Forex Today: Markets turn cautious to start new week

Here is what you need to know on Monday, September 25: 

Financial markets adopted a cautious stance at the beginning of the week amid renewed concerns over the Chinese property sector. The European docket will feature the IFO business sentiment survey from Germany and European Central Bank (ECB) President Christine Lagarde will testify before the Committee on Economic and Monetary Affairs. There won't be any high-tier data releases from the US in the second half of the day and investors will pay close attention to comments from central bank officials and the risk perception.

China's Evergrande announced on Sunday that it was unable to issue new debt due to an ongoing investigation into its main domestic subsidiary, Hengda Real Estate Group Co Ltd, putting the debt restructuring plan on hold. Hong Kong's Hang Seng Index fell sharply on this development and was last seen losing nearly 2% on a daily basis. Meanwhile, the Shanghai Composite Index lost more than 0.5%. This development also weighed on the AUD and the NZD. At the time of press, AUD/USD and NZD/USD pairs were down 0.3% and 0.2%, respectively.

Despite the bearish action in Asian stock indices, US stock index futures trade modestly higher on the day. The US Dollar Index stays in a consolidation phase slightly above 105.50 and the 10-year US yield holds steady at around 4.45%.

EUR/USD extended its sideways action at around 1.0650 Monday after spending the second half of the previous week fluctuating near that level. 

GBP/USD lost nearly 150 pips last week and registered its lowest daily close since March at 1.2238 on Friday. The pair opened with a bullish gap and rose above 1.2250 in the early Asian session but failed to gather further recovery momentum.

Gold price closed the previous week virtually unchanged. Early Monday, XAU/USD went into a consolidation phase slightly above $1,920.

USD/JPY registered weekly gains after rising sharply on the Bank of Japan's (BoJ) inaction early Friday. While speaking in a press conference following a meeting with business leaders in Osaka on Monday, BoJ Governor Kazuo Ueda reiterated that they need to patiently maintain monetary easing. USD/JPY showed no reaction to these comments and was last seen moving up and down in a tight channel at around 148.30.