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    Next Crises: China Property plus European Energy shake Currency Markets

    Fears Chinese mega developer Evergrande’s collapse will spark a contagion event and the ongoing European gas crisis has hit confidence.

    Updated: Sep 25, 2021  

    Fears Chinese mega developer Evergrande’s collapse will spark a contagion event, plus the ongoing European gas crisis has hit confidence, driving a ‘Risk off’ slide across currencies and demand for the safe haven denominations, USD and JPY.

    The greenback has been helped in September by the US Fed Chair Jerome Powell, who signalled that the bond tapering is expected to start in November. Bank of America commentators see this leaves the door open to interest rates hikes starting mid 2022.

    Dollar strength and declines for stock and some commodity markets saw the single currency on the decline and within distance of 1 YEAR LOWS versus the greenback below 1.17.

    USD to EUR

    September’s key political event is the German General Election, scheduled for September 26, which will signal the end of Angela Merkel’s 16-year tenure. However, this is unlikely to cause much volatility in the euro as a change in leadership should be relatively smooth. USD-EUR Forecasts

    The spread of the Delta variant in Australia plus the Evergrande property debt crisis in China has forced down commodity prices particularly iron ore, further compounding AUD losses. AUD Overview

    AUD to USD

    In 2021 forecasters have changed direction several times on the Australian dollar saying it could fall below US70¢ or hit US82¢, which leads one to suspect that basically no one has any idea! AUD-USD Forecasts

    Changing expectations around US Federal Reserve policy and a less positive outlook for global growth continue to weigh on the Aussie to Euro rate, despite the single currencies own problems with increased gas prices heading into winter. AUD-EUR Forecasts

    The energy crisis combined with a ‘risk off’ market sentiment has pushed the Pound down against the Australian, New Zealand and Canadian Dollars. These currencies that normally are vulnerable to ‘risk off’ events, showing the impact of the gas crisis in the UK. GBP-AUD Forecasts

    The souring of risk appetite almost always sees the AUD/JPY pair push lower. The Australian Dollar normally strengthens when risk appetite is healthy while the opposite follows. As for the Yen, it’s the opposite. The Japanese currency will rise when risk appetite sours. AUD-JPY Forecasts

    CAD to USD

    In 2021 the Canadian dollar has risen as a global economic recovery takes hold, with larger gains if the Bank of Canada is seen to be preparing to reduce monetary stimulus, economists say. CAD Overview

    After outstripping its G10 counterparts in the first six months of 2021 the loonie has been one of the worst-performing developed-market currencies in the second half of the year. USD-CAD Forecasts

    GBP to EUR

    Higher gas prices pose problems to UK consumer spending as well as industrial production, all of which argues for delays to any interest rate rises being considered at the Bank of England – which is negative for the pound. The Pound-to-Euro exchange rate fell to two-week lows at 1.165. GBP-EUR Forecasts

    Deutsche Bank say the Pound Sterling is already feeling the impact of an emerging energy crisis. GBP Overview

    The British Pound has dropped against the safe havens of the Dollar, Yen and Franc, as well as the Euro. Due to a risk-off mood after the possible collapse of mega developer Evergrande and persistent fears of a global economic slowdown and a European gas crisis. GBP-USD Forecasts

    The energy crisis combined with a ‘risk off’ market sentiment has pushed the Pound down against the Australian, New Zealand and Canadian Dollars. These currencies that normally are vulnerable to ‘risk off’ events, showing the impact of the gas crisis in the UK. GBP-AUD Forecasts

     

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    USD to MXN

    The Mexican Peso’s recent rebound was held back by weaker economic data on the Mexican economy. Going forward surging delta variant COVID-19 cases and the relatively low vaccination rate for Mexico may continue to hold back the Peso. USD-MXN Forecasts

    The Japanese yen has continued trading against USD between 110 and 109 in September, influenced by dynamics pulling in different and opposite directions. USD-JPY Forecasts

    In late September the USD/CHF pair has dropped below 1.09 (it’s 90-Day average) hitting a low of 1.07. There was then some reprieve in the risk-off market sentiment helping the Swissie back to the 1.08 level vs the greenback. CHF Forecasts


    SGD to USD

    The Singapore dollar hit a 14-day low below 0.74 US cents along with most Asian currencies after the hawkish tilt from US Fed Chair Jerome Powell, who on signalled the bond tapering is expected to start in November. SGD Forecasts

    The Malaysian ringgit has fallen below 24 cents as a firmer US dollar kept Asian currencies subdued while escalating woes at indebted developer China Evergrande switched markets to safe haven mode. MYR Forecasts


    NZD to USD

    The New Zealand dollar has recovered from it’s dramatic sell-off in August and has traded between 0.70 – 0.715 USD in September. NZD Forecasts

    The Federal Reserve’s message to the markets that it was preparing to reduce bond purchases sent most USD/Asian and Emerging Market Currencies higher. INR Forecasts

    USD to INR

    The rupee has weakened in September back to 73.5 – 74 per USD, after powering ahead in August gaining almost 2% as speculation grew that the central bank was relaxing its control over the currency. USD-INR Forecasts

     


    Currency Markets Volatile on Energy, China Debt and Inflation

    Property debt crisis in China, central bank bond policy and the energy crisis are combining for a volatile October – it is ever thus!

    Posted: 10 Oct, 2021 - Last update: 10 Oct, 2021

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    The FX markets turns risk-off after less new jobs were added in the US last month than expected.

    Posted: 8 Sep, 2021 - Last update: 24 Sep, 2021

    Oil drop hits loonie and peso – FX Volatility returns

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    Posted: 23 Aug, 2021 - Last update: 8 Sep, 2021


     
    Posted under: #News #AUD #CAD #CHF #EUR #GBP #INR #JPY #Newsletters #NZD #PHP #SGD #THB #USD

    Disclaimer: Please note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.