,
    TUI      
     
      Dividends
    FTSE 100: British American Tobacco, Smith & Nephew, Rightmove, Barratt Developments
    FTSE 250: Kainos, RIT Capital, Travis Perkins, Hays, TP ICAP, Games Workshop, LXI, Travis Perkins (special), JTC
     
    Dividends are applied after the close of the previous day’s session for each market. So, for example, the FTSE 100 goes ex-dividend on a Thursday, but the adjustment is applied at the close of the previous day, e.g. Wednesday. The table below shows the days in which the adjustment is applied, not the ex-dividend days.
     
    Index adjustments
      Monday
    27 September Tuesday
    28 September Wednesday
    29 September Thursday
    30 September Friday
    1 October Monday
    4 October FTSE 100    
    5.79       Australia 200   0.4       0.2 Wall Street       3.0 2.4 6.6 US 500 0.23 0.46 0.31 0.04 0.26 0.51 Nasdaq   0.52 0.40   1.64 1.21 Netherlands 25         1.8   EU Stocks 50 2.4       2.5   China H-Shares 7.6           Singapore Blue Chip             Hong Kong HS50 13.2           South Africa 40   93.1         Italy 40             Japan 225   183.06    
  18. MongiIG

    US Dollar Extends Decline as US PMIs Slip

    By MongiIG,


    Market News
    US Dollar Analysis & News
    Markit PMI Misses Expectations USD Back Down to Pre-FOMC Levels
    Markit PMI Misses Expectations
    US Markit Composite PMI for September fell to 54.5 from 55.4, whereby the services and manufacturing figures fell to 54.4 and 60.5 respectively, both missing analyst estimates. Supply chain issues and capacity shortages remain the key factors behind the slump, linked in part to the spread of the Delta variant. IHS Markit note that supply chain delays show no signs of easing and thus output looks set to remain constrained.
    US PMI Takes a Hit from Supply Constrains

    USD Reaction Muted
    In response the PMI report, the USD index has extended its pullback with the greenback now trading at pre-FOMC levels. That said, the data is unlikely to be a key factor in dictating price action in the greenback with the Federal Reserve on course to taper. Instead, short term FX movements will be determined by the ebb and flow of risk appetite, with particular attention being placed on Evergrande.
     
    By Justin McQueen, Strategist, 23 September 2021. DailyFX
  19. MongiIG
    Bank of England Analysis and News
    BoE Leaves Policy Tools Unchanged as Expected Policymakers Vote 7-2 on Maintain Gilt Purchases, Ramsden Joins Saunders in Hawkish Dissent GBP Breaks Above 1.37 on More Hawkish Statement
    Bank of England left policy measures unchanged as expected with the Bank Rate remaining at 0.1% and gilt purchases at GBP 875bln. However, the vote split on gilt purchases saw Ramsden joining Saunders in calling for a cut to GBP 860bln. Alongside this, the BoE noted that some developments have meant that the case for tightening has strengthen, which in turn has prompted a shift in money markets pricing in a 15bps rate hike for March 2022 vs Previous May 2022. That said, the March meeting is not a quaterly meeting like February or May, making it unlikely that a hike will take place at March.
    UK Money Market See Rate Lift Off by March 2022

    Source: Refinitiv
    Growth: Bank staff had revised down their expectations for 2021 Q3 GDP growth from 2.9% at the time of the August Report to 2.1%, in part reflecting the emergence of some supply constraints on output. That would leave the level of Q3 GDP around 2½% below its pre-Covid level.
    Inflation: The BoE also continue to expect inflation to rise towards 4% in Q4 before returning back to 2% over the medium term and thus sticking with the transitory view on inflation.
    GBP/USD: A jump to session highs and breaking above 1.3700 in response to a slightly more hawkish than expected statement. On the topside, near term resistance sits at 1.3722 and 1.3750.
    EUR/GBP: Range trading persists in the cross, having once again failed to maintain a foothold above 0.8600 and thus remains the area to fade rallies into. That said, support is situated at 0.8520 and 0.8500. For now, there is little to suggest that this range will see a notable breakout. Short term momentum is neutral, offering little excitement for the cross.
    GBP/USD and UK Gilt Yields Immediate Reaction to BoE

    Source: Refinitiv
     
    By Justin McQueen, Strategist, 23 September 2021. DailyFX
  20. MongiIG
    FTSE 100, BANK OF ENGLAND POLICY DECISION, NEWS AND ANALYSIS:
    The FTSE 100 index has been climbing for most of this week and the Bank of England’s monetary policy committee will likely consider it a job well done if London stocks and GBP are stable after its announcement today. A hawkish tilt cannot be ruled out but the Bank is more likely to focus on stability and avoiding a major market reaction.
     
    BANK OF ENGLAND TO FOCUS ON STABILITY
    Torn two ways by an above-target UK headline inflation rate of 3.2% year/year in August and a robust labor market on one side, and a stalling economic recovery on the other, the Bank of England is almost certain to leave all its monetary settings unchanged Thursday.
    For now, its monetary policy committee will likely continue to see the rise in inflation as transitory and put its emphasis on stability and avoiding a major market reaction when it announces its decisions. However, a hawkish tilt cannot be completely ruled out, and that would have a negative impact on London stocks after their advance over the last few days.
    FTSE 100 PRICE CHART, DAILY TIMEFRAME (JANUARY 21 – SEPTEMBER 23, 2021)

    Source: IG (You can click on it for a larger image)
    More likely though, even the hawks on the MPC will likely have reached the conclusion that against a background of soaring UK energy prices and unease over China because of the Evergrande saga, now is not the time to signal a hawkish tilt.
    With no press conference today by BoE Governor Andrew Bailey and no new economic projections released, it’s only the actual announcement that traders will need to look at. In it, the key question will be whether any other MPC members have joined Michael Saunders in thinking that the necessary conditions for a tapering of the Bank’s QE asset-purchase program have been fulfilled.
    The answer to that question is probably no. Note that the QE program is on course to finish in December anyway, and that the MPC’s two new members will probably want to keep their heads down rather than rock the boat so soon after joining.
    Still, the Bank remains likely to tighten policy next year, when there could be rate rises in May and again in November even if that is still up in the air at the moment.
     
    Written by Martin Essex, Analyst, 23 September 2021. DailyFX
  21. MongiIG
    BRITISH POUND, US DOLLAR, GBP/USD, FOMC, BOE, EVERGRANDE - TALKING POINTS
    The British Pound was pushed to lows by the FOMC but rallied through Asia APAC equities were generally positive after Evergrande debt semi-resolution US Dollar strength tested after the Fed meeting. Will GBP/USD break-out?
     
    The British Pound moved higher through the Asian session as the US Dollar had a mixed day in the aftermath of the FOMC meeting. The resolution of the Evergrande bond coupon payment due today is still evolving but the equity market was upbeat enough to post gains on most bourses, South Korea being the exception.
    The FOMC delivered on expectations and the Fed is now believed to begin tapering stimulus at the November meeting. A rate hike is still a long way off it seems, although the skew of the “dot plot” – a summary of Fed officials’ forecasts for the direction of the bank’s target interest rate – moved from 7 to 9 members out of 18 expecting to hike rates in 2022.
    The US yield curve flattened and the US Dollar rallied on the news. The USD pulled up just short of making a new high for the year as measured by the US Dollar index (DXY). GBP and EUR recovered some ground today while JPY continued to trade near its’ post-FOMC lows.
    Evergrande made a coupon payment on one of its’ bonds in Chinese Yuan today, but it is unclear if it was in full or not. A US Dollar coupon payment is due in the US session and it is not known if it will be made at this stage. The terms of the debt contract allow for a missed payment period of 30 days, in which time a deal can be negotiated.
    The PBOC added liquidity for the fourth day in a row and this helped to provide buoyant sentiment for markets.
    Looking ahead, the Bank of England is due to meet to discuss monetary policy, but the market expects no change as the UK is experiencing high inflation and stagnating growth. US jobless claims numbers are also due to be out later.
     
    GBP/USD TECHNICAL ANALYSIS
    Overnight, GBP/USD visited the 1.3600 area for the third time in 2 months. Those 2 previous lows of 1.3600 and 1.3572 might provide some support initially but a break below those levels could be a bearish signal.
    The move to here has 2 medium term simple moving averages (SMA) displaying a negative gradient slope. A rally to the 21-day SMA or the 55-day SMA may see some resistance. Below those SMAs, possible resistance might be the pivots points at 1.3725 and 1.3763.
    Potential further resistance may lie at the previous highs of 1.3913 and 1.3982, as well as a descending trend line.

    Chart created in TradingView
    Written by Daniel McCarthy, Strategist for DailyFX.com. 23 September 2021.
  22. MongiIG

    Bank of England meeting – what to watch

    By MongiIG,


    Market News
    A cautious stance overall from the Bank of England is likely to offer little support for an already hard-pressed pound.
    Source: Bloomberg  Jeremy Naylor | Writer, London | Publication date: Wednesday 22 September 2021  Here are a few points to note ahead of the Bank of England (BoE) meeting tomorrow. IG
    Cautious outlook remains in place
    The looming end of the furlough scheme will put pressure on unemployment, causing the bank to err on the side of caution when looking at the future direction of the economy and any policy changes.
    Meanwhile, an end to the Universal Credit increase and the planned rise in National Insurance contributions will hit spending, particularly among the lower income groups.
    Recent rises in energy prices will not help matters either, and could well slow the rise in consumer spending rather markedly.
    Mid-2022 rate hike seems unlikely
    Markets are pricing in a rate hike in the middle of next year, but given the likelihood of a slowdown in growth in the final quarter of 2021 and into 2022, this is probably overdone.
    While prices have risen sharply, there is as yet little sign that the rise is generated by factors specific to the UK and thus within the control of policymakers.
    Any rate rise would thus be symbolic at best, prompting the bank to stick to its ‘wait and see’ approach for the time being on rate increases.
    Policy to remain unchanged
    A rise in the number of Monetary Policy Committee (MPC) members voting for a hike may well prompt some GBP strength in the wake of the meeting, but any hints of tighter policy in the near future are unlikely given how the bank is still concerned about the direction of growth, unemployment and wage increases.
    GBP/USD outlook
    The pound has continued to struggle against the dollar, and it looks like this will remain the case in the near-term, pushing to, and then below, the late August lows at $1.36.
    Even given a more hesitant Federal Reserve, it looks like the dynamics continue to favour additional cable downside for the time being, further eroding the gains made in the second half of 2021.
    Source: ProRealTime
  23. MongiIG

    FOMC Event Risk: How Will the Market React?

    By MongiIG,


    Market News
    USD, Fed Price Analysis & News
    Markets on Tenterhooks Ahead of Fed Meeting All Eyes on the Dot Plot Again
    Markets on Tenterhooks Ahead of Fed Meeting
    Despite some overnight excitement with the latest actions in China regarding Evergrande. FX markets have been stuck in the usual pre-FOMC lull during the London session. As the time nears for the eventual Fed taper, market participants will be keeping a close eye on whether any explicit details are mentioned in tonight’s statement, while focus will also be on the latest dot plot projections.
    Dot Plots: The key market mover could be on the dot plot projections as the Fed provides a first look at the 2024 dot plot.
    Reminder that the dot plots released at the June meeting showed 7 members expect a Fed rate lift off in 2022. Therefore, three more members would need to move towards a hike to see a shift in the median dot-plot for 2022 rate hike. For 2023, there would need to be two members to shift in order to bring the median projection to three rate hikes. In which case, this would raise the risk of four hikes being shown in the 2024 dot plot. That said, this would be a very hawkish outlook relative to market expectations. Chair Powell would likely use the presser to downplay the significance of the dot plots, as he done on numerous times in the past where everyone had focused on the dot plots. But much like June, that didn’t stop the USD rallying over 2% in the subsequent few sessions.
    All Eyes on the Dot Plot Again

    China Risks Provide a Reason For Caution
    However, while in recent sessions playing the hawkish view might have had value, given that the USD is near the August highs, rising over 1% in the past week amid safe-haven demand and an increasing amount of market participants anticipating a hawkish meeting, the value has somewhat diminished.
    Keep in mind, that Chinese risks are at the forefront of investors’ minds and also in the minds of central bankers (as per RBA Debelle’s comments overnight). In turn, the rising uncertainty in China has prompted US equity markets to fall 5% from all time highs for the first time since October. Therefore, this does provide an excuse for Powell and Co. to stick to a relatively cautious stance where even the slightest of hints that a taper takes place in 2022 could be a enough to prompt a rally in risk appetite, which would also mean 2022 and 2023 dot plots left unchanged while 2024 dot plots see three rate hikes.
    The Fed put is a real thing, below is an abstract on the study regarding the Economics of the Fed Put.
    “Since the mid-1990s, negative stock returns comove with downgrades to the Fed’s growth expectations and predict policy accommodations. Textual analysis of FOMC documents reveals that policy makers pay attention to the stock market. The primary mechanism is their concern with the consumption wealth effect, with a secondary role for the market predicting the economy. We find little evidence of the Fed overreacting to the market in an ex post sense (reacting beyond the market’s effect on growth expectations). Although policy makers are aware that the Fed put could induce risk-taking, moral hazard considerations appear not to significantly affect their decision-making ex ante.”
     
    Scenario and FX Outperformer:
    Hawkish Dot Plots and Explicit Taper Signal: USD outperforms, particularly against low yielders (JPY, CHF & EUR) Cautious & More Dovish Than Expected: USD weakens most notably against CAD and AUD (currently has record shorts, according to CFTC data)  
    By Justin McQueen, Strategist, 22 September 2021. DailyFX
  24. MongiIG
    CRUDE OIL, EVERGRANDE, PBOC, BOJ, AUD/JPY, NZD/JPY, FOMC - TALKING POINTS
    Crude oil prices find support as China resolves systemic issues, for now APAC equities move higher from early lows, but end mixed on the day Risk-sensitive currencies and commodities rally. Can crude keep going?
    Crude oil, and the markets in general, breathed a sigh of relief as Evergrande announced it had struck a deal to pay bond holders on Thursday. The filing was not specific on the details of the deal struck and the market perception is that the coupon payment was not paid in full but that a default had been avoided.
    Asian equity markets are ending the day with some red and green on the screens, but they are all higher from where they started before the news out of China.
    The PBOC also added liquidity via their reverse repurchase agreements program. The sense
    from markets today is that systemic risk appears to have been avoided and the Chinese government could manage the Evergrande situation to avoid contagion.
    The commodity currencies of AUD, NZD and CAD all moved higher with NOK the best of the basket, aided by crude oil and energy trading higher. Copper enjoyed a strong bounce back from US session lows and iron ore managed to steady itself for a second day.
    The Bank of Japan interest rate decision delivered on expectations of no change. The Yen continued the weakening that already begun with safe-haven currencies abandoned in the risk-on environment. Combined with commodity appreciation, this led to AUD/JPY and NZD/JPY outperforming.
    The FOMC meeting is the key event today. The extent of policymakers’ plans to taper stimulus will be the focus for markets, as well as any changes in the “dot plot” – a summary of Fed officials’ forecasts for the direction of the bank’s target interest rate – that hint at the potential for movement in 2022. At the last meeting, 7 of 18 FOMC members projected a 2022 rate hike.
    CRUDE OIL TECHNICAL ANALYSIS
    Crude oil futures broke up through trend line resistance last week. The 21-day simple moving average (SMA) has also just crossed up through the 200-day SMA to form a Golden Cross, which is a potential bullish signal.
    There is possible topside resistance at the previous highs of 73.14, 74.23 and 76.90. Below the market, there could be nearby support provided at the previous lows of 67.56 and 67.12.
    Chart created in TradingView
     
    Written by Daniel McCarthy, Strategist for DailyFX.com. 22 September 2021.
  25. MongiIG
    GBP PRICE, NEWS AND ANALYSIS:
    The embattled Chinese property company Evergrande’s main unit, Hengda Real Estate, has said it will make a bond interest payment Thursday after private negotiations with bondholders. That has eased fears of widespread market disruption, and boosted riskier assets such as stocks and currencies like the British Pound, despite concerns that Evergrande could still default on its debts.
     
    GBP/USD STEADIER ON EVERGRANDE NEWS
    GBP/USD is steadier in early European business Wednesday on relief that China’s indebted property developer Evergrande has reached agreement on some interest payments and the People’s Bank of China has injected more money into the country’s banking system.
    The news boosted stock prices and also helped stabilize riskier assets such as the British Pound, which has been losing ground to the US Dollar since Tuesday last week.
    GBP/USD PRICE CHART, FOUR-HOUR TIMEFRAME (JULY 15 – SEPTEMBER 22, 2021)

    Source: IG (You can click on it for a larger image)
    FEDERAL RESERVE POLICY DECISION AHEAD
    Where GBP/USD goes next will depend largely on Wednesday’s decisions on monetary policy by the Federal Reserve. The Fed is expected to signal that it will scale back its asset buying later this year amid growing pressure to increase interest rates in 2022. If such a statement is not forthcoming, USD will likely fall back, benefiting currencies like GBP.
    On the domestic front, GBP might also benefit from news that the UK is exploring joining the US, Mexico, Canada (USMCA) free-trade agreement. Thursday’s announcement by the Bank of England’s monetary policy committee is unlikely to be a market mover as little is expected from it.
    Written by Martin Essex, Analyst, 22 September 2021. DailyFX

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