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On Monday, the US Dollar edged higher by 119 pips or 0.93% against the Canadian Dollar. The currency pair tested the upper boundary of an ascending channel pattern at 1.2850 during Monday's trading session.

By and large, the exchange rate could continue to trend higher during the following trading session. The potential target for the USD/CAD pair will be near the 1.2920 level.

However, if the currency exchange rate breaks the support level at 1.2768, sellers may pressure the price lower today.

Daily Pivots: (S1) 0.7225; (P) 0.7247; (R1) 0.7273; More...

With 0.7320 minor resistance intact, fall from 0.7277 is still in progress. Deeper decline would be seen to retest 0.7105 low first. Firm break there will resume whole decline from 0.8006 for 0.6991 support next. On the upside, above 0.7320 minor resistance will turn bias back to the upside for 0.7477 resistance instead.

In the bigger picture, with 0.6991 cluster support (38.2% retracement of 0.5506 to 0.8006 at 0.7051) intact, we're seeing price action from 0.8006 as a correction only. That is, up trend from 0.5506 low would resume after the correction completes. In that case, main focus will be 0.8135 key resistance (2018 high). Sustained break there will carry larger bullish implications. However, sustained break of 0.6991 will argue that the whole medium term trend has indeed reversed.

Daily Pivots: (S1) 109.12; (P) 109.58; (R1) 109.84; More...

Intraday bias in USD/JPY remains neutral as range trading continues. On the upside, above 110.44 will turn bias back to the upside for 110.79, and then 111.65 high. On the downside, break of 109.10 will argue that larger fall from 111.65 is resuming. Deeper decline should then be seen to 108.71 support first, and then 38.2% retracement of 102.58 to 111.65 at 108.18 next.

In the bigger picture, medium term outlook is staying neutral with 111.71 resistance intact. The pattern from 101.18 could still extend with another falling leg. Sustained trading below 55 day EMA will bring deeper fall to 107.47 support and below. Nevertheless, strong break of 111.71 resistance will confirm completion of the corrective decline from 118.65 (2016 high). Further rise should then be seen to 114.54 and then 118.65 resistance.

Daily Pivots: (S1) 0.9254; (P) 0.9294; (R1) 0.9316; More....

Intraday bias in USD/CHF remains neutral for consolidation below 0.9331 temporary top. Further rally will remain in favor as long a s0.9162 support holds. Rise from 0.8925 is in progress and break of 0.9331 will target 0.9471 key resistance. Sustained break there will carry larger bullish implications.

In the bigger picture, the strong rally above 55 week EMA (now at 0.9182) now tilts favor to the case of bullish trend reversal. That is, decline from 1.3042 (2016 high) is probably completed at 0.8756 already. Sustained break of 0.9471 resistance should confirm this case and pave the way to retest 1.0342 ahead. However, rejection by 0.9471 will mix up the outlook again and retain some medium term bearishness.

Downside risks pressured the GBP/JPY currency pair lower on Monday. As a result, the British Pound fell by 183 pips or 1.22% against the Japanese Yen during yesterday's trading session.

The exchange rate bounced off the lower line of a descending channel pattern on Tuesday morning.

Given that the currency exchange rate has bounced off the support level, buyers could continue to drive the price higher during the following trading session.

However, the 50– hour simple moving average at 150.52 could provide resistance for bullish traders within this session.

On Monday, the Australian Dollar rose by 44 pips or 0.60% against the US Dollar. The currency pair breached the 50– hour simple moving average at 0.7264 during the Asian session on Tuesday.

As for the near future, the exchange rate could continue to edge higher. Bullish traders may target the 0.7340 level within the following trading session.

However, technical indicators suggest that the AUD/USD currency exchange rate might continue to trend lower in a descending channel pattern during Tuesday's trading session.

Daily Pivots: (S1) 1.1707; (P) 1.1721; (R1) 1.1743; More...

Further fall is expected in EUR/USD as long as 1.1788 minor resistance holds, for 1.1663 support. Firm break there will resume the fall from 1.2265, and the pattern from 1.2348, to 1.1602 key support next. On the upside, above 1.1788 minor resistance will turn bias back to the upside for 1.1908 again.

In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally remains in favors long as 1.1602 support holds, to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). However sustained break of 1.1602 will argue that the rise from 1.0635 is over, and turn medium term outlook bearish again. Deeper fall would be seen to 61.8% retracement of 1.0635 to 1.2348 at 1.1289 and below.

On Monday, the common European currency fell by 81 pips or 0.83% against the Japanese Yen. The currency pair tested the lower line of a descending channel pattern at 128.20 during Monday's trading session.

Given that the EUR/JPY exchange rate has bounced off the lower boundary of the channel pattern, buyers could target the 129.20 level during the following trading session.

However, the 50– hour simple moving average at 128.72 could provide resistance for the currency exchange rate within this session.

Wall Street tumbled on Monday as investors remained concerned about the rising risks in the financial market. The Dow Jones fell by more than 800 points while the Nasdaq 100 index fell by more than 400 points. The decline happened as the Evergrande contagion risk remained while the deadline to hike the debt ceiling nears. Also, there are concerns that the Federal Reserve will sound hawkish in its upcoming monetary policy meeting. The bank is expected to provide hints about tapering since the economy is relatively strong. Some of the biggest laggards in Wall Street were firms like Blackstone, Deutsche Bank, Apollo Global, and Nio.

The US dollar rose in the overnight session as investors rushed to safe havens. The fear and greed index declined to 30 while the CBOE volatility index rose by more than 25%. The decline happened ahead of the latest US housing statistics data. Economists polled by Reuters expect data to show that the country’s building permits declined in August while housing starts rose in the same period. Still, the housing sector remains resilient as low-interest rates push people to buy homes. There is also the challenge of low supply.

The euro declined rebounded as the risk-off sentiment resumed in the market. The currency fell as investors reacted to the rising gas crisis in Europe. Gas prices rose by more than 20% after Russia made plans to reduce inflows in Europe. As a result, according to the Financial Times, European governments are considering spending billions of dollars to aid families and companies. Italy will likely be the first country to supply about 4.5 billion euros to address rising costs. France has also unveiled about 100 euros for poor families while the EU will meet to deliberate on more support.

EURUSD

The EURUSD rose from yesterday’s low of 1.1700 to 1.1730. On the two-hour chart, the pair is between the lower and middle lines of the Bollinger Bands. It is also below the 25-day moving averages while the Relative Strength Index (RSI) has moved slightly above the oversold level of 30. The pair is also slightly above the dots of the Parabolic SAR. Therefore, the pair will likely resume the downward trend today as investors wait for the Fed decision.

GBPUSD

The GBPUSD pair declined sharply as the gas crisis continued. It fell to a low of 1.3637, which was the lowest level since August 24. On the four-hour chart, the pair remains below the short and longer-term moving averages while the MACD and Relative Strength Index (RSI) have also maintained a bearish trend. Therefore, there is a likelihood that the pair will stage a relief rally as traders rush to buy the dips.

SPX500

The S&P 500 index declined sharply in the overnight session. It fell to a low of $4,330, which was substantially below this year’s high of $4,550. On the four-hour chart, the index has tumbled below the 25-day and 50-day moving averages. It also moved below the key support level at $4,350 while the Relative Strength Index (RSI) declined to an oversold level. This sell-off will likely continue today even though a relief rally is also possible.

General trend

• US equity FUTS rise after prior decline.
• Asian financials trade generally lower after US declines.
• Travel-sensitive cos. trade generally higher; (US) White House Covid adviser Zients: Confirms U.S to reopen travel to fully vaccinated foreign nationals, CDC to determine what will be deemed fully vaccinated.
• Hang Seng has pared the opening decline ahead of holiday [Financials trade mixed, Ping An Insurance extends decline; Evergrande’s Chairman issued statement; Casino names rise after meeting with Macau official].
• S&P downgraded another Chinese property developer (Sinic Holdings).
• Nikkei trades modestly lower following holiday [Elliot Management said to cut stake in Softbank Group].
• S&P ASX 200 has traded slightly higher [Slight rebound seen for the Resources index after prior drop; Financials decline].
• CAD gains amid election results, oil prices also rise.
• AUD/JPY rises after prior decline.
• Generally quiet session for metals after prior declines.
• Central banks in focus this week.
• NZD lags amid RBNZ comments.
• RBA released minutes.
• Sept 22nd Fed decision in focus (Wed).
• BOJ decision also due on Wed, PBOC to set loan prime rates (LPRs).

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened 0.0%.
• (NZ) New Zealand Q3 Westpac Consumer Confidence: 102.7 v 107.1 prior.
• (NZ) Reserve Bank of New Zealand (RBNZ) Assistant Gov Hawkesby: least regret is to reduce stimulus, in Aug MPs noted more confidence in meeting goals, given uncertainty central banks move in 25bps increments.
• AST.AU APA notes disappointing that AST entered into period of exclusivity with Brookfield, offered A$2.60/shr in cash and shares v A$2.50/shr from Brookfield.
• (AU) Reserve Bank of Australia (RBA): Excess cash at exchange settlement (ES) accounts at A$363.8B v A$362.4B prior (record high).
• (AU) RESERVE BANK OF AUSTRALIA (RBA) SEPT MEETING MINUTES: REITERATES CENTRAL SCENARIO IS CONDITIONS FOR RATE RISE WILL NOT BE MET UNTIL 2024.

Japan

• Nikkei 225 opened -1.6%.
• (JP) Japan Securities Dealers Association (JSDA) global funds have purchased the most ultra long Japan bonds since 2014.
• (JP) Japan Foreign Minister Motegi: Japan welcomes the establishment of AUKUS (trilateral security pact between Australia, UK and US).
• Daiichi Sankyo and AZN.UK ENHERTU demonstrated robust and durable tumor pesponse of 54.9% in patients with HER2 mutant metastatic non-small cell lung cancer.
• (JP) Japan Chief Cabinet Sec Kato: Cabinet decided to hold extraordinary diet session Oct 4th.
• 9984.JP Elliot Management said to reduce stake - NY Post.
• (JP) Japan Fin Min Aso: Coronavirus likely to delay reaching primary balance target, fiscal stability requires Rev and spending balance.

Korea

• Kospi closed for holiday.

China/Hong Kong

• Hang Seng opened -0.1%; Shanghai Composite closed for holiday.
• 3333.HK Chairman: will fulfill responsibilities to buyers, investors, partners, and financial institutions.
• 3333.HK S&P Does not expect China Govt to provide support for Company.
• LI Cuts Q3 deliveries ~24.5K (prior 25-26K) citing chips shortage due to COVID-19 situation in Malaysia.
• (HK) Hong Kong Real estate Association: Unaware of a meeting between China and Developers - local media.
• (CN) China State run newspaper notes that coal fired power plants may struggle to provide power this winter, due to prices being so high for coal and inability to buy enough, they are also said to be having large operating losses.
• (HK) Hong Kong Chief Exec Lam to visit China on Sept 22nd ahead of annual policy address.

North America

• (CA) Canada PM Trudeau projected to win 3rd term; Liberal party to form minority Govt - CTV.
• FDX Shipping rates to increase on average by 5.9% for US domestic, US export, US import services; Effective Jan 3 ,2022.
• (US) NIH's Fauci: Mix and match strategy for COVID boosters still on the table.
• LEN Reports Q3 $3.27 v $3.24e, Rev $6.94B v $7.27Be; Q4 guidance implies FY21 deliveries 60K (guided 62-64K).
• (US) SEMI Aug North America-based Manufacturers of Semi Equipment Billings: $3.65B, -5.4% m/m and +37.6% y/y.
• (US) Speaker Pelosi: Hops for $3.5T bill to pass, but there may be adjustments; Top line number may change.

Europe

• (UK) PM Johnson: Would prefer a great free trade agreement (FTA) over a quick trade deal - comments on the way to US.
• (EU) Some talk that Europe runs the risk of running out of natural gas this winter, amid limited supplies from Russia and tight inventories - press.

Levels as of 01:20 ET

• Nikkei 225, -1.8%, ASX 200 +0.2% , Hang Seng -0.4%; Shanghai Composite closed ; Kospi closed.
• Equity S&P500 Futures: +0.6%; Nasdaq100 +0.5%, Dax +0.6%; FTSE100 +0.7%.
• EUR 1.1740-1.1723 ; JPY 109.63-109.34 ; AUD 0.7277-0.7243 ;NZD 0.7036-0.7001.
• Gold -0.1% at $1,761/oz; Crude Oil +1% at $70.84/brl; Copper +0.3% at $4.137/lb.