US dollar selling picks up. USD/JPY falls to one-week low

USD/JPY down 20 pips to 109.49

USD/JPY is trading at an one-week low after falling below 109.48 in a round of US dollar selling.
There were some minor stops below the Aug 18 low of 109.48.
There’s no clear catalyst for the latest move lower in the dollar and the Treasury market along with equities are largely steady.
Even in all the churn of the past week, USD/JPY has been remarkably flat. The pair traded inside of a 100-pip range as risk aversion and shifting tapering expectations battled to a standstill.
USD/JPY down 20 pips to 109.49
Along with USD/JPY weakness, there is some EUR/USD strength going through at the moment but otherwise the dollar isn’t getting much of a lift.

EURUSD trades to new highs in early North American trading

There is only in a 24 pip trading range

The good news for the buyers is that the EURUSD is trading to a new session high in early North American trading. Also positive in a negative way sort of, is that the range is extended to 26 pips. That is well below the 51 pips average over the last 22 trading days. So although the price activity is very limited, there is room to roam.

There is only in a 24 pip trading range_

Looking at the hourly chart, the next upside target comes between 1.1754 to  1.17594 area (see higher yellow area in the chart above). Within that range sits the 38.2% retracement of the move down from the July 30 high. That is a minimum hurdle to get to and through if the buyers are to start to take back more control. Be aware.
Earlier today, the price corrected lower and dipped back below the 200 hour moving average at 1.17297. However the price did stay above a swing area between 1.1723 and 1.17248. A move back below the 200 hour moving average would not be good for the buyers looking for more corrective upside price action.
Buyers are making play above the 200 hour moving average, but there is still work to do with overhead resistance target in the way.

German SPD overtakes Merkel’s conservatives in poll for the first time in 15 years

Is the tide finally turning on Merkel

Is the tide finally turning on Merkel
Merkel’s run as chancellor has been one of the great accomplishments in democratic politics but an opinion poll from Forsa shows that her time might be running out.
They have the Social Democrats (SPD) at 23% compared to Merkel’s CDU/CSU at 22% and the Greens at 18%. It’s the first time in 15 years that the SPD has polled ahead of Merkel.

Risk steady in quiet trading so far

Not a whole lot going on in European morning trade

European indices are a little more mixed on the session now after a brighter start, though US futures are still sitting slightly higher on the day.
S&P 500 futures are up 0.2% as early gains have been trimmed but nothing to suggest any significant turn in broader risk sentiment to start the week.
Overall risk tones are still relatively steady with 10-year Treasury yields seen up 0.8 bps to 1.263%. Oil is also up by 0.7% to $66.10 while in the major currencies space, commodity currencies hold a slight edge.
The kiwi leads the way amid hawkish talk by RBNZ assistant governor Hawkesby earlier here. Besides that, not much changes are observed across the board with the dollar also keeping steadier and little changed for the most part.
After a lively start to proceedings yesterday, it appears we’re winding down a bit as we get into the grind of counting down to Jackson Hole on Friday.

No end in sight to semiconductor chip shortage – surging COVID-19 in Malaysia to weigh on production

A piece in the Asian press on how the acceleration of infections in Malaysia will likely further curtail semi availability.

  • Malaysia a major centre for chip testing and packaging, with Infineon Technologies AG, NXP Semiconductors NV and STMicroelectronics NV among the key suppliers operating plants there.
  • infections … jeopardising plans to lift lockdowns and restore full production capacity
  • Ford Motor Co said last week it would temporarily suspend production of its popular F-150 pickup truck at one United States plant because of “a semiconductor-related part shortage as a result of the Covid-19 pandemic in Malaysia”.
Link here for more. The piece notes Malaysia is not the centre of technology supply chains that Taiwan, South Korea or Japan but there is still to be an impact.
A piece in the Asian press on how the acceleration of infections in Malaysia will likely further curtail semi availability. 

European equities open higher to start the day

The early week optimism stays the course

  • Eurostoxx +0.4%
  • Germany DAX +0.3%
  • France CAC 40 +0.5%
  • UK FTSE +0.3%
  • Spain IBEX +0.3%
  • Italy FTSE MIB +0.4%
That’s a good start to the day as equities are keeping with the mood from yesterday. US futures are also up on the day and that is keeping risk trades on firmer footing as we get things underway in European morning trade.
S&P 500 futures are up 0.4%, Nasdaq futures up 0.5%, and Dow futures up 0.3%.

US SEC has new disclosure requirements for Chinese companies seeking to list in New York

Reuters had this out a few hours ago, posting now as a bit of a catch up for those interested.

  • Some Chinese companies have now started to receive detailed instructions from the SEC about greater disclosure of their use of offshore vehicles known as variable interest entities (VIEs) for IPOs; implications for investors and the risk that Chinese authorities will interfere with company operations.

I bolded that bit as its been a key concern on Chinese equities

Iran resumed fuel exports to Afghanistan last week

Via Reuters comes the report that the Taliban requested Iranian oil


  • “The Taliban sent messages to Iran saying ‘you can continue the exports of petroleum products’,” Hamid Hosseini, board member and spokesperson of Iran’s Oil, Gas and Petrochemical Products Exporters’ Union, in Tehran, told Reuters.
  • Iran lifted a ban on fuel exports to Afghanistan, which had been in place since Aug. 6 because of Iran’s concerns about the safety of trading in the country.
  • Those concerns have been eased by the Taliban’s attitude, Hosseini said.


Via Reuters comes the report that the Taliban requested Iranian oil Via Reuters comes the report that the Taliban requested Iranian oil 

China’s rulers have a new catch-phrase: cross-cyclical economic policy strategy

Senior officials of the ruling Chinese Communist Party have been bandying about a new catchphrase to guide economic policy: a cross-cyclical approach.

While they haven’t bothered explaining what that means here’s an outline (in brief).
Fiscal and monetary policy will become more quickly responsive, taking policy action steps sooner, in smaller steps, all the while with the main eye on longer time frame goals.
Its different to ‘countercyclical policy’ which is adding stimulus when the economy slows and withdrawing it as the economy speeds up. ‘Cross-cyclical’, on the other hand, shifts more pre-emptively, moving sooner and more incrementally.
As the policy becomes more active we’ll get a more nuanced view on what it entails, but for now that’s what we are going on.
Last week the People’s Bank of China kept its LPR rates unchanged for the 16th month in a row. However, under the cross-cyclical approach, any further slowing in the economy will likely see easings ahead. Further cuts to the RRR are a tool in the toolbox, as are LPR cuts.
If I can dig up further analysis of the new approach I’ll post it up.
Senior officials of the ruling Chinese Communist Party have been bandying about a new catchphrase to guide economic policy: a cross-cyclical approach.

Solid gains for stocks as investors cheer FDA approval of Pfizer Covid vaccination

S&P and NASDAQ close at record levels

The US major indices had a solid gains today led by the NASDAQ index which increased 1.54%. The Russell 2000 also had a solid gain of near 1.9%.

The gains were help by the FDA’s full approval of the Pfizer Covid vaccination. The hope is that those who have remained unvaccinated will be encouraged to get vaccinated now, and also that businesses and local governments, etc. will start to force workers to get the approved Pfizer vaccination.
  • NASDAQ closed at a record high
  • the S&P and NASDAQ hit new all-time intraday record levels. The S&P could not stay above its previous record closing level.
  • Dow is up for the second straight day
  • NASDAQ and S&P client for the third straight day
the final numbers are showing:
  • Dow up 215 points or 0.61% at 35335.71
  • S&P index up 37.84 points or 0.85% at 4479.51
  • NASDAQ index up 228 points or 1.55% at 14942.65
  • Russell 2000 up 40.70 points or 1.88% at 2208.30
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