24th September 2021 - AUD/USD bulls pressured back to the start again

Market Headlines

The market sentiment improved substantially, following news that Evergrande, the Chinese property giant, will likely be restructured to avoid default. Additionally, the local government is prepared to provide another kind of support, while a unit of the troubled company pledged to make an on-time interest payment. The S&P500 is up 1.2%, and bond yields and risk-sensitive currencies had solid gains. Norway’s central bank hiked, while the BoE worried about inflation. US 2yr treasury yields rose from 0.24% to 0.26%, while the 10yr yield rose from 1.32% to 1.41%. Australian 3yr government bond yields (futures) rose from 0.38% to 0.41%, while the 10yr yield rose from 1.30% to 1.37%. Commodities, Brent crude oil futures rose 1.2% to $77, copper fell 0.5%, gold fell 1.0%, and iron ore rose 2.7% to $108.

Overnight Currency Range

AUD/USD 0.7223 0.7315

EUR/USD 1.1685 1.1750

GBP/USD 1.3615 1.3750

USD/JPY 109.75 110.35

NZD/USD 0.6982 0.7093

USD/CAD 1.2634 1.2795

USD/CNH 6.4512 6.4749

AUD/JPY 79.32 80.59

AUD/NZD 1.0302 1.0353

AUD Thoughts

Earlier in yesterday’s Asian session, the pair dipped towards 0.7220 on the back of a hawkish Fed and Evergrande worries. However, as the day advances, the AUD/USD is trading at 0.7304, posting gains of 0.81% at the time of writing.

The market mood is positive. European bourses closed with gains, except the FTSE 100, which lost 0.08% on the back of a hawkish BoE. Across the pond, the four most significant indices are gaining between 0.82% and 1.60%, while the US Dollar Index, which tracks the greenback’s performance versus six peers, is down almost a half percent, sitting at 93.04.

Worse than expected, US economic data weaken the buck

In the US economic docket, the Bureau of Labour Statistics unveiled showed that the US Jobless Claims for the week ending on September 18 rose to 351K versus 320K foreseen by analysts. Further, the US Initial Jobless Claims four-week moving average decreased from 336.5K to 335.75K. According to employers in different industries, the end of federal pandemic benefits has not yet led to an increase in job applications.

The economic activity in the US continued its expansion in September. The IHS Markit’s Manufacturing PMI rose by 60.1 against 62.5 expected by economists. Despite the miss in the reading, the good news is that manufacturers expanded their workforce numbers at a faster rate in September. Further, the Kansas City Fed Manufacturing Activity fell to 10 in September 2021 from 22 in the previous month, the lowest reading since July 2020.

Today, the Australian economic docket is empty. Meanwhile, in the United States, the New Home Sales for August on a monthly basis will be released.

Event Risk Data Today

New Zealand: The market is forecasting the trade deficit to widen to $2150m in August as imports post another bumper month.

Japan: Deflationary pressures are expected to persist for the CPI despite upstream price gains (market f/c: -0.3%yr). Further, the manufacturing and services PMIs for September will be released.

Germany: The September IFO business climate survey will provide a timely guide on business sentiment (market f/c: 99.0).

UK: Re-opening momentum should support sentiment in September’s GfK consumer sentiment release.

US: New home sales for August are expected to stabilise after a large fall through 1H 2021 (market f/c 0.6%). The FOMC’s Mester, George and Williams will discuss the economic outlook. Further, Chair Powell and the FOMC’s Clarida and Bowman will host Fed listen events.

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