September 13, 2021

China puts more pressure on tech companies, threatens Taiwan

No US or Canadian economic data today

US dollar opens on firm footing

FX at a Glance:

Source: IFXA/RP

USDCAD Snapshot   Open 1.2664-68, Overnight Range 1.2663-1.2693, Previous close 1.2692

USDCAD soared Friday, despite posting robust employment gains (90,200) in August, and a drop in the unemployment rate to 7.1% from 7.5%. That’s because the US PPI index rose to 0.7% in August, from 0.1% in July, suggesting inflation continues to rise, intensifying Fed rate hike pressure.  Neither the Canadian election nor domestic data has much influence on the currency.  Bank of America is predicting WTI oil at $100.00/bbl on the back of a cold-snap. USDCAD moves continue to be driven by expectations for the Fed.

Technical view:  The intraday USDCAD technicals are bearish below 1.2690, looking for a break below 1.2650 to extend losses to 1.2580.  Longer term, USDCAD’s failure to break above 1.3000, sets the stage for a retest of 200 day moving average support at 1.2524, then then 100 day moving average at 1.2387.

For today, support is at 1.2650 and 1.2610.  Resistance is 1.2690 and 1.2730. Today’s range 1.2630-1.2690.

Chart USDCAD monthly

 Source: Saxo Bank

G-10 FX recap and outlook

There wasn’t much in the way of top-tier economic data to help get traders interested overnight. News of North Korea missile tests, another coronavirus outbreak in China, and more Chinese interference in technology stocks provided a distraction but not much else.

The major Asia equity indexes closed with small gains, except the Hong Kong Hang Seng, which dropped 1.5%.  European bourses are all higher, and S&P futures recovered from earlier weakness to suggest a positive open on Wall Street. Gold prices are a touch lower, but WTI oil has gained 1.30%.  US 10-year Treasury yields are nearly unchanged at 1.333%.

EURUSD extended Friday’s losses and fell from 1.1813 to 1.1775 in early NY trading. Prices continue to be weighed down due to the somewhat dovish ECB outcome last week and the prospect that the Fed begins tapering as soon as November. The intraday EURUSD technicals are bearish below 1.1790, looking for a further drop to 1.1700.

GBPUSD is sitting close to the middle of its 1.3799-1.3945 range, outperforming against the single currency due to EURGBP selling.   Prices continue to be underpinned by concerns the Bank of England rate will raise rates earlier than expected.  Even so, the gains are dubious, as the hike won’t occur until the end of 2022.

USDJPY continues to bounce around the 110.00 area with US Treasury yields supporting prices.

AUDUSD continues to underperform against its NZDUSD cousin due to better than expected New Zealand Business Confidence and Activity outlook data.

Chart of the Day- EURUSD

Source:  Saxo Bank

FX open, high, low, previous close

Source: Saxo Bank

China Snapshot

Today’s Bank of China Fix, 6.4497  Previous 6.4566

Shanghai Shenzhen CSI 300 index fell 0.44% to 4991.66                    

China also plans to break up Ant Group’s Alipay and tells tech companies to stop blocking each others links on websites. 

China’s Global Times says US renames their Taiwan office, it would recall ambassador from US, and levy full scale sanctions on Taiwan.

Chart: USDCNY 1 month

Source: Yahoo Finance