FX Weekly

FX Weekly Update – September 13th, 2021

Posted Under: Weekly updates

Little ground has changed for the dollar in the last week. Limited economic data had no impact in the U.S. The U.S. 10-year yield had no change, remaining at 1.34%. Several Fed governors did discuss the potential for the Fed to begin tapering in November. We expect some upward movement in yields as the market anticipates this tapering. But this does not mean the dollar will rally, in fact a quick look through most major financial firms, continue to call for the dollar to be lower into the year and next. This coming week will provide the latest inflation data in most major economies, including the U.S.

Inflation remains high and the transitory tag remains and while the Fed’s Powell believes this is correct, each month is showing increased pressures. This week will be no exception.

EUR (1.1800): The failure of the euro to rally and sustain the 1.1900 level last week was less of a “euro weakness” but rather currencies like the pound outperformed and put a lid on the euro. Beginning this new trading week, the hourly technical point to another leg lower for the euro and we would suggest an early level to keep an eye on is 1.1750. Euro-zone CPI is the main economic data. Look for a resurgence in prices as the Delta virus seems to have crested.

Resistance: 1.1850, 1.1900; Support: 1.1750, 1.1720

GBP (1.3830): The pound was very strong against the dollar and the single currency last week. The BOE’s governor, Baily, said that a Q1 2022 rate hike is possible and that was the support the currency needed. The strength did pressure the EUR/GBP, pushing the pair toward a short-term level of 0.8500, with the next important area at 0.8460. Inflation data and retail sales will give the markets an idea of the strength of the British consumer!

Resistance:1.3885, 1.3945; Support: 1.3720, 1.3650

JPY (109.90): Another week of limited activity for the yen. The range was 109.62/110.44. No reason to believe that the coming week will provide anything new. The bottom of the range (109.60) should be tested early in the week. We mentioned that the euro can have early weakness, which together will push EUR/JPY lower. Following the logic of this currency pair being the bell weather for the global equity markets, we can assume that global stocks may be under pressure.

Resistance: 109.90, 110.45; Support: 109.60, 109.20

CAD (1.2685): The Canadian dollar fell sharply last week after rallying from 1.2583. Oil can’t be blamed for this move which rallied and remained near $70.00/ bbl. The move was more of a reaction to the rough treatment of Canadian Prime Minister, Justin Trudeau. Crowds shouted and shoved, forcing him to cut speeches early. More to come on this but anger is over the slower economic recovery, keeping the job creation machine in Canada slower than most would like.

Resistance: 1.2750, 1.2950; Support: 1.2585, 1.2550

MXN (19.9000): Limited activity in the peso last week. Levels remain the same, support at the 19.8000 level and resistance near 20.1000. The lack of dollar buying does provide a clue to the amount of peso buying, even though there is no ground being lost by the dollar. Continue to buy pesos for future expenses!

Resistance:  20.1000, 20.25; Support: 19.8000, 19.6000

CNY (6.4500): The 6.4000 level was never threatened last week, but the dollar buyers came in and pushed the CNH back to 6.4500. We will leave the range: 6.4000 – 6.5000.

Resistance: 6.4800, 6.5000; Support: 6.4300, 6.4000