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Germany: Annual HICP rose to 4.1% in September from 3.4% previous

172660   September 30, 2021 20:21   FXStreet   Market News  

• HICP inflation in Germany rose to 4% in September.
• EUR/USD remains depressed near the 1.1575 region. 

According to the preliminary estimate published by Destatist this Thursday, consumer inflation in Germany, as measured by CPI, remained flat for the second successive month in September as against market expectations for a modest 0.1% rise. On a yearly basis, the headline CPI rose 4.1% during the reported month from 3.9% in August, again missing expectations for a reading of 4.2%.

Further details of the publication revealed that the Harmonized Index of Consumer Prices (HICP), the European Central Bank’s preferred gauge of inflation, accelerate to 4.1% annually from 3.4% reported in the previous month.

Market reaction

Signs of rising inflationary pressure in the Eurozone did little to provide any impetus to the shared currency or lend any support to the EUR/USD pair, which remains at the mercy of the USD price dynamics. The pair remained depressed near the 1.1575 region, or the lowest level since July 2020 as traders now look forward to the final US GDP print for a fresh impetus.

ForexLive European FX news wrap: Dollar steady, equities hold slight advance

172658   September 30, 2021 20:05   Forexlive Latest News   Market News  

Forex news from the European trading session – 30 September 2021

Headlines: 

Markets:

• AUD leads, EUR lags on the day
• European equities higher; S&P 500 futures up 0.4%
• US 10-year yields flat at 1.524%
• Gold down 0.1% to $1,725.46
• WTI down 0.8% to $74.07
• Bitcoin up 3.5% to $42,988

The European session observed some light pushing and pulling as the focus today rests on month-end and quarter-end trading, with US traders set to come into the fray and work through all of that as September draws towards a close.

The dollar is trading mixed but is in a good spot technically, seen losing a bit of ground against commodity currencies as equities are keeping firmer so far.

The bond market is less enthused once again, like yesterday, but we’ll see if there will be an extension to the dollar gains from Wednesday – as suggested by Citi’s month-end rebalancing model (more on that here).

EUR/USD continues to remain pressured, holding at 1.1570-80 levels – its lowest since July last year as the downside momentum stays the course.

USD/JPY is keeping buoyant, contesting the 112.00 level as buyers eye a firm break above the figure level while GBP/USD is keeping a slight advance after having moved off lows of 1.3416 to hold around 1.3440 levels at the moment.

Meanwhile, AUD/USD is up a touch to 0.7195 but has seen gains ease from 0.7215 earlier. And USD/CAD is down a little to 1.2730-40 levels but off the high of 1.2757 earlier.

The slight easing in risk gains comes as US futures also pull back a little with S&P 500 futures now seen up just 0.4% after having advanced by as much as 0.9% earlier.

It’s all about month-end and quarter-end in the session ahead but looking past that, the technicals will have more of a say for dollar pairs in general. Adding to that will be the continued focus on energy prices and bond yields.

Natural gas is up another 4% today as the upside pressure holds.

Germany September preliminary HICP +4.1% vs +4.0% y/y expected

172657   September 30, 2021 20:02   Forexlive Latest News   Market News  

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GBP/USD to dive as low as 1.2855 on a breach of the support 1.3189/35 zone – Credit Suisse

172656   September 30, 2021 19:05   FXStreet   Market News  

GBP/USD extends its aggressive collapse towards 1.34. Analysts at Credit Suisse stay bearish for a cluster of supports including the 38.2% retracement of the entire 2020/2021 bull trend at 1.3189/35.

Resistance is seen at 1.3601/09

“Next support is seen at 1.3350/43 ahead of a more important cluster of supports including the 38.2% retracement of the entire 2020/2021 bull trend and December 2020 lows at 1.3189/35. Our bias would then be for a floor to be found here, at least at first. Should weakness directly extend, we see support next at 1.2855/29.”

“Resistance for a rebound is seen at 1.3530 initially, then 1.3555, above which can see a recovery back to 1.3601/09, which we continue to look to cap. Above can see a deeper rebound towards 1.3658/75, but with fresh sellers expected here.”

EUR/USD: The trend stays lower for key support at 1.1495 – Credit Suisse

172655   September 30, 2021 19:05   FXStreet   Market News  

EUR/USD has already removed support from the September and November 2020 lows at 1.1612/04. Economists at Credit Suisse  maintain a bearish view for 1.1495 next.

See – EUR/USD: Close below 1.1574 to open up the path towards 1.1500 – OCBC

Resistance moves to 1.1695/1.1711

“We stay bearish for our first core objective at 1.1495/93 – the key March 2020 high and the 50% retracement of the rally from the 2020 low. We would expect this to prove a good interim floor.”

“Our bias would be to view strength from 1.1495/93 as temporary and we look for a move below here in due course with support then seen next at 1.1370, then the 61.8% retracement of the rally from the 2020 low at 1.1290.” 

“Immediate resistance moves to 1.1663, with 1.1695/1.1711 now ideally capping to keep the immediate risk lower. Only above 1.1756 though would warn of a ‘false’ break.”

Columbus 5 arrives on Terra, UST growth to accelerate with introduction of wormhole

172654   September 30, 2021 18:33   FXStreet   Market News  

• Terra’s upgrade to Columbus 5 is on, expected to bring more scalability and features for projects. 
• Columbus 5 is Terra’s most significant one yet since it introduces a new “burn” policy. 
• The wormhole, or the bridge between Terra to Solana projects, goes live with Columbus 5. 

The Terra ecosystem undergoes major changes with the arrival of Columbus 5. The upgrade brings a slew of developments and features to the protocol. 

Columbus 5 is here, Wormhole and Burn policy to be live soon

Terra’s most significant upgrade yet has been set in motion at 3:30 AM GMT on September 30, 2021. The upgrade is bringing three critical changes to Terra. There is a planned upgrade to Stargate, integration of IBC protocol, Ozone, Wormhole and a new burn policy. 

These changes are expected to influence the growth of the ecosystem positively. 

The most-awaited addition is the ‘Burn policy’. Traders and speculators have awaited the implementation of burn in LUNA.

Proponents expect this new policy to have a similar impact on LUNA as it did on the Ethereum ecosystem, pulling tokens out of the circulating supply by burning them. Furthermore, it is expected to have a positive impact on LUNA price by creating scarcity across exchanges. 

LUNA has offered relatively higher risk-adjusted returns than most other cryptocurrencies over the past two weeks in anticipation of Columbus 5 launch. Analysts have compared the altcoin to Solana before its explosive rally. 

Mike Novogratz, CEO of Galaxy Investment partners, is enthusiastic on the arrival of Columbus,

Stargate will enable integration with the Inter Blockchain Communication protocol to facilitate more interchain use cases. As of now, Terra has 8 live protocols, and the number is expected to multiply in the future with Stargate.

UST is expected to emerge as a preferred stablecoin for decentralized applications. 

Ryan Watkins, a senior research analyst at Messari Crypto, believes that UST growth will accelerate beyond $2.5 billion in circulation. 

The introduction of Wormhole and Ozone provides insurance to projects built by Terraform Labs and bridges projects on Terra to Solana. When UST moves between both networks, analysts expect further integration and collaboration between projects on both blockchain networks. 

The launch of the wormhole triggered an explosive rally in Solana. It is therefore considered as a key factor that is likely to drive LUNA demand and utility higher. 

The team behind Terra will share further updates once the upgrade is complete. Until then, they recommend no interaction with the Terra blockchain. 

Jay Jaboneta, managing director of DLSL Nexus, expects over 50 protocols to go live on Terra in the following months. Jaboneta tweeted,

USD/CHF holds steady near multi-month tops, around mid-0.9300s

172653   September 30, 2021 18:26   FXStreet   Market News  

• USD/CHF edged higher for the sixth successive day on Thursday amid the risk-on mood.
• The USD was seen consolidating near one-year tops and did little to provide any impetus.
• The bias seems tilted in favour of bullish traders and supports prospects for further gains.

The USD/CHF pair traded with a mild positive bias through the first half of the European session and was last seen hovering around mid-0.9300s, just below multi-month tops touched on Wednesday.

The risk-on mood – as depicted by a strong rally in the equity markets – undermined the safe-haven Swiss franc and assisted the USD/CHF pair to gain traction for the sixth straight session on Thursday. On the other hand, the US dollar was seen consolidating its recent gains to one-year tops and did little to inspire bulls or provide any additional boost to the major.

The greenback had gained strong positive traction over the past one week or so amid expectations that the Fed will begin rolling back its massive pandemic-era stimulus as soon as November. Adding to this, the markets also seem to have started pricing in the possibility of a Fed rate hike in 2022, which was evident from the recent upsurge in the US Treasury bond yields.

However, the looming US debt ceiling, along with a modest pullback in the US bond yields held the USD bulls from placing fresh bets. Nevertheless, prospects for an early policy tightening by the Fed might continue to act as a tailwind for the greenback. This, in turn, supports prospects for an extension of the USD/CHF pair one-week-old appreciating move from the 0.9220 area.

Even from a technical perspective, the overnight move beyond the previous monthly swing highs, around the 0.9330-35 region adds credence to the constructive outlook for the USD/CHF pair. Hence, a subsequent strength beyond the 0.9375 intermediate hurdle, towards reclaiming the 0.9400 round-figure mark, remains a distinct possibility.

Market participants now look forward to the US economic docket, highlighting the final GDP print and Weekly Initial Jobless Claims. Apart from this, Fed Chair Jerome Powell’s testimony and the US bond yields will influence the USD. Traders might further take cues from the broader market risk sentiment for some short-term opportunities around the USD/CHF pair.

Technical levels to watch

Chainlink to deceive investors as LINK price eyes 30% breakout

172651   September 30, 2021 18:21   FXStreet   Market News  

• Chainlink price is consolidating inside a symmetrical triangular, hinting at an explosive move soon.
• A decisive close above the upper trend line will trigger a bullish scenario.
• However, a breakdown of this consolidation might trigger the start of a steep downtrend.

Chainlink price began its consolidation after a steep descent that started on September 7. This coiling up could be confusing to investors as LINK could pull a 180.

Chainlink price awaits breakout 

Chainlink price dropped roughly 35% since September 16 but began consolidation after forming a swing low at $21.03 on September 22. This move was followed by congestion of LINK price action as swing points started converging.

Connecting trend lines joining these peaks and troughs reveals the formation of a symmetrical triangle. This technical formation has no directional bias and forecasts a 16% breakout, determined by measuring the distance between the highest peak and the trough. Adding this measure to the breakout point reveals a target of $28.38 or $18.26.

Since symmetrical triangles do not have a directional bias for breakouts, investors might expect LINK to break lower due to the bearish trend before the consolidation phase. However, the big crypto and altcoins are booming, suggesting that this symmetrical triangle is a bottom reversal pattern in disguise.

If Chainlink price produces a decisive close above the trading range’s midpoint at $24.90, it will confirm a bullish breakout, triggering a move to $28.39. In some cases, LINK might also tag the subsequent barrier at $30.85, constituting a 30% ascent.

LINK/USDT 9-hour chart

Regardless of optimism in the cryptocurrency markets, if the Chainlink price produces a bearish breakout below $22.15, it will not necessarily invalidate the bullish thesis but only delay it.

In some cases, the buyers might kick-start the uptrend inside the high probability reversal zone, ranging from $18.26 to $22.15.

US Dollar Index has the 96.00 level in its crosshairs – Westpac

172650   September 30, 2021 18:21   FXStreet   Market News  

The US Dollar Index (DXY) has firmed to 12-month highs. More near-term DXY upside is likely now that US real rates are more forcefully repricing the Fed’s Nov/Dec QE taper signal and the hawkish reshuffling of their dots, economists at Westpac report.

See: US Dollar Index to climb towards the 96.00 level into year-end – MUFG

Fed more hawkish than markets

“In the wake of the hawkish reshuffling to the Fed’s dots at the Sept meeting OIS markets are now pricing in 3 Fed hikes by end-2023. That is very close to the 2023 median dot at 1.00%. But for 2024, there’s a large disconnect between the dots and market rates. With markets still under-pricing the Fed’s intent, there’s plenty of scope for real rates to provide ongoing support for the USD.”

“DXY retracement targets for the Mar 2020 103.0 highs to the Jan 2021 89.0 lows point to 96.0 as a realistic upside target.”

EUR/SEK to reach 9.75 by mid-2022 – CIBC

172649   September 30, 2021 18:02   FXStreet   Market News  

The Riksbank assumes that policy can and should remain at zero until the end of their forecast profile, currently Q3 2024. The question is, are such assumptions tenable? Earlier liftoff by Riksbank than expected will support SEK momentum, economists at CIBC Capital Markets report.

The Riksbank appears in no hurry to consider post-pandemic tightening

“Above trend GDP is a function of household consumption, which is expected to average nearly 5% in calendar years 2021/22. Rising activity levels will also result in a sliding unemployment rate, which the central bank sees dropping from 8.8% this year to 7.6% next. Such assumptions point towards the need to tighten in late 2022, not 2024.”

“The bank seems reluctant to move early despite inflation being set to miss their target. A more realistic rate profile will encourage a stronger SEK, limiting the CPI overshoot.” 

“For now, the currency remains substantially undervalued and we expect an appreciation, with EUR/SEK expected to reach 9.75 by mid-2022.”

South Africa Producer Price Index (MoM) above expectations (0.7%) in August: Actual (0.8%)

172648   September 30, 2021 17:51   FXStreet   Market News  

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South Africa Producer Price Index (YoY) above forecasts (7.05%) in August: Actual (7.2%)

172647   September 30, 2021 17:51   FXStreet   Market News  

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