September 2022 Macro Market Commentary

Bitcoin -

Bitcoin has been holding above the June low around $17,500 and despite a mid-month run toward $23,000, failed to maintain the momentum higher. Risk sentiment has remained weak and interest rates continue to be raised, as central banks seek to tame high inflation.

• The United States Federal Reserve has released

• The chair of the United States Commodity Futures Trading Commission (CFTC), Rostin Behnam, talked about cryptocurrency regulation in an interview with CNBC. He stated the CFTC is working alongside the Securities and Exchange Commission (SEC) to come up with crypto regulation to address the unique characteristics of digital assets which differ to traditional asset classes. As a derivatives regulator, the CFTC is seeking extended authority over the cash markets in relation to digital assets, allowing the SEC to continue to cover digital assets that fall under the securities markets.
• Singapore’s largest bank, DBS Bank, plans to offer digital asset services to its wealthy clients in Asia. DBS will offer its institutional and wealthy clients access to its DBS Digital Exchange through its DBS mobile banking app. Qualified clients would be able to trade Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), and Ripple (XRP).
• In Europe, BlackRock has launched an exchange traded fund (ETF) called the iShare Blockchain Technology UCITS ETF. The fund will allow European clients to increase their exposure to the blockchain space through companies involved in the industry. Companies with direct exposure to cryptocurrencies include Coinbase, Galaxy Digital, and Marathon Digital, and those with blockchain technology exposure would include those like IBM and Nvidia.

DAILY TREND: DOWN

Bitcoin remained trapped between $25,000 and $17,500 in September. Price attempted a move toward $23,000 in the first half of the month before it fell toward $18,000 in the third week.

Short term price action has been sideways with the overall trend continued to remain weak.

XBT closed the month lower at $19,212 with a -0.8% change.

UPCOMING HIGH IMPACT EVENTS

• Spring 2024 bitcoin halving event

US Dollar -

The U.S. Dollar Index ® (USDX) soared to a fresh two-decade high in September at 114.75 and a fourth consecutive higher close. The USDX closed the month at 112.08 with a gain of 2.99%.

• Nonfarm Payrolls data released on 2nd September reported that 315,000 new jobs were created during August, beating expectations of 300,000 although a decline on August data which posted a revised gain of 526,000 (revised downwards from 528,000). The USDX closed the day at 109.51, down 0.08% on the day.
• Consumer Price Index (CPI) data for all items released on 13th September slowed for a second straight month, inflation data 12-month ending August was at 8.3% dropping from 8.5% the prior month as energy prices continued to decline. Core Inflation (all items less food and energy) increased over the last 12 months at a rate of 6.3%, up from June and July’s 5.9% gain to move off the six-month low. The USDX closed the day at 109.81 with a gain of 1.48%.
• The Federal Reserve raised rates by 75 basis points at the meeting held on 21st September and signaled more rates hikes of similar proportions likely in future meetings. The USDX closed the day at 110.35 with a gain of 0.41%.

DAILY TREND: UP

INDEX WEIGHTING:
EUR 57.6% | JPY 13.6% | GBP 11.9% | CAD 9.1% | SEK 4.2% | CHF 3.6%

The bulls were firmly in control at the start of September trading on the U.S. Dollar Index ®. The bullish move extended as positive ISM Manufacturing PMI data for August was released. Data published showed manufacturing output remained consistent to that announced for July at 52.8. The data released was above market expectations of 52.0 and stemmed the steady decline previously observed although still pointed towards low levels of manufacturing growth. The U.S. Dollar Index ® closed the day at 109.68 with a gain of 0.78%.

The U.S. Dollar Index ® lost momentum to the upside during the Asian and European session trading on 2nd September as the bears took control, and the market dropped. Nonfarm Payroll data offered little comfort and after a small injection of positivity the U.S. Dollar Index ® steadily declined. The data published showed that 315,000 new jobs were created during August, which just beat market expectations of 300,000. Although it was a substantial decline on July data that posted a revised gain of 526,000 (revised downwards from 528,000) to record the lowest monthly gain since April 2021. Data published also revealed that the unemployment rate had unexpectedly risen to 3.7% although this was largely due to an increase in workforce participation rates. Wages continued to rise, albeit slightly below expectations with average hourly earnings increasing by 0.3% in August and 5.2% from a year ago.

The U.S. Dollar Index ® traded lower throughout the majority of the U.S. session until it reached a small area of support at 108.97 – 108.73 where the market took a bounce upwards and recaptured some of the earlier losses. The U.S. Dollar Index ® closed the day down with a loss of 0.08% at 109.51.

The U.S. Dollar Index ® closed the trading week ending 2nd September with a gain of 0.65%.

On 5th September, the bulls came out and asserted control as the U.S. Dollar Index ® rallied to reach a high of 110.26 where the market struggled. The sellers returned and the bears drove the market lower to close the day down at 109.51 equal to Friday's close with a loss of 0.29% for the day.

On 6th September during early trading the market traded sideways as economic data was due to be released. The bulls returned as positive ISM Services PMI was announced for August. The data showed the service sector economic activity continued to expand for the twenty-seventh consecutive month as August recorded 56.9 against market expectations of 55.1 and above the prior month’s data of 56.7.

On this news, the market rallied and the U.S. Dollar Index ® remained buoyant throughout much of the U.S. trading session. The market met some resistance when the U.S. Dollar Index ® reached a high of 110.55 and pulled back slightly. The U.S. Dollar Index ® closed the day at 110.20 with a gain of 0.55%.

On 7th September, the U.S. Dollar Index ® throughout the Asian, European and early U.S sessions traded sideways. There were various members of the Federal Reserve speaking throughout the course of the day and the Fed’s Beige Book was due, all of which weighed heavily on the market. In one of the speeches the Federal Reserve Vice Chair Lael Brainard eluded that the Fed will need to raise rates further and for as long as necessary in order to restore price stability even though signs have emerged to show inflation is slowing. The Fed will be looking for several months of low monthly inflation data to be confident it will move toward the 2% target.

The Fed Beige Book later reported that the Federal Reserve is expecting the U.S. economy to weaken within the next 6 – 12 months as the U.S. economy was balanced between “slight to modest” growth. This dampened the spirits of the U.S. Dollar bulls and the U.S. Dollar Index ® began to drop to close at 109.83 with a loss of 0.44%.

The U.S. Dollar Index ® had a mixed day of trading on 8th September with the bulls and the bears both taking their fair share of control throughout the day. Fed Chair Powell spoke to reiterate the Fed's stance with the current measures they are taking to tackle and bring inflation into line. This was reflected in the movements of the market on the day. The U.S. Dollar Index ® closed the day 109.71 with a modest gain of 0.02%.

On the final day of trading for the week, the U.S. Dollar Index ® bears took charge and drove the market lower until the U.S. Dollar Index ® reached the midpoint of the Daily Bollinger Bands where buyers were waiting. The bulls propelled the market higher after the U.S. Dollar Index ® reached a low of 108.35 and whilst there was insufficient momentum to recover all of the earlier losses the bulls recovered some ground. The U.S. Dollar Index ® closed the day at 109.00 with a loss of 0.50%.

The U.S. Dollar Index ® closed the first full week of September trading with a loss of 0.75% at 109.00.

12th September trading the U.S. Dollar bulls struggled to maintain control and as the U.S. Dollar Index ® reached a high of 108.87, the bears returned and the market dropped. The U.S. Dollar Index ® closed the day at 108.32 with a loss of 0.28%.

The latest inflation figures released during 13th September showed the pace of inflation softened for a second consecutive month as Consumer Price Index (CPI) data for all items 12-month ending August announced prices rose by 8.3% falling from 8.5% the prior month. Lower rises in gasoline and fuel oil prices contributed towards the drop although the cost of natural gas and electricity rose (highest since August 1981) along with the cost for food (up 11.4%, the highest increase since 1979). The Core inflation rate, which represents all items excluding food and energy, showed an unexpected increase to 6.3% over the last 12-month period, compared to data released for July at 5.9% and expectations of 6.1%. This represented the highest monthly increase since March 2020.

On 13th September after reaching a low of the day at 107.67 the U.S. Dollar Index ® found buyers when the market approached a 4-hour area of support at 107.65 – 107.48. The market rallied as the bulls took control and blasted through the midpoint of the Daily Bollinger Bands. The U.S. Dollar Index ® closed the day up at 109.81 with a gain of 1.48%.

As inflation remains one of the key priorities, to help gauge future inflation expectations ICE Benchmark Administration has launched the ICE U.S. Dollar Information Expectation Index Family. A useful tool to help answer some of the key questions that will affect how the monetary policy will unfold within the coming quarters

On 14th September trading the buyers struggled, the bears stepped in and the U.S. Dollar Index ® dropped although it recovered slightly towards the end of the trading day. The U.S. Dollar Index ® closed the day at 109.63 with a loss of 0.19%.

On 15th September, the U.S. Dollar Index ® struggled to find any momentum in either direction. Retail Sales data surprised the market as sales grew by 0.3% in August compared to the decline in July, which was revised downwards from flat (0%) to -0.4%. Market expectations for August were 0%. The U.S. Dollar Index ® closed the day at 109.71 with a gain of 0.11%.

Michigan Consumer Sentiment Index information published on 16th September brought initial disappointment as data published below expected figures at 58.6 (revised lower against preliminary figures of 59.5 initially announced) against expectations of 60.0 and August data at 51.5. The U.S. Dollar Index ® closed the day at 109.74 with a loss of 0.04%.

The U.S. Dollar Index ® closed the week with an overall gain of 1.03% at 109.74.

Monday 19th September the U.S. Dollar Index ® pulled back as the bears drove the market lower to retest the Daily 20 SMA (midpoint of the Daily Bollinger Bands) where the bulls waited and the U.S. Dollar Index ® took a bounce. The U.S. Dollar Index ® closed the day with a modest gain of 0.05% at 109.47.

On 20th September, the U.S. Dollar Index ® traded sideways during early trading although found support from the daily moving averages, this time the Daily 20 EMA provided support as the bulls returned and the market rallied. The U.S. Dollar Index ® closed the day at 109.42 with a gain of 0.60%.

On 21st September the Federal Reserve announced a 75 basis points (bps) rate rise, it was an unprecedented rate hike as it was the third consecutive 75 bps hike raising its benchmark rate to a range of 3.00% to 3.25%. The tough monetary policy stance continued as a means to tackle persistently high inflation whilst concerns have been acknowledge about the impact this will likely have on the wider economy.

On this news the U.S. Dollar Index ® rallied to a high of 111.36 and sliced through the upper boundary of the Daily Bollinger Bands before pulling back to close the day positive with a gain of 0.41% at 110.35.

As inflation is set to play a key role in interest rate decisions throughout 2022, the ICE U.S. Dollar Information Expectation Index Family is a great tool to help plan for the future. The chart below provides the historical Index setting over the past year:

The U.S. Dollar bulls drove the market higher during the Asian and early European trading sessions on 22nd September and again the U.S. Dollar Index ® rallied through the upper boundary of the Daily Bollinger Bands. Whilst sellers returned to reverse some of the earlier gains, the market closed above. The U.S. Dollar Index ® closed at 111.11 with a loss of 0.10%.

The bulls regained control during trading on 23rd September and the bullish momentum gathered pace as money moved into the safe haven. The U.S. Dollar Index ® rallied throughout the final trading day of the week to close with a gain of 1.76% at 112.96, to mark the strongest one-day performance of the month.

The U.S. Dollar Index ® closed the week with an overall gain of 3.24% at 112.96, reversed the prior week losses and produced the strongest weekly performance in September.

The bullish momentum continued into the following trading week as the U.S. Dollar bulls drove the market higher. The U.S. Dollar Index ® closed 26th September with a strong move up and whilst the market pulled back from the high at 114.45, the U.S. Dollar Index ® closed with a gain of 0.91% for the day at 114.02.

On the 27th September, the bears controlled early trading and the U.S. Dollar Index ® traded lower. The bulls returned during the U.S. session and reversed some of the earlier losses. Data released for Durable Goods Orders for August showed a decline in orders dropping to -0.2% from -0.1% for July (revised downwards from initial reports of 0%) this was against expected increase of 0.6%.

Nondefense Capital Goods Orders ex. Aircraft also released on 27th September showed an uptick as data published an increase of 1.3% markedly above expectations of 0.2% and above the revised 0.3% data released for July (revised from 0.4%). Neither set of data announcements had an impact on the U.S. Dollar Index ® direction at the time of release.  The U.S. Dollar Index ® closed the day up at 114.05 with a gain of 0.18%.

The U.S. Dollar Index ® continued to trade higher during early trading on 28th September to reach a high of 114.75, a fresh two-decade high before pulling back as sellers stepped in to send the U.S. Dollar Index ® lower as risk-on market sentiment weakened the demand for the  U.S. Dollar. The bears gathered momentum throughout the rest of the trading day and the U.S. Dollar Index ® closed the day with a loss of 1.40% at 112.51. The largest one-day loss in September.

On 29th September, the bulls briefly regained control and the U.S. Dollar Index ® reached a high of 113.72, here it met resistance as the bears returned to send the market lower. The U.S. Dollar Index ® closed the day 112.20 with a loss of 0.67%.

GDP data released on 29th September showed the U.S. economy contracted by an annualized 0.6% for quarter two as expected after the release of earlier provisional data. Whilst this technically shows the economy is shrinking it is an improvement on the drop seen for quarter one which was a contraction of 1.6%.

The bearish momentum continued on 30th September although the bulls came back during the early U.S. session and drove the market off from the lows there was insufficient momentum to stay at the high of the day and the market pulled back. The U.S. Dollar Index ® closed the day at 112.08 with a gain of 0.25%.

In the final week of September trading the U.S. Dollar Index ® created a fresh two-decade high at 114.75, although could not sustain the bullish momentum and closed the week with a loss of 0.80%.

The U.S. Dollar Index ® closed the month with a gain of 2.99% at 112.08 for a fourth consecutive higher monthly close. The uptrend remained intact on both the weekly and the daily timeframes.

UPCOMING HIGH IMPACT EVENTS

• Mon 3 Oct ISM Manufacturing PMI (Sep)
• Wed 5 Oct ADP Employment Change (Sep)
• Wed 5 Oct ISM Services PMI (Sep)
• Fri 7 Oct Nonfarm Payrolls (Sep)
• Wed 12 Oct FOMC Minutes
• Thr 13 Oct Consumer Price Index (Sep)
• Fri 14 Oct Retail Sales (Sep)
• Fri 14 Oct Michigan Consumer Sentiment (Oct) PREL
• Wed 26 Oct Durable Goods Order (Sep)
• Wed 26 Oct Nondefense Capital Goods Orders ex. Aircraft (Sep)
• Wed 26 Oct Gross Domestic Product Annualized (Q3) PREL

South Korean Won -

The South Korean Won hit a fresh 13-year low against the U.S. Dollar and was Asia’s weakest performing currency. The South Korean Won closed September at 1439.94 KRW against the U.S. Dollar after trading to a high of 1444.93 to record a loss of 7.24%.

• S&P Global Manufacturing PMI data continued to decline as data released on 1st September posted a drop to 47.6 for August against expectations of 50.5 and a decline from 49.8 released for July data.
• Consumer Price Index (CPI) all items 12-month ending August released on 1st September showed inflation had eased for the first time compared to the prior six-months at 5.7% down from the 24-year high posted last month at 6.3%. The data released was below market expectations of a 6.1% increase.
• Industrial Production data published on 29th September for 12-month ending August recorded a slight increase at 1.0% although this was significantly below market expectations of 3.2% and prior release of 1.5% for July. Monthly data published for month ending August showed a further decline at -1.8% against expectations of a rise of 1.3%.

DAILY TREND: UP

1st September trading the U.S. Dollar bulls regained control and the USDKRW rallied to close the first day of the month up at 1355.77 with a gain of 0.97%.

The bullish momentum continued into the following trading day and the USDKRW closed with a gain of 0.43% at 1361.13 to end the trading week with a 1.44% gain overall.

The U.S. Dollar bulls drove the pair higher as the new trading week began and the USDKRW closed up for the first two trading days to gain 1.06% during this period after piercing the upper boundary of the Daily Bollinger Bands.

The U.S. Dollar bears returned on 7th September as the appetite for the South Korean Won increased. After the pair reached a high of 1390.62, the USDKRW dropped to close with a small loss of 0.09% at 1377.09.

The bearish sentiment was short lived as the bulls returned and the USDKRW closed trading on 8th September at 1383.66 with a 0.61% gain.

Trading on 9th September neither the bulls nor the bears could establish overall control and the pair closed at 1379.74 with a loss of 0.28% although ended in neutral territory.

The 9th marked the end of the trading week and the USDKRW gained 1.18% for the week. This was the fourth consecutive higher weekly close and during this period, the South Korean Won had lost 6.03% of its value against the U.S. Dollar.

12th September the U.S Dollar bears drove the USDKRW lower and pair dropped into a pocket of support found on a 4-hour timeframe 1371.68 – 1364.08 where buyers waited and the pair paused. The USDKRW rallied strongly from this area on 13th September and closed the day up at 1394.66 with a gain of 1.46%. The largest daily gain of the month.

Fortunes reversed the following trading day as the bears returned and the pair dropped. The USDKRW closed at 1389.98 down 0.17%. The bulls regained control on 15th September and the USDKRW closed the day at 1398.39, a gain of 0.60%.

The gains made reversed on the last trading day of the week as the bears returned and the pair closed down on 16th September with a loss of 1.0%.

The USDKRW closed the week at 1384.75 with a gain of 0.36%.

19th September the bulls returned and drove the pair higher until it met resistance at the high of the day and the bears stepped in to drive prices lower. Even with the pullback the pair closed the day up at 1389.98 with a gain of 0.38%.

The USDKRW gradually moved higher during the following three trading days and gained 1.31%, a significant weakening of the South Korean Won being the quote. The upside move met resistance on the third day as it pierced the upper boundary of the Daily Bollinger Bands and pulled back.

The final trading day of the week, the U.S. Dollar bulls returned with vigor and the pair put in the strongest performance of the week to close with a daily gain of 1.01%.

The USDKRW closed the week at 1421.26 with a gain of 2.64%, the largest weekly gain of the month.

With the bulls in control, the USDKRW rallied on 26th September and blasted through the upper Daily Bollinger Bands to reach a high of 1435.03 before it met resistance. The pair closed the day with a gain of 0.55% at 1429.01.

The U.S. Dollar bears struggled to maintain overall control during trading on 27th September as buyers returned, but ultimately the pair closed down 0.26% at 1425.41.

On 28th September, the bulls were out in force, the market rallied throughout the late Asian/European trading sessions. The USDKRW made a fresh 13-year high at 1444.93 before the bears returned and the pair dropped throughout the U.S. session to close with a loss of 0.07% at 1424.46.

The following day the bulls returned however, the pair failed to reach the high of the prior day as it met resistance at 1441.82 and pulled back to close with a gain of 0.35% at 1429.39. The bulls returned on the 30th September and the pair rallied to close up at 0.74% at 1439.94.

The uptrend continued on both the weekly and daily timeframes. The USDKRW closed the month at 1439.94 with a gain of 7.24%, the largest one-month gain in over a decade after reaching a fresh 13- year low against the U.S. Dollar.

UPCOMING HIGH IMPACT EVENTS

• No major events listed

Singapore Dollar -

The Singapore Dollar, whilst one of the top performing Asian currencies, closed the month weaker against the U.S Dollar at $1.4349, a decline of 2.71%.

• PMI Manufacturing data released on 2nd September showed a further drop albeit slight based on the prior month as figures published 50.0 against 50.1 reported in July. This data was above expectations of 49.9.
• Consumer Price Index (CPI) data released on 23rd September showed inflation continued to rise as CPI - all items 12-month ending August recorded an increase of 7.5% which was above market expectations of 7.2% and 12-month ending July at 7.0%. The highest increase seen in 14-years (June 2008). The rise came from an increase in the costs of food, clothing and housing driven by higher fuel and utility costs. Core inflation hit 5.1% to record a near 14-year high (5.5% November 2008) up from 4.8% in July due to a rise in food and services items.
• Industrial Production data released on 26th September showed an unexpected increase in manufacturing output for the period 12-month ending August as manufacturing rose by 0.5%, exceeding market expectations of a 0.6% drop and just short of July’s upwardly revised 12-month data with a 0.8% gain. August month on month data showed manufacturing output increased by 2.0%, the first increase in three months and above market expectations of 1.5%.

DAILY TREND: UP

A bullish start to 1st September trading as the U.S. Dollar bulls drove the USDSGD higher to close at 1.4022 with a gain of 0.37%.

The U.S. Dollar bulls struggled to maintain overall control on 2nd September as the pair found weakness at the high of the prior day, the USDSGD closed the day with a small loss of 0.02% at 1.4018.

The USDSGD closed the trading week at 1.4018 with a gain of 0.60%.

The bulls regained control during the Asian and European sessions on Monday 5th September and the pair rallied. However, fortunes reversed in the U.S. session as the bears returned. The USDSGD dropped from the high of 1.4062 to close the day at 1.4032 with a gain of 0.14%.

The bulls came back and drove the pair higher on 6th September. The USDSGD closed up at 1.4066, a gain of 0.22%.

On 7th September the USDSGD moved towards the upper boundary of the Daily Bollinger Bands which combined with an area of resistance at 1.4079 – 1.4139 selling pressure returned, the bears took control to send the pair lower. The USDSGD closed down at 1.4039 with a loss of 0.17%.

The bearish momentum continued during the following three trading days as the USDSGD dropped to close the first full week of September trading at 1.3984 with a loss of 0.21%. This loss on the USDSGD converts to the strengthening of the Singapore Dollar, as this is the quote currency.

On 12th September, the bears maintained control until support was found at the midpoint of the Daily Bollinger Bands. The USDSGD closed at 1.3962 down 0.11%.

Buyers were waiting at this support area and the bulls regained control. The pair rallied on 13th September to close the day with a gain of 0.75% at 1.4065.

The bulls struggled to gain momentum on 14th September. The bears returned as the pair almost reached the prior day high, close to an area of resistance at 1.4079 – 1.4139 and the USDSGD dropped to close the day with a small loss of 0.05% at 1.4057.

The USDSGD traded sideways throughout the remainder of the week testing high within an area of resistance at 1.4079 – 1.4139 where it combined the upper boundary of the Daily Bollinger Bands. On each test, the pair pulled back but with little downward momentum.

The USDSGD closed the week with a gain of 0.56% at 1.4056.

The bulls returned on Monday 19th September and the pair began to rise, again this met selling pressure within the area of resistance and struggled. The USDSGD closed the day 1.4075 with a gain of 0.14%.

The bulls drove the pair higher the following day and the USDSGD closed with a 0.18% gain at 1.4100.

This bullish momentum picked up pace on the 21st September and the pair blasted through the resistance area and upper boundary of the Daily Bollinger Band to close the day at 1.4168 with a gain of 0.48%.

The following trading day both bulls and bears struggled to gain overall control and the USDSGD closed at 1.4179 with a small gain of 0.07%.

The bulls drove the pair higher on the final trading day of the week as the USDSGD closed with a gain of 0.93% at 1.4311.

The USDSGD closed the week with a gain of 1.82%, the strongest performance of the month. A significant weakening of the Singapore Dollar.

The demand for the U.S. Dollar continued into trading on 26th September to the detriment of the Singapore Dollar (being the quote). The USDSGD closed higher for a sixth consecutive positive close at 1.4380 with a gain of 0.50%.

27th September the pair began to struggle to move higher due to overhead resistance at 1.4446 – 1.4513 from a daily timeframe. It was on 28th September the area was tested and after the USDSGD reached a high of 1.4492, the pair dropped. The pair closed down at 1.4340 with a loss of 0.31%.

The bearish momentum continued into the following trading day after a retest of the area the pair closed lower at 1.4322, a loss of 0.13%.

On the final day of trading, the USDSGD closed at 1.4349 with a gain of 0.19% for the day and a 0.29% gain for the week.

The USDSGD broke out of the sideways phase on a daily timeframe and re-established the uptrend. The weekly uptrend remained. The USDSGD closed the month with a gain of 2.71% at 1.4349.

UPCOMING HIGH IMPACT EVENTS

• No major events listed

Chinese Yuan -

The Chinese Yuan Renminbi recorded a record low against the U.S. Dollar after losing 3.37% of its value during September trading to close at 7.1365 CNY to the U.S. Dollar.

• Consumer Price Index (CPI) data released on 9th September showed inflation softened with data published at 2.5% increase for 12-month ending August a drop from the 2.7% reported for 12-month ending July. This figure came out just below expectations of 2.8%.
• Retail Sales figures published on 16th September for 12-month ending August showed an unexpected increase at 5.4% against 2.7% reported for 12-month ending July and significantly above market expectations of 3.5%.
• The NBS Manufacturing PMI data released on 30th September showed a continued improvement as manufacturing output for September was at 50.1 against 49.4 reported for August, beating market expectations of 49.6 and back in expansion territory. Non-Manufacturing PMI data for September showed a continued decline as figures released 50.6 for September against 52.6 for August and below expectations of 52.0.

DAILY TREND: UP

On 1st September, the U.S. Dollar bulls gained control and drove the USDCNH higher to recover some of the prior day’s losses. The USDCNH closed the first day of September trading up with a gain of 0.17% at 6.9151.

The 2nd September the bulls and the bears struggled to gain overall control and after just breaking the prior day high weakness crept in. The USDCNH closed marginally down at 6.9110 with a loss of 0.04%.

The USDCNH closed the trading week with a gain of 0.34% at 6.9110.

The bulls returned on Monday 5th September and the pair rallied to close up at 6.9405 with a gain of 0.39%.

The bullish momentum continued into the following trading day as the U.S. Dollar extended its gains against the Yuan. It was not until 7th September did the bears return with more vigor as the USDCNH reached the upper boundary of the Daily Bollinger Bands combined with a daily area of resistance at 6.9865 – 7.0302 selling pressure came in and the pair dropped to close the day at 6.9569 with a loss of 0.17%.

On 8th September, the bulls struggled to gain momentum due to the resistance overhead and after the USDCNH reached a high of 6.9775, the bears returned. The pair closed up at 6.9576, one pip above the open.

The bearish momentum gathered pace on the final trading day of the week until the pair reached an area of daily support at 6.9210 – 6.9006 where buyers waited and the pair took a bounce. The USDCNH closed at 6.9344 with a loss of 0.37%.

The first full week of September trading after reaching a high of 6.9971 the USDCNH closed at 6.9344 with a gain of 0.30%,

The daily area of support at 6.9210 – 6.9006 was retested on 12th September where buyers waited and the pair stopped falling to close within the boundaries at 6.9158 with a loss of 0.13%. It was on 13th September where the bulls took control and the pair rallied from this area to close up 6.9818 with a gain of 0.95%.

The bears returned on 14th September and the pair closed down 0.16%. Fortunes reversed the following day and the bulls drove the pair higher into the daily area of resistance at 6.9865 – 7.0302. The USDCNH closed 15th September trading with a 0.60% gain at 70119.

On 16th September, the pair rallied and broke through the daily area of resistance although failed to close above due to an initial reaction to a resistance on a weekly timeframe at 7.0402 – 7.0973. Sellers were waiting and the pair dropped to close the day at 7.0040 with a loss of 0.06%.

The USDCNH closed the week with a gain of 1.15%.

On 19th September, the USDCNH struggled to break the Friday’s high and pulled back to close the day up at 7.0039 with a gain of 0.13%.

The bulls returned on 20th September and drove prices higher throughout the remainder of the week, breaking through and closing above the weekly resistance area by Fridays close.

The USDCNH closed the week with a gain of 1.75%, the largest weekly gain of the month. This represented a significant weakening of the Yuan against the U.S. Dollar.

The bullish momentum continued into the final trading week of the month as the USDCNH posted further gains on 26th and 27th September to make it seven positive consecutive closes.

The bullish move continued into trading on 28th September. The pair blasted through the previous all-time high at 7.1964 created in September 2019 (that was revisited and held in May 2020) to create a new high at 7.2672. It was at this point sellers stepped in and drove the pair lower to close the day down at 7.1549 with a loss of 0.24%.

The USDCNH printed a second consecutive down day on 29th September to close at 7.0951 with a loss of 0.86%.

The bulls regained control on the final day of September trading after taking a bounce from a daily support area refined to 7.0801- 7.0611. The USDCNH closed up with a gain of 0.58% at 7.1365.

USDCNH during September remained in an uptrend on both the daily and weekly timeframes. The USDCNH closed the month of September at 7.1365, with a gain of 3.37%.

UPCOMING HIGH IMPACT EVENTS

• Fri 14 Oct CPI (Sep
• Tue 18 Oct GDP (Q3)
• Tue 18 Oct Retail Sales (Sep)
• Thr 20 Oct PBOC Interest Rate Decision
• Mon 31 Oct NBS–Manufacturing & Non–Manufacturing PMI (Oct)

Asia Tech -

The ICE Asia Tech 30 Index (ATI) set a new low on 30th September, as most of the major equity indices including the S&P 500 and the Nasdaq Composite closed the month lower. ATI component stock performance ended overall weak.

• Chinese component stocks all performed negatively with the largest falls from Bilibili, Inc. down 37.1%, and Sunny Optical Technology down by 30.4%.
• Taiwan stock components suffered less with the largest fall in price from MediaTek Inc. by 17.4% and Taiwan Semiconductor Manufacturing was down by 16.4%. Delta Electronics, Inc. was down the least by 3.8%.
• For the Japanese index components, the largest fall was seen in Tokyo Electron Ltd. down by 19.2% and Sony which was down by 16.6%. The single exception was Nintendo which gained 1.9%.
• Korean component stocks all fell with Kakao down by 22.2% and Naver Corp was down 19.4%.

DAILY TREND: DOWN

ATI followed the continued weakness in the equity markets. A new low was set by the index at $2,703 on 30th September. None of the countries that made up the index was spared, although selected individual components held up.

ATI closed the month at $2,698 with a -17.1% change.

Index Composition: 37% China, 23% Japan, 23% Taiwan and 17% South Korea

UPCOMING HIGH IMPACT EVENTS

• Sat 8 Oct China CPI (Sep)
• Fri 14 Oct Retail Sales (Sep)
• Tht 20 Oct PBOC Interest Rate Decision
• Mon 31 Oct China Non-Manufacturing PMI (Oct)

Oil -

The price of ICE Brent Crude continued lower during September under the monthly high of $97.00. Price created a lower-low around the $86.00 level, and another lower-low just above $82.00 as the month drew to a close.

• A Russian proposal to cut oil output by 1 million barrels per day is expected to be tabled at the next OPEC+ meeting on Wednesday 5th October. Oil prices have fallen steadily since June where prices had reached $124.00 and now sit closer to around $85.00. Recession concerns surround the global economy faced with months of high inflation, and the actions taken by central banks and governments to reign it in through interest rate hikes.
• While oil prices have been falling on recessionary fears, there are factors which could reverse the trend in the next 3 to 6 months. These factors could include the influence of underinvestment in oil and gas production facilities limiting new supply sources, continued Asian purchase of Russian oil keeping prices elevated, demand for oil for electricity generation, and recovering demand from China.

DAILY TREND: DOWN

Brent continued lower during the month under the monthly high of $97.00, created a lower-low around $86.00, and another lower-low above $82.00 as the month drew to a close.

Prices remained weak on the last trading day of the month.

Brent closed the month at $85.14 with a -9.3% change.

UPCOMING HIGH IMPACT EVENTS

• Wed 5 Oct OPEC+ policy meeting to decide on whether to decrease supply of oil or hold it steady as price continued to fall.

Key Figures -

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TRADDICTIV · Research Team