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Evergrande Contagion Fears are Rising

“If you buy things you do not need, soon you will have to sell things you need.” - Warren Buffet

 

 

HEADLINES

 

 

  • Evergrande nerves weigh on offshore yuan, dollar edges up on safety bid
  • GBP/USD trades near month lows around 1.3650 ahead of FOMC meeting
  • Gold firms on Evergrande risks; pre-Fed jitters cap gains
  • Oil prices decline as worries over China’s Evergrande sink the stock market and lift the U.S. dollar
  • S&P Slumps as China Contagion Fears Trigger Spike in Volatility
  • Bitcoin in Pullback Mode, Support at $40K-$42K
  • EUR/USD to plunge towards 1.13 by end-2022 – Danske Bank

 

 

FOREX

 

 

Evergrande nerves weigh on offshore yuan, dollar edges up on safety bid

 

The offshore Chinese yuan weakened versus the greenback to its lowest level in nearly a month on Monday, as worries about the repercussions from property developer Evergrande’s solvency issues spooked financial markets and lifted safe-haven currencies.

Market sentiment has been rattled by the potential contagion from Evergrande, which is trying to raise funds to pay a host of lenders, suppliers and investors. A deadline for an $83.5 million interest payment on one of its bonds is due on Thursday, and the company has $305 billion in liabilities.

 

GBP/USD trades near month lows around 1.3650 ahead of FOMC meeting

 

GBP/USD is declining for the third day in a row, down 0.61%, trading at 1.3657 at the time of writing. The market sentiment remains downbeat as Chinese real estate developer Evergrande scrambles to fulfill its bond interest payments due this week, triggering a global sell-off of everything that has the “risk” word attached to it. Additionally, the possibility of a Federal Reserve announcement of reducing its bond asset purchases this week also weighed.

 

 

COMMODITIES

 

 

Gold firms on Evergrande risks; pre-Fed jitters cap gains

 

Gold rose on Monday as fears about the solvency of Chinese property group Evergrande sparked a flight to safe-haven assets, but gains were capped by strength in the dollar ahead of the U.S. Federal Reserve’s policy meeting. Investors are rushing to the safety of bonds as fears grow of a default by Evergrande, driving a drop in yields that is helping gold.

 

Oil prices decline as worries over China’s Evergrande sink the stock market and lift the U.S. dollar

 

Oil futures declined Monday, as worries over the potential collapse of China property giant Evergrande dragged down global financial markets and fueled strength in the U.S. dollar.

 

 

STOCKS

 

 

S&P Slumps as China Contagion Fears Trigger Spike in Volatility

 

The S&P 500 slipped further into the red Monday, amid a jolt of volatility that swept through the market as investors mulled the broader implications of a liquidity crisis at China Evergrande Group. China Evergrande Group, the second largest property company in China, has more than $300 billion in liabilities, and reports suggest it won’t hit an interest payment deadline on its offshore bonds due Thursday.

Failure of the Chinese property giant to make good on its debt payments could force it into bankruptcy, sparking a wider liquidity crisis in real estate sector -- a key component of the nation's economy - that some fear could trigger an economic crisis in China and severely hamper global growth.

 

 

CRYPTO

 

 

Bitcoin in Pullback Mode, Support at $40K-$42K

 

Bitcoin (BTC) sellers were active over the weekend as the cryptocurrency’s price dipped below the 200-day moving average at $45,000. Initial support is seen in the $40,000-$42,000 range where a breakout occurred on Aug. 6. The $50,000 resistance level was tested several times over the past few weeks, although buyers ultimately took profits as overbought signals appeared on the charts. BTC was trading at around $44,200 at press time and is down 5% over the past 24 hours.

 

 

ANALYSIS

 

 

EUR/USD to plunge towards 1.13 by end-2022 – Danske Bank

 

“The USD depreciation in H2 20 reflected market optimism about economic recovery. We expect the USD to strengthen as this effect fades.”

“With the Federal Reserve likely to start noticeably tightening monetary policy in the period until end-2022, we expect the positive USD trend to return.”

“EUR/USD Forecast: 1.17 (1M), 1.16 (3M),1.15 (6M), 1.15 (12M), 1.13 (end-2022).”CHART

Nasdaq 100 – Daily Candlesticks

Source: GKFX Prime Metatrader 4

NAS100 has broken below a 2-month old rising trendline and looks on course to test support from a longer term rising trendline and resistance tuned support from the prior record highs in February and April. - Prepared by Trading Writers*

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

 

SOURCE

 

 

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/gbp-usd-trades-near-month-lows-around-13650-ahead-of-fomc-meeting-202109201749
https://www.fxstreet.com/news/eur-usd-to-plunge-towards-113-by-end-2022-danske-bank-202109201452
https://www.reuters.com/article/global-forex/forex-evergrande-nerves-weigh-on-offshore-yuan-dollar-edges-up-on-safety-bid-idUSL1N2QM1QT
https://www.reuters.com/article/global-precious/precious-gold-firms-on-evergrande-risks-pre-fed-jitters-cap-gains-idUSL4N2QM1SW
https://www.investing.com/news/stock-market-news/sp-slumps-as-china-contagion-fears-trigger-spike-in-volatility-2621154
https://www.marketwatch.com/story/oil-loses-ground-as-worries-over-chinas-evergrande-lift-u-s-dollar-11632145861?mod=mw_latestnews
https://www.coindesk.com/markets/2021/09/20/bitcoin-in-pullback-mode-support-at-40k-42k

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