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The dollar got lifted by safe-haven bids ahead of Housing starts and building permits data release. The Japanese inflation rose to a 3-decade high in August. German witnessed a surprise rise in PPI data ahead of ECB’s McCaul and Christine Lagarde’s speeches. Oil rallied on rising demand as Hong Kong relax some of its covid restrictions.
USDCAD pair gained +0.25% as investors eye Canadian CPI data ahead of the FOMC meeting. Inflation in Canada is expected to have eased in the previous month with CPI [MoM] expected to decline to -0.1% and the yearly reading to 7.3% from 7.6% in July. The fed is expected to hike its key rates by 75bps on Wednesday which may give bulls more room to the upside. The pair advanced towards November 2020 high at 1.3350 and a break above that level could trigger a further rally towards the 1.3450 level. To the downside, 1.3250 is a critical pivot for the trend. Traders should pay close attention to the US building Permits for August due today.
EURJPY rallied by +0.15% boosted by German PPI data. The German Producer Prices soared to a record high at 7.9% against 1.6% surveyed. The Japanese yen weakened as inflation hits a 3-decade high while BoJ maintains an ultra-loose policy. Bulls are capped by a 144.00 psychological level and a break above that level could see the pair rally towards the 145.70 level. The 142.80 level remains critical support in the near term. The EUR maintains hawkishness ahead of ECB’s McCaul and Lagarde’s speeches later in the New York session.
AUDCHF dipped by -0.27% post dovish RBA minutes. The RBA indicated that they are not on a pre-set path when it comes to tightening although an increase in rates is expected. Switzerland’s trade balance in August dropped to 3.424B though it failed to weigh on the CHF. The Swiss National Bank is expected to hike its key rates by 75bps boosting the CHF. The pair is currently capped by 0.6500 resistance and bulls may need to break above to invalidate the bearish outlook. However, a continued dip may give bears 0.6425.
European stocks were trading in a mixed manner mid-European trading session. The CAC40 in France declined by -1.57% from 6120 intraday resistance and bears may face a challenge at 5975 Monday’s support. The FTSE 100 managed to retain +0.30% despite giving away much of its earlier gains. Critical levels to watch are the 7325 resistance and 7200 support. DAX plunged by -0.67% as the 12950-resistance level continue to hold. Bears may target the 12400 level if the 12600-support level is broken.
US stock futures upside movement remain weighed by Fed policy meeting in focus. The S&P500 futures dropped by -0.46% as bears remain underpinned by the 3900, near-term resistance. Near-term targets are at 3800 and 3750 levels. Nasdaq100 futures trimmed most of their Monday gains by -0.57% as bulls retract from 12000, a near-term resistance. DJIA index futures were down by -0.47% despite trading activity trapped inside the 31000 resistance and 30500 sport level.
The rate-sensitive 10-year treasury yields soared by +1.46% as investors have priced in a supersized rate hike of 75bps by the fed. The US will be auctioning their 20-year bonds later in the New York session. The 10-year yields rose from 3.45% breaching 3.50% a multi-year high. Further up bulls may seek 3.60% and 3.73% resistances in the near term.
