Forex Market Trading – Here is what you need to know on Thursday, September 10:
The rebound rally in stocks might suggest that investors remain confident about the economic prospects where a virus vaccine still provides a pillar of support, albeit with some dents in the armour. But ultimately, they remain codified around the Federal Reserve Boards’ redoubtable policy support – Forex Market – Stocks stage a rebound rally as focus shifts to the ECB.
In currency markets, price movements have been very rangy in the Asia session, which signals the importance of the European Central Bank (ECB) meeting and suggests traders are close to home risk-wise.
EUR/USD
Still, there is a soft, but enduring bid under the EURUSD as the run of general chatter is that ECB President Christine Lagarde will not say much on the euro. Which means EURUSD will likely be stronger after the meeting.
ASEAN’s focus is very much on Indonesia, with the return of social-distancing measures, including limiting movement in and out of Jakarta, hitting equities. JCI is currently down 4%. The follow-through to FX has been relatively limited. Still, the weakness of domestic demand compounded by this latest lockdown could certainly hobble the Indonesian Rupiah (IDR).
China
In October, China’s top leadership will layout its 2021-2025 strategy, including increases to its state reserves of crude, strategic metals and farm goods, according to some media reports.
I struggle to see how this will not be good for the reflation trade, so I suspect longer-term players will be looking to sell US dollar and strap on some commodity risk, especially oil, which is currently trading at a four-month low.
S&P500
In turn, higher commodity prices should be good for the S&P500 and a plethora of Asia markets as it could lead to a broadening out of the rotation trade given that reflation assets have been under the cosh of late due to general de-risking.
The China strategy meeting is a longer-term play, but in the meantime, there is still a lot of wood to chop between here and WTI $40 suggesting a slow grind higher, if any.
According to senior government officials, the US is blocking visas for some Chinese graduate students, according to some media reports.
A State Department representative confirmed that more than 1,000 visas held by Chinese graduate students and research scholars had been revoked. Running parallel to rising political tensions is a recovery in China’s exports to the US back to pre-trade war levels, i.e., 2018, which is favourable for the Yuan.
Forex Market Trading – Stocks stage a rebound rally as focus shifts to the ECB
