21 September 2021, GBP/USD
GBPUSD trading plan:
Spreads on 10-year U.S. interest rate swaps over Treasuries hit their widest in more than six months due in part to worries about the potential fallout of Chinese property group Evergrande’s financial troubles to the global economy. Spreads of interest rate swaps are typically viewed as indicators of market risk. A higher spread suggests market participants are willing to swap their risk exposures, suggesting overall risk aversion. This is positive news for the dollar. Hedge funds purchased crude after disruption to offshore production in the Gulf of Mexico lasted longer than expected, extending a drawdown of already-tight petroleum inventories. Commercial inventories outside the strategic petroleum reserve had fallen to their lowest level for the time of year since 2014. Ida extended and accelerated the reduction in inventories already occurring despite the resurgence of coronavirus infections over the summer. This is negative news for the dollar, since the U.S. currency and oil have an inverse correlation.
Investment idea: range 1.3635 -1.3735.
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