Daily Market Outlook, September 7th, 2021

Overnight Headlines

  • Biden Seeks To Shift Focus To Domestic Issues After Afghanistan Exit
  • Goldman Cuts US Growth Forecast As Consumer Sees Harder Path
  • Canada's Trudeau, Trailing In Polls, Goes On Attack Ahead Of Vote
  • UK PM To Unveil GBP 10.0B/Year Tax Rise To Fund NHS, Social Care
  • UK Retail Sales Lose Steam as Firms, Shoppers Fret Over Prices
  • Chinese Trade Unexpectedly Surges Despite Virus Outbreaks
  • Japan PM Candidate Kishida Calls For $270.0B Stimulus Package
  • RBA Holds Cash Rate; Confirms Plans To Taper Bond Purchases
  • Oil Wobbles As Demand Woes Stalk Market After Saudi Price Cuts
  • Japanese Nikkei 225 Rallies As Reshuffle Extends Japan Stock Gains

The Day Ahead

  • Global equities closed higher on Monday amid muted trading as the American stock and bond markets were closed for Labour Day. European stocks rallied on Monday after Friday’s weaker US job data suggest that the Federal Reserve’s pandemic stimulus may stay longer than previously expected, thus putting on less pressure for the ECB to taper its similar program as well. The pan-European STOXX Europe 600 rose 0.7%; key equity benchmarks in Germany, France and the UK all finished higher.
  • In the Asia Pacific, Japanese shares extended last week’s rally to Monday following Prime Minister Suga’s announcement that he would not run for party leadership; the Nikkei 225 jumped 1.8%. Hong Kong and Chinese stocks rose as well. US stock futures pointed higher this morning.
  • Eurozone sovereign bond yields were steady ahead of the ECB’s meeting on Thursday. Germany’s benchmark 10Y bund yield was little changed at -0.37%. The dollar made some recovery from last week’s selloff, strengthening against most G10 currencies. Spot gold was down modestly (-0.2%) to $1822.79/oz.
  • Looking Ahead – Economic Data (GMT) • 09:00 DE Sep ZEW Economic Sentiment, 30.0 f'cast, 40.4 prev; Current Conditions, 34.0 f'cast, 29.3 prev • 09:00 EZ Q2 Employment Final YY, 1.8% f'cast, 1.8% prev; QQ, 0.5% f'cast, 0.5% prev • 09:00 EZ Q2 GDP Revised QQ, 2.0% f'cast, 2.0% prev; YY, 13.6% f'cast, 13.6% prev

G10 FX Options Expiries for 10AM New York Cut

(Hedging effect can often draw spot toward strikes pre expiry if nearby)

  • USDJPY - 110.50/60 583m. 110.20/30 698m. 109.90/110.00 777m. 109.50/60 589m.
  • EURUSD - 1.1900 466m. 1.1840/50 851m. 1.1800/10 444m.
  • AUDUSD - 0.7400/10 766m. 0.7370/80 431m. 0.7290/0.7300 792m.
  • NZDUSD - 0.7050 418m.
  • USDCAD - 1.2630/40 961m. 1.2540 842m. 1.2300 1.00bn (C).
  • GBPJPY - 153.10 392m.

Technical & Trade Views

EURUSD Bias: Bearish below 1.19 Bullish above

  • Firm tone in quiet Asian session
  • EUR/USD opened slightly lower at 1.1872 after hitting 1.1856 low in London
  • The range in Asia was 1.1871/85 while maintaining a firm tone
  • Heading into the afternoon it is trading around 1.1880
  • Resistance at double-top at 1.1909 with break targeting 100-day MA at 1.1949
  • Support is at the 10-day MA at 1.1827 and break eases upward pressure
  • EUR/USD may consolidate ahead of ECB meeting on Thursday
  • Improving EZ economic outlook raising expectations ECB will be upbeat

GBPUSD Bias: Bearish below 1.39 Bullish above.

  • Bid, as the positive setup targets a 1.3900 break
  • +0.1%, near top of a busy 1.3837-1.3855 range with the USD slightly softer
  • UK launches GBP 270 mln fund to support green heating...
  • Charts; 21 day Bollinger bands flat line, 5, 10 & 21 DMAs base or rise
  • Neutral signals have finally turned positive with 1.3819 200 DMA supporting
  • Next stop 1.3893, 76.4% Jul-Aug fall, then 1.3917 upper 21 day Bolli band
  • 1.3837 Asian low and Monday's 1.3863 Asian high first support and resistance
  • Close below 1.3777 21 day moving average needed to end topside bias
  • With key levels broken, sterling has room to climb

USDJPY Bias: Bullish above 109 Bearish below

  • USD/JPY, JPY crosses sideways, await US yield moves
  • USD/JPY, JPY crosses quiet in Asia ahead of US re-open, yield moves
  • USD/JPY 109.67-84 EBS, well within recent 109.50-110.50 core range
  • Holding near 109.76 Ichi daily kijun, 109.74 100-DMA
  • Ichi cloud 110.00-11 above, still wafer thin but to fan out some
  • US yields on firm side, USD supportive, Treasury 10s indicated @1.340%
  • Option expiries both sides - 109.15-40 total $1 bln, 110.00-60 $1.9 bln
  • Tokyo market thin, volume low, focus on upcoming LDP vote, elections
  • Nikkei up more with PM Suga stepping down, hopes for stronger govt
  • EUR/JPY 130.27-44, GBP/JPY 151.88-152.13, both buoyant
  • AUD/JPY 81.61-84, NZD/JPY 78.28-52, better bid

AUDUSD Bias: Bearish below 0.75 Bullish above

  • Briefly moves higher as RBA continues with tapering plan
  • AUD/USD briefly moved higher after the RBA decided not to pause taper plans...
  • RBA did say however - they would continue 4 Bln per week until Feb instead of Nov
  • Opinion was divided among analysts so reaction is relatively muted
  • The high so far has been 0.7469 - below Friday's 0.7477 high
  • RBA acknowledged economic recovery interrupted by Delta outbreak
  • The AUD/USD has backed off from the high and is trading around 0.7435
  • Market was positioned long into the RBA decision - so upside limited
  • Support is at previous resistance at 0.7426