Market News by OnEquity
Oct 03 at 14:58
Cryptocurrency Markets Reeling From Global Uncertainty Over Middle East Conflict
Bitcoin plummeted as the market reacted to the ongoing conflict between Israel and Iran. On a macroeconomic level, crypto-asset markets have been shaken by the escalation of geopolitical tensions between Iran and Israel, challenging the notion of ‘Uptober’ and raising doubts about the role of digital assets like cryptocurrencies during global crises.
As the conflict unfolds, its collateral effects are being felt across all financial markets, with some cryptocurrencies and ETFs experiencing considerable volatility.
Market Impact and Consolidations
The immediate response to Iran’s missile strike against Israel sent Bitcoin down to around $60,200, indicating a considerable 6% decline from recent highs of approximately $64,000. This drop was not limited to Bitcoin, as Ethereum and other altcoins also posted losses, with Ethereum falling by more than 4% and Solana down 5%.
The market turmoil triggered massive liquidations, with Coinglass reporting that $523.37 million was lost within just 24 hours. Long positions suffered the most, with $451 million liquidated compared to $71 million in short positions. This volatility resulted in the liquidation of 154,011 traders, demonstrating the significant impact of the ongoing crisis on the cryptocurrency market.
The rapid market decline has drastically altered investor sentiment. The cryptocurrency fear and greed index, a key measure for analyzing market sentiment, dropped from a “greed” level of 61 to a “fear” level within 42 days.
Additionally, U.S. spot Bitcoin ETFs recorded significant outflows, with withdrawals totaling $242.53 million on October 1 alone. This marked the largest outflow in nearly a month and the third largest in five months, signaling a broader pullback from crypto-assets amid heightened global uncertainty.
Macroeconomic Implications and Outlook
The current crisis calls into question the idea that cryptocurrencies, especially Bitcoin, serve as a safe haven during global turmoil. Although some advocates have long argued that Bitcoin’s decentralized nature makes it an ideal hedge against geopolitical risks and tensions, its recent behavior suggests otherwise.
However, not all analysts view this decline as a long-term setback. For instance, André Dragosch, European head of research at Bitwise, points out that Bitcoin has historically demonstrated resilience in recovering from geopolitical turbulence.
Bitcoin plummeted as the market reacted to the ongoing conflict between Israel and Iran. On a macroeconomic level, crypto-asset markets have been shaken by the escalation of geopolitical tensions between Iran and Israel, challenging the notion of ‘Uptober’ and raising doubts about the role of digital assets like cryptocurrencies during global crises.
As the conflict unfolds, its collateral effects are being felt across all financial markets, with some cryptocurrencies and ETFs experiencing considerable volatility.
Market Impact and Consolidations
The immediate response to Iran’s missile strike against Israel sent Bitcoin down to around $60,200, indicating a considerable 6% decline from recent highs of approximately $64,000. This drop was not limited to Bitcoin, as Ethereum and other altcoins also posted losses, with Ethereum falling by more than 4% and Solana down 5%.
The market turmoil triggered massive liquidations, with Coinglass reporting that $523.37 million was lost within just 24 hours. Long positions suffered the most, with $451 million liquidated compared to $71 million in short positions. This volatility resulted in the liquidation of 154,011 traders, demonstrating the significant impact of the ongoing crisis on the cryptocurrency market.
The rapid market decline has drastically altered investor sentiment. The cryptocurrency fear and greed index, a key measure for analyzing market sentiment, dropped from a “greed” level of 61 to a “fear” level within 42 days.
Additionally, U.S. spot Bitcoin ETFs recorded significant outflows, with withdrawals totaling $242.53 million on October 1 alone. This marked the largest outflow in nearly a month and the third largest in five months, signaling a broader pullback from crypto-assets amid heightened global uncertainty.
Macroeconomic Implications and Outlook
The current crisis calls into question the idea that cryptocurrencies, especially Bitcoin, serve as a safe haven during global turmoil. Although some advocates have long argued that Bitcoin’s decentralized nature makes it an ideal hedge against geopolitical risks and tensions, its recent behavior suggests otherwise.
However, not all analysts view this decline as a long-term setback. For instance, André Dragosch, European head of research at Bitwise, points out that Bitcoin has historically demonstrated resilience in recovering from geopolitical turbulence.
Oct 07 at 12:14
Dollar steady on payrolls hikes; euro eases on weak data
The U.S. dollar stabilized on Monday, holding on to the gains seen after Friday’s strong jobs report, at the start of a week that brings the release of key inflation data, as well as minutes from the Federal Reserve’s latest meeting.
Payrolls help boost the dollar
The growth in U.S. payrolls ended fears of a slowdown in the U.S. economy and served to reinforce the notion that the Federal Reserve will not need to cut interest rates sharply to sustain the economy, which served to boost the dollar.
According to the Fedwacth tool, traders largely dismissed bets on a further 50 basis point cut at the next Fed meeting and estimated the option of a 25 basis point cut at more than 90%.
This week, the focus will be on speeches by several Fed officials, inflation data and the minutes of the September meeting. The Fed cut rates by about 50 basis points at the meeting and signaled the beginning of an easing cycle, although it continues to say that future rate cuts will be data dependent.
Analysts at ING say in a note that “Friday’s extraordinary U.S. jobs report triggered the kind of repricing of rate expectations that we thought would materialize in a few weeks.”
“Markets no longer have an excuse to look through Fed Chair Jerome Powell’s pushback against the 50 basis point cuts, and are now finally aligned with the Dot Plot projections: 25bp cuts in November and December.”
The dollar, sheltering second, has similarly received a boost from the turmoil in the Middle East, with Israel carrying out bombing raids against Hezbollah targets in Lebanon and the Gaza Strip on Sunday, ahead of Monday’s one-year anniversary of the October 7 attacks that kicked off the war.
Weak German data hits the euro
In Europe, the EUR/USD, down 0.1% at 1.0965, and the euro weakened after German factory orders fell about 5.8% on month in August, another example of the economic difficulties facing the largest economy in the eurozone.
ECB chief economist Philip Lane, as well as board members Piero Cipollone and Jose Luis Escriva are scheduled to speak later on Monday, and are likely to follow President Christine Lagarde in signaling a rapid pace of additional easing.
GBP/USD retreated slightly to 1.3113 after suffering a 1.9% drop the previous week, posting its biggest decline since early 2023.
Bank of England chief economist Huw Pill said Friday that the central bank should only gradually cut interest rates, a day after it said Governor Andrew Bailey may move more aggressively to reduce borrowing costs.
Questions about the Bank of Japan’s rate hike.
USD/JPY fell 0.3% to 148.22, retreating after hitting its highest level since mid-August. The yen was hit by growing doubts about the Bank of Japan’s ability to continue raising interest rates in the coming months, especially amid uncertainty about the upcoming Japanese general election.
USD/CNY was virtually flat at 7.0176, with Chinese markets still closed for the Golden Week celebrations.
The U.S. dollar stabilized on Monday, holding on to the gains seen after Friday’s strong jobs report, at the start of a week that brings the release of key inflation data, as well as minutes from the Federal Reserve’s latest meeting.
Payrolls help boost the dollar
The growth in U.S. payrolls ended fears of a slowdown in the U.S. economy and served to reinforce the notion that the Federal Reserve will not need to cut interest rates sharply to sustain the economy, which served to boost the dollar.
According to the Fedwacth tool, traders largely dismissed bets on a further 50 basis point cut at the next Fed meeting and estimated the option of a 25 basis point cut at more than 90%.
This week, the focus will be on speeches by several Fed officials, inflation data and the minutes of the September meeting. The Fed cut rates by about 50 basis points at the meeting and signaled the beginning of an easing cycle, although it continues to say that future rate cuts will be data dependent.
Analysts at ING say in a note that “Friday’s extraordinary U.S. jobs report triggered the kind of repricing of rate expectations that we thought would materialize in a few weeks.”
“Markets no longer have an excuse to look through Fed Chair Jerome Powell’s pushback against the 50 basis point cuts, and are now finally aligned with the Dot Plot projections: 25bp cuts in November and December.”
The dollar, sheltering second, has similarly received a boost from the turmoil in the Middle East, with Israel carrying out bombing raids against Hezbollah targets in Lebanon and the Gaza Strip on Sunday, ahead of Monday’s one-year anniversary of the October 7 attacks that kicked off the war.
Weak German data hits the euro
In Europe, the EUR/USD, down 0.1% at 1.0965, and the euro weakened after German factory orders fell about 5.8% on month in August, another example of the economic difficulties facing the largest economy in the eurozone.
ECB chief economist Philip Lane, as well as board members Piero Cipollone and Jose Luis Escriva are scheduled to speak later on Monday, and are likely to follow President Christine Lagarde in signaling a rapid pace of additional easing.
GBP/USD retreated slightly to 1.3113 after suffering a 1.9% drop the previous week, posting its biggest decline since early 2023.
Bank of England chief economist Huw Pill said Friday that the central bank should only gradually cut interest rates, a day after it said Governor Andrew Bailey may move more aggressively to reduce borrowing costs.
Questions about the Bank of Japan’s rate hike.
USD/JPY fell 0.3% to 148.22, retreating after hitting its highest level since mid-August. The yen was hit by growing doubts about the Bank of Japan’s ability to continue raising interest rates in the coming months, especially amid uncertainty about the upcoming Japanese general election.
USD/CNY was virtually flat at 7.0176, with Chinese markets still closed for the Golden Week celebrations.
Oct 08 at 13:16
U.S. Stock Markets Down: Fed, Inflation, Earnings in Spotlight
U.S. stock index futures were lower on Monday, shedding some of the previous week’s gains following strong payrolls data, with attention focused on more hints on interest rates and corporate earnings in the coming days.
Wall Street rose sharply on Friday after better-than-expected nonfarm payrolls data eased concerns about a slowing U.S. economy but reduced the likelihood of sharper interest rate cuts in the coming months.
Goldman Sachs strategists cut their 12-month recession probability by 5 percentage points to 15% in the wake of the September jobs report.
“September’s strong employment gains and upward revisions have for now calmed fears that labor demand may be too weak to prevent the unemployment rate from trending higher,” the strategists reported in a note.
On Friday, the Dow Jones index rose 0.8%; the S&P 500 index gained 0.9%, just below record levels, and the NASDAQ Composite index rose 1.2%.
Fed Comments and CPI Inflation
This week, the focus will be on new signals from the Federal Reserve, with several policymakers taking the floor in the coming days. Rate-setting committee members Michelle Bowman and Neel Kashkari will speak on Monday, as will Raphael Bostic.
Their speeches will come ahead of the release of the minutes of the Fed’s September meeting, scheduled for Wednesday. While no rate cut was made, the minutes will provide insight into the Fed’s future policy direction.
This week will also see the release of consumer price index inflation data for September, which will likely influence estimates for the path of U.S. interest rates.
Banks Start the Third Quarter Earnings Season
This week marks the start of the third-quarter earnings season, with major banks JPMorgan Chase (JPM), Wells Fargo (WFC), and Bank of New York Mellon (BK) releasing their quarterly results next Friday. Markets will be watching for resilience in corporate earnings in the face of pressure from high interest rates and continued inflation.
Bullish investors expect the results to help justify the stock market’s rising valuations. The S&P 500 is up 20% so far this year and trading near record highs, despite recent volatility generated by heightened geopolitical tensions in the Middle East.
Oil Prices Rise
Oil prices rose again on Monday, adding to last week’s strong gains, as traders monitor continued tensions in the Middle East. Oil prices last week recorded their biggest weekly gain in nearly a year amid the growing threat of a regional war in the Middle East. Tensions have escalated in the region, with concerns over further conflict involving Iran and Hezbollah in response to recent developments.
U.S. stock index futures were lower on Monday, shedding some of the previous week’s gains following strong payrolls data, with attention focused on more hints on interest rates and corporate earnings in the coming days.
Wall Street rose sharply on Friday after better-than-expected nonfarm payrolls data eased concerns about a slowing U.S. economy but reduced the likelihood of sharper interest rate cuts in the coming months.
Goldman Sachs strategists cut their 12-month recession probability by 5 percentage points to 15% in the wake of the September jobs report.
“September’s strong employment gains and upward revisions have for now calmed fears that labor demand may be too weak to prevent the unemployment rate from trending higher,” the strategists reported in a note.
On Friday, the Dow Jones index rose 0.8%; the S&P 500 index gained 0.9%, just below record levels, and the NASDAQ Composite index rose 1.2%.
Fed Comments and CPI Inflation
This week, the focus will be on new signals from the Federal Reserve, with several policymakers taking the floor in the coming days. Rate-setting committee members Michelle Bowman and Neel Kashkari will speak on Monday, as will Raphael Bostic.
Their speeches will come ahead of the release of the minutes of the Fed’s September meeting, scheduled for Wednesday. While no rate cut was made, the minutes will provide insight into the Fed’s future policy direction.
This week will also see the release of consumer price index inflation data for September, which will likely influence estimates for the path of U.S. interest rates.
Banks Start the Third Quarter Earnings Season
This week marks the start of the third-quarter earnings season, with major banks JPMorgan Chase (JPM), Wells Fargo (WFC), and Bank of New York Mellon (BK) releasing their quarterly results next Friday. Markets will be watching for resilience in corporate earnings in the face of pressure from high interest rates and continued inflation.
Bullish investors expect the results to help justify the stock market’s rising valuations. The S&P 500 is up 20% so far this year and trading near record highs, despite recent volatility generated by heightened geopolitical tensions in the Middle East.
Oil Prices Rise
Oil prices rose again on Monday, adding to last week’s strong gains, as traders monitor continued tensions in the Middle East. Oil prices last week recorded their biggest weekly gain in nearly a year amid the growing threat of a regional war in the Middle East. Tensions have escalated in the region, with concerns over further conflict involving Iran and Hezbollah in response to recent developments.
Oct 08 at 13:17
Cryptocurrencies Exempted from VAT in the United Arab Emirates
The UAE has exempted cryptocurrency transfers and conversions from value-added tax (VAT), making it a more cryptocurrency-friendly jurisdiction for digital asset transactions. The amendments to the UAE’s VAT regulations will exempt transfers and conversions of digital assets, including cryptocurrencies.
On October 2, the UAE’s Federal Tax Authority (FTA) made public the amendments to the country’s VAT rules. According to business consultancy PwC, the new rules provide for VAT exemptions for additional services, including investment fund management and the transfer and conversion of virtual assets. PwC highlighted that the exemptions on the transfer and conversion of virtual assets will apply retroactively as of January 1, 2018.
Tax Recovery for Virtual Asset Companies
The audit firm detailed that in the UAE, virtual assets are defined as a “representation of value that can be traded or digitally transferred and can be used for investment purposes.”
However, the definition does not cover fiat currencies or financial securities.
The audit firm recommended that companies dealing in virtual assets analyze the exemption in their past VAT filings. PwC added that virtual asset companies should pay particular attention to the collection of their input tax.
UAE-based accounting and tax firm Finanshels noted that in the UAE, input tax collection authorizes registered companies to refund the VAT they have already paid on eligible business purchases.
In addition, PwC said that correcting historical returns may require voluntary disclosures by virtual asset companies.
United Arab Emirates Improves Cryptocurrency Regulations
In addition to VAT exemptions, UAE regulators have been modernizing and simplifying their rules on virtual assets. On September 9, the Dubai Virtual Assets Regulatory Authority (VARA) and the Securities and Commodities Authority (SCA), the UAE’s federal financial agency, reached an agreement to jointly supervise virtual asset service providers (VASPs). Under the agreement, VASPs operating in Dubai that acquire a license from VARA can also provide services in the rest of the UAE by being registered by default with the SCA.
Meanwhile, VARA has also tightened its rules on cryptocurrency trading. On September 26, the regulator stated that companies promoting investments in digital assets must incorporate a prominent notice in their material. The notice must highlight that “virtual assets may lose their value in whole or in part and are subject to extreme volatility.”
The new tax policies come amid efforts by the United Arab Emirates (UAE) to push for new regulations in the digital currency sector and transform itself into the next financial technology innovation hub. In 2022, Dubai became a pioneer in the region by establishing the Virtual Assets Regulatory Authority (VARA) and issuing a cryptocurrency regulatory framework.
The rules set a specific licensing regime for exchanges. Recently, the VARA tightened its rules on cryptocurrency trading, requiring companies promoting investments in digital assets to add a disclaimer to their material.
The UAE has exempted cryptocurrency transfers and conversions from value-added tax (VAT), making it a more cryptocurrency-friendly jurisdiction for digital asset transactions. The amendments to the UAE’s VAT regulations will exempt transfers and conversions of digital assets, including cryptocurrencies.
On October 2, the UAE’s Federal Tax Authority (FTA) made public the amendments to the country’s VAT rules. According to business consultancy PwC, the new rules provide for VAT exemptions for additional services, including investment fund management and the transfer and conversion of virtual assets. PwC highlighted that the exemptions on the transfer and conversion of virtual assets will apply retroactively as of January 1, 2018.
Tax Recovery for Virtual Asset Companies
The audit firm detailed that in the UAE, virtual assets are defined as a “representation of value that can be traded or digitally transferred and can be used for investment purposes.”
However, the definition does not cover fiat currencies or financial securities.
The audit firm recommended that companies dealing in virtual assets analyze the exemption in their past VAT filings. PwC added that virtual asset companies should pay particular attention to the collection of their input tax.
UAE-based accounting and tax firm Finanshels noted that in the UAE, input tax collection authorizes registered companies to refund the VAT they have already paid on eligible business purchases.
In addition, PwC said that correcting historical returns may require voluntary disclosures by virtual asset companies.
United Arab Emirates Improves Cryptocurrency Regulations
In addition to VAT exemptions, UAE regulators have been modernizing and simplifying their rules on virtual assets. On September 9, the Dubai Virtual Assets Regulatory Authority (VARA) and the Securities and Commodities Authority (SCA), the UAE’s federal financial agency, reached an agreement to jointly supervise virtual asset service providers (VASPs). Under the agreement, VASPs operating in Dubai that acquire a license from VARA can also provide services in the rest of the UAE by being registered by default with the SCA.
Meanwhile, VARA has also tightened its rules on cryptocurrency trading. On September 26, the regulator stated that companies promoting investments in digital assets must incorporate a prominent notice in their material. The notice must highlight that “virtual assets may lose their value in whole or in part and are subject to extreme volatility.”
The new tax policies come amid efforts by the United Arab Emirates (UAE) to push for new regulations in the digital currency sector and transform itself into the next financial technology innovation hub. In 2022, Dubai became a pioneer in the region by establishing the Virtual Assets Regulatory Authority (VARA) and issuing a cryptocurrency regulatory framework.
The rules set a specific licensing regime for exchanges. Recently, the VARA tightened its rules on cryptocurrency trading, requiring companies promoting investments in digital assets to add a disclaimer to their material.
Oct 08 at 13:17
Dollar falls from highs; euro gains on strong German data
The U.S. dollar declined on Tuesday, although it remained near seven-week highs, as market traders were simultaneously analyzing the Federal Reserve’s monetary policy estimates following the strong employment report the previous week.
The dollar seems to be taking a breather
Friday’s strong payrolls report has caused traders to reassess the Fed’s rate-cutting path, with the likelihood of another 50 basis point cut during November mostly ruled out in favor of a slightly more traditional 25 basis point reduction.
The benchmark 10-year Treasury yield, which shows the least hawkish expectations, held above 4% on Tuesday, while the two-year yield was at its highest level in more than a month.
This has helped boost the dollar, as has the escalation of tensions in the Middle East, which has hit risk sentiment.
Later this week, several members of the Federal Reserve will have their say, as will September’s inflation report and the U.S. central bank’s meeting the month before.
“We have seen a fairly limited impact on the FX market from US 10-year yields hitting the 4% mark, which appears to be the tail end of the payrolls-induced move that has already triggered some considerable repositioning in dollar crosses,” ING analysts said in a note.
“There is a possibility that the FX market will cease to be guided by rates now that the Fed’s new 25 basis point per meeting rate path has become the market benchmark. We suspect that this week’s inflation data this week will not cause major directional changes in the dollar, which may instead respond more to the turmoil in the Middle East, and the resulting moves in oil prices,“ the analysts added.” added the analysts.
The euro benefits from German industrial production.
In Europe, the EUR/USD rose 0.2% to 1.0995. The euro benefited from the release of better-than-expected industrial production data in Germany, as the August figure increased by more than 2.9% more than estimated compared to last month.
Moreover, the less volatile quarter-on-quarter comparison revealed that output was 1.3% lower in the June to August period than in the previous three months.
The European Central Bank meets next week and is expected to ease policy once again, having already cut rates twice this year, as inflation pressures have eased.
GBP/USD was up 0.2% at 1.3104, moving away from Monday’s three-week low of 1.3059.
Data released Tuesday revealed that UK retail sales rose at their fastest pace in six months during September.
Total sales rose 2% year-on-year, according to the British Retail Consortium, helped by a 3.1% rebound in food retailers, while non-food transactions fell 0.3%.
Yuan retreats after the vacations
USD/JPY was down nearly 0.4% to 147.55, able to recover some of the strong gains posted the previous week.
Data related to wage growth and household spending likewise helped Japan’s currency. USD/CNY rose 0.5% to 7.0506 as trading resumed after a week.
Sentiment towards China was boosted by a series of stimulus measures from Beijing, including lower interest rates, although these put further pressure on the yuan, especially as US interest rates are now expected to continue to rise.
The U.S. dollar declined on Tuesday, although it remained near seven-week highs, as market traders were simultaneously analyzing the Federal Reserve’s monetary policy estimates following the strong employment report the previous week.
The dollar seems to be taking a breather
Friday’s strong payrolls report has caused traders to reassess the Fed’s rate-cutting path, with the likelihood of another 50 basis point cut during November mostly ruled out in favor of a slightly more traditional 25 basis point reduction.
The benchmark 10-year Treasury yield, which shows the least hawkish expectations, held above 4% on Tuesday, while the two-year yield was at its highest level in more than a month.
This has helped boost the dollar, as has the escalation of tensions in the Middle East, which has hit risk sentiment.
Later this week, several members of the Federal Reserve will have their say, as will September’s inflation report and the U.S. central bank’s meeting the month before.
“We have seen a fairly limited impact on the FX market from US 10-year yields hitting the 4% mark, which appears to be the tail end of the payrolls-induced move that has already triggered some considerable repositioning in dollar crosses,” ING analysts said in a note.
“There is a possibility that the FX market will cease to be guided by rates now that the Fed’s new 25 basis point per meeting rate path has become the market benchmark. We suspect that this week’s inflation data this week will not cause major directional changes in the dollar, which may instead respond more to the turmoil in the Middle East, and the resulting moves in oil prices,“ the analysts added.” added the analysts.
The euro benefits from German industrial production.
In Europe, the EUR/USD rose 0.2% to 1.0995. The euro benefited from the release of better-than-expected industrial production data in Germany, as the August figure increased by more than 2.9% more than estimated compared to last month.
Moreover, the less volatile quarter-on-quarter comparison revealed that output was 1.3% lower in the June to August period than in the previous three months.
The European Central Bank meets next week and is expected to ease policy once again, having already cut rates twice this year, as inflation pressures have eased.
GBP/USD was up 0.2% at 1.3104, moving away from Monday’s three-week low of 1.3059.
Data released Tuesday revealed that UK retail sales rose at their fastest pace in six months during September.
Total sales rose 2% year-on-year, according to the British Retail Consortium, helped by a 3.1% rebound in food retailers, while non-food transactions fell 0.3%.
Yuan retreats after the vacations
USD/JPY was down nearly 0.4% to 147.55, able to recover some of the strong gains posted the previous week.
Data related to wage growth and household spending likewise helped Japan’s currency. USD/CNY rose 0.5% to 7.0506 as trading resumed after a week.
Sentiment towards China was boosted by a series of stimulus measures from Beijing, including lower interest rates, although these put further pressure on the yuan, especially as US interest rates are now expected to continue to rise.
Oct 15 at 14:15
Dollar Falls from Highs, Euro Under Pressure on Weak Inflation Data
The U.S. dollar fell from recent highs on Tuesday as weak regional inflation data weighed on the euro ahead of the European Central Bank (ECB) meeting.
Dollar Falls from Highs
In recent weeks, demand for the U.S. dollar has been boosted by employment and inflation data, which suggest a slower pace of rate cuts by the Federal Reserve. This follows the Fed’s decision to cut rates by 50 basis points in September, marking the start of an easing cycle.
Fed Governor Christopher Waller reiterated this cautious approach on Monday, emphasizing the need for more gradual rate cuts in the coming months. Waller suggested that the central bank should reduce rates only slowly over time.
The U.S. economic calendar is relatively quiet on Tuesday, although several Federal Reserve speakers, including FOMC members Mary Daly and Raphael Bostic, are scheduled to speak.
According to CME Fedwatch, traders see an 86.8% chance of a 25 basis point rate cut by November, with a 13.2% chance of rates remaining unchanged.
Euro Declines Ahead of ECB Meeting
In Europe, EUR/USD was down 0.2% to 1.0892 following the release of weak regional inflation data, which increased the likelihood of further rate cuts by the ECB, starting as soon as Thursday.
Consumer prices in France fell more than initially estimated in September, with the harmonized consumer price index revised down to 1.4%, its lowest level since early 2021. Similarly, consumer prices in Spain fell below the ECB’s 2.0% target, while wholesale prices in Germany declined by 1.6% in September compared to the same period last year, indicating minimal underlying price pressures in the eurozone’s largest economy.
The ECB has already cut rates twice this year, and financial markets fully expect another 3.5% deposit rate cut later this week.
“The euro is losing ground ahead of Thursday’s ECB meeting and has now made a decisive break below 1.090,” analysts at ING said in a note.
“Rising rate differentials with the dollar are clearly shifting EUR/USD strategic positioning, with CFTC data showing that net long positions have fallen from 13.5% to 5.9% of open interest since the beginning of September.”
GBP/USD Slightly Higher
GBP/USD rose 0.1% to 1.3070 after the UK unemployment rate unexpectedly fell to 4% in August, down from 4.1%, indicating underlying strength in the labor market. However, the decline in average earnings could pave the way for a further interest rate cut when the Bank of England meets next month.
The fall in average earnings may open the door to an interest rate cut when the Bank of England meets in November, provided Wednesday’s consumer inflation data does not deliver an upside surprise.
Yuan Under Pressure
USD/CNY rose 0.4% to 7.1156, with the yuan under pressure due to uncertainty surrounding China’s fiscal stimulus plans. The Ministry of Finance has yet to provide key details regarding the timing and phasing of the anticipated measures.
China’s economy has also been impacted by a series of weak economic data. Monday’s figures showed that China’s trade balance contracted more than expected in September, with a sharp slowdown in export growth. Previous data indicated that the country’s disinflationary trend continues.
USD/JPY fell 0.4% to 149.11, with the yen recovering slightly after the currency pair threatened to break above resistance at the 150 level.
The U.S. dollar fell from recent highs on Tuesday as weak regional inflation data weighed on the euro ahead of the European Central Bank (ECB) meeting.
Dollar Falls from Highs
In recent weeks, demand for the U.S. dollar has been boosted by employment and inflation data, which suggest a slower pace of rate cuts by the Federal Reserve. This follows the Fed’s decision to cut rates by 50 basis points in September, marking the start of an easing cycle.
Fed Governor Christopher Waller reiterated this cautious approach on Monday, emphasizing the need for more gradual rate cuts in the coming months. Waller suggested that the central bank should reduce rates only slowly over time.
The U.S. economic calendar is relatively quiet on Tuesday, although several Federal Reserve speakers, including FOMC members Mary Daly and Raphael Bostic, are scheduled to speak.
According to CME Fedwatch, traders see an 86.8% chance of a 25 basis point rate cut by November, with a 13.2% chance of rates remaining unchanged.
Euro Declines Ahead of ECB Meeting
In Europe, EUR/USD was down 0.2% to 1.0892 following the release of weak regional inflation data, which increased the likelihood of further rate cuts by the ECB, starting as soon as Thursday.
Consumer prices in France fell more than initially estimated in September, with the harmonized consumer price index revised down to 1.4%, its lowest level since early 2021. Similarly, consumer prices in Spain fell below the ECB’s 2.0% target, while wholesale prices in Germany declined by 1.6% in September compared to the same period last year, indicating minimal underlying price pressures in the eurozone’s largest economy.
The ECB has already cut rates twice this year, and financial markets fully expect another 3.5% deposit rate cut later this week.
“The euro is losing ground ahead of Thursday’s ECB meeting and has now made a decisive break below 1.090,” analysts at ING said in a note.
“Rising rate differentials with the dollar are clearly shifting EUR/USD strategic positioning, with CFTC data showing that net long positions have fallen from 13.5% to 5.9% of open interest since the beginning of September.”
GBP/USD Slightly Higher
GBP/USD rose 0.1% to 1.3070 after the UK unemployment rate unexpectedly fell to 4% in August, down from 4.1%, indicating underlying strength in the labor market. However, the decline in average earnings could pave the way for a further interest rate cut when the Bank of England meets next month.
The fall in average earnings may open the door to an interest rate cut when the Bank of England meets in November, provided Wednesday’s consumer inflation data does not deliver an upside surprise.
Yuan Under Pressure
USD/CNY rose 0.4% to 7.1156, with the yuan under pressure due to uncertainty surrounding China’s fiscal stimulus plans. The Ministry of Finance has yet to provide key details regarding the timing and phasing of the anticipated measures.
China’s economy has also been impacted by a series of weak economic data. Monday’s figures showed that China’s trade balance contracted more than expected in September, with a sharp slowdown in export growth. Previous data indicated that the country’s disinflationary trend continues.
USD/JPY fell 0.4% to 149.11, with the yen recovering slightly after the currency pair threatened to break above resistance at the 150 level.
Oct 15 at 14:15
U.S. stock markets stabilize ahead of quarterly earnings results
U.S. stock index futures and equities stabilized on Tuesday, consolidating after a rally in technology stocks moved to all-time highs on Wall Street last session ahead of some major company data.
The major indexes posted solid gains on Monday, supported by strong gains in major technology vlores, with market favorite Nvidia (NVDA) rising to an all-time high, coming close to replacing iPhone maker Apple (AAOL) as the world’s most valuable company.
The S&P 500 rose 0.8% to an all-time high, the Dow Jones Industrial Average rose 0.5% to an all-time high above 43,000 points, while the NASDAQ Composite rose 0.9% again, close to the all-time highs achieved earlier in the year.
In addition to technology gains, stock markets were also boosted by continued bets that the Federal Reserve will cut interest rates next month.
Q3 earnings in the spotlight
Investors’ attention is now focused on the third quarter earnings season, which kicks off in earnest on Tuesday.
Financial giants Bank of America (BAC), Goldman Sachs (GS), Citigroup (C) and Charles Schwab (SCHW) will report their results on Tuesday, as will Johnson & Johnson (JNJ), United Airlines (UAL), Unitedhealth (UNH) and Walgreens Boots Alliance (WBA).
Morgan Stanley (MS) rounds out bank earnings on Wednesday, while Netflix (NFLX), Blackstone (BX) and American Express (AXP) will release results later in the week.
Investors will be watching to see if company earnings persevere despite the backdrop of pressure from high interest rates and sticky inflation.
This week, aside from earnings, attention will focus on retail sales data, as well as speeches from a number of Federal Reserve officials, looking for more signals on the economy along with interest rates.
Oil prices fall on demand fears
Oil prices fell sharply on Tuesday, adding to their recent losses on concerns about slowing demand growth, particularly from top exporter China.
These fears were compounded by the Organization of the Petroleum Exporting Countries cutting its crude oil demand expectations for the third successive month.
Oil prices were also influenced by the risk premium that traders discounted on Monday’s news that Israel will not attack Iran’s oil and nuclear facilities. Such an attack would escalate the conflict and alarm investors about a supply disruption from the oil-rich region.
U.S. stock index futures and equities stabilized on Tuesday, consolidating after a rally in technology stocks moved to all-time highs on Wall Street last session ahead of some major company data.
The major indexes posted solid gains on Monday, supported by strong gains in major technology vlores, with market favorite Nvidia (NVDA) rising to an all-time high, coming close to replacing iPhone maker Apple (AAOL) as the world’s most valuable company.
The S&P 500 rose 0.8% to an all-time high, the Dow Jones Industrial Average rose 0.5% to an all-time high above 43,000 points, while the NASDAQ Composite rose 0.9% again, close to the all-time highs achieved earlier in the year.
In addition to technology gains, stock markets were also boosted by continued bets that the Federal Reserve will cut interest rates next month.
Q3 earnings in the spotlight
Investors’ attention is now focused on the third quarter earnings season, which kicks off in earnest on Tuesday.
Financial giants Bank of America (BAC), Goldman Sachs (GS), Citigroup (C) and Charles Schwab (SCHW) will report their results on Tuesday, as will Johnson & Johnson (JNJ), United Airlines (UAL), Unitedhealth (UNH) and Walgreens Boots Alliance (WBA).
Morgan Stanley (MS) rounds out bank earnings on Wednesday, while Netflix (NFLX), Blackstone (BX) and American Express (AXP) will release results later in the week.
Investors will be watching to see if company earnings persevere despite the backdrop of pressure from high interest rates and sticky inflation.
This week, aside from earnings, attention will focus on retail sales data, as well as speeches from a number of Federal Reserve officials, looking for more signals on the economy along with interest rates.
Oil prices fall on demand fears
Oil prices fell sharply on Tuesday, adding to their recent losses on concerns about slowing demand growth, particularly from top exporter China.
These fears were compounded by the Organization of the Petroleum Exporting Countries cutting its crude oil demand expectations for the third successive month.
Oil prices were also influenced by the risk premium that traders discounted on Monday’s news that Israel will not attack Iran’s oil and nuclear facilities. Such an attack would escalate the conflict and alarm investors about a supply disruption from the oil-rich region.
Oct 16 at 14:49
Today’s Stocks to Watch: J&J, Boeing, and Goldman Sachs
Key points:
A number of energy stocks and Chinese companies posted significant market declines.
Boeing and Goldman Sachs shares posted notable gains.
UnitedHealth and J&J readjusted their earnings forecasts due to external factors.
Boeing Aims to Raise $10 Billion
Boeing (BA) plans to raise at least $10 billion through the sale of new shares. This strategy aims to stabilize its finances after a period of instability. Shares rose nearly 1% in after-hours trading.
Goldman Sachs Reports a 45% Increase in Profits
Goldman Sachs (GS) announced a 45% increase in quarterly earnings, exceeding market expectations. Stocks were up more than 3% in pre-market trading.
Bank of America Beats Expectations Despite Profit Decline
Bank of America (BAC) posted a decline in quarterly earnings, despite beating expectations. The stock was up nearly 2% in pre-market trading.
UnitedHealth Revises Profit Forecast Following Cyberattack
UnitedHealth (UNH) lowered its earnings expectations due to ongoing disruptions caused by a cyberattack. Stocks were down more than 3% in after-hours trading.
Johnson & Johnson Posts Profit but Cuts Annual Outlook
Johnson & Johnson (JNJ) reported better-than-expected quarterly sales and earnings but reduced its annual profit forecast. Stocks were down about 1% in after-hours trading.
Walgreens Boots Alliance Confirms Adjusted Earnings
Walgreens Boots Alliance (WBA) reported a quarterly loss of $3 billion despite beating adjusted profit and sales forecasts. Stocks rebounded more than 5% in pre-market trading.
Chinese Companies Fall as Beijing Reduces Stimulus
Stocks of U.S.-listed Alibaba (BABA), PDD (PDD), and NIO (NIO) declined in pre-market trading, attributed to cooling interest in Beijing’s economic stimulus efforts.
Trump Media & Technology Rebounds After Recent Gains
Stocks of Trump Media & Technology (DJT), parent company of Truth Social, rose in pre-market trading following an 18% gain on Monday. The rise is tied to the perception that Donald Trump holds a slight edge in the election, as well as a recovery from recent losses.
Energy Companies Retreat on Falling Oil Prices
Stocks of Occidental Petroleum (OXY) and Diamondback Energy (FANG) were down in pre-market trading due to lower oil prices. Hopes are rising that Israel’s planned attack on Iran will not impact nuclear or oil facilities.
Key points:
A number of energy stocks and Chinese companies posted significant market declines.
Boeing and Goldman Sachs shares posted notable gains.
UnitedHealth and J&J readjusted their earnings forecasts due to external factors.
Boeing Aims to Raise $10 Billion
Boeing (BA) plans to raise at least $10 billion through the sale of new shares. This strategy aims to stabilize its finances after a period of instability. Shares rose nearly 1% in after-hours trading.
Goldman Sachs Reports a 45% Increase in Profits
Goldman Sachs (GS) announced a 45% increase in quarterly earnings, exceeding market expectations. Stocks were up more than 3% in pre-market trading.
Bank of America Beats Expectations Despite Profit Decline
Bank of America (BAC) posted a decline in quarterly earnings, despite beating expectations. The stock was up nearly 2% in pre-market trading.
UnitedHealth Revises Profit Forecast Following Cyberattack
UnitedHealth (UNH) lowered its earnings expectations due to ongoing disruptions caused by a cyberattack. Stocks were down more than 3% in after-hours trading.
Johnson & Johnson Posts Profit but Cuts Annual Outlook
Johnson & Johnson (JNJ) reported better-than-expected quarterly sales and earnings but reduced its annual profit forecast. Stocks were down about 1% in after-hours trading.
Walgreens Boots Alliance Confirms Adjusted Earnings
Walgreens Boots Alliance (WBA) reported a quarterly loss of $3 billion despite beating adjusted profit and sales forecasts. Stocks rebounded more than 5% in pre-market trading.
Chinese Companies Fall as Beijing Reduces Stimulus
Stocks of U.S.-listed Alibaba (BABA), PDD (PDD), and NIO (NIO) declined in pre-market trading, attributed to cooling interest in Beijing’s economic stimulus efforts.
Trump Media & Technology Rebounds After Recent Gains
Stocks of Trump Media & Technology (DJT), parent company of Truth Social, rose in pre-market trading following an 18% gain on Monday. The rise is tied to the perception that Donald Trump holds a slight edge in the election, as well as a recovery from recent losses.
Energy Companies Retreat on Falling Oil Prices
Stocks of Occidental Petroleum (OXY) and Diamondback Energy (FANG) were down in pre-market trading due to lower oil prices. Hopes are rising that Israel’s planned attack on Iran will not impact nuclear or oil facilities.
Oct 16 at 14:49
United Arab Emirates Approves First Dirham-Linked Stablecoin
AED Stablecoin Company announced that it has received the first approval from the UAE Central Bank to issue a dirham-backed stablecoin.
The United Arab Emirates (UAE) will soon see its first regulated stablecoin.
AED Stablecoin LLC has announced that it has received approval in principle from the UAE Central Bank to issue and establish its own dirham-linked stablecoin digital currency.
In a statement issued on Monday, the company described itself as a pioneer for obtaining permission to become the first authorized entity in the region to launch a stablecoin backed by reserves of the local currency. The authorization issued by the central bank falls under its framework for regulating payment token services, according to the statement.
Dubbed AE Coin, the new currency promises to revolutionize financial services by offering unprecedented stability, security, and efficiency, the statement continues.
“As a stable, regulated currency, it provides secure and seamless payment solutions while fostering the growth of the UAE’s digital economy,” the statement reads. Pegged to a fiat currency, AE Coin will be backed by “transparent reserves” of the dirham and subject to “regular audits,” the company assures.
The token will offer fast and low-cost transactions, with potential use for various purposes, including business-to-business payments, individual transactions, and investments. The stablecoin aims to foster economic growth and innovation in the UAE by providing a secure and efficient digital currency, the issuer said.
AED Stablecoin added that its token will offer additional features, such as integration with the decentralized finance ecosystem (DeFi), allowing users to make loans and credit transactions on decentralized platforms.
In addition, the ambitious roadmap includes integration with decentralized applications (dApps), listings on exchanges, and ongoing technological advancements. The company also stated its plans to form strategic partnerships and forge alliances with merchants to increase real-world use cases, making the coin more accessible for everyday transactions.
AE Coin is intended to support the UAE’s booming digital economy, enabling simpler and more secure payments that contribute to the country’s financial innovation.
Interest in Stablecoins Grows in the UAE
The news comes at a time of global growth for stablecoins, a type of digital token built on blockchain technology that, unlike most cryptocurrencies, maintains a stable price, often with parity to a fiat currency such as the U.S. dollar.
Banks and other financial institutions in traditional finance have been actively exploring transactions with this class of tokens, as well as issuing their own stablecoins. Additionally, within the cryptocurrency industry, companies such as Ripple are working to advance this field.
Tether’s USDT dominates the stablecoin market, which is valued at more than $170 billion, with a current capitalization of $119 billion, according to CoinMarketCap data.
This development aligns with the UAE’s efforts to position itself as a global hub for cryptocurrency and Web3. Local regulators have been implementing regulatory policies that are more favorable to the new asset class. Dubai has introduced a sector-specific framework with a licensing system for digital currency exchanges.
Earlier this year, the UAE Central Bank’s board of directors approved a new system for overseeing and licensing stablecoins, raising concerns about potential restrictions on using cryptocurrencies other than authorized dirham-linked tokens as payment mechanisms.
A few days ago, UAE regulators removed VAT from cryptocurrency transactions.
Tether had already signaled its intention to launch a dirham-linked stablecoin when it announced a partnership in August with an Abu Dhabi-based company to advance these plans.
AED Stablecoin Company announced that it has received the first approval from the UAE Central Bank to issue a dirham-backed stablecoin.
The United Arab Emirates (UAE) will soon see its first regulated stablecoin.
AED Stablecoin LLC has announced that it has received approval in principle from the UAE Central Bank to issue and establish its own dirham-linked stablecoin digital currency.
In a statement issued on Monday, the company described itself as a pioneer for obtaining permission to become the first authorized entity in the region to launch a stablecoin backed by reserves of the local currency. The authorization issued by the central bank falls under its framework for regulating payment token services, according to the statement.
Dubbed AE Coin, the new currency promises to revolutionize financial services by offering unprecedented stability, security, and efficiency, the statement continues.
“As a stable, regulated currency, it provides secure and seamless payment solutions while fostering the growth of the UAE’s digital economy,” the statement reads. Pegged to a fiat currency, AE Coin will be backed by “transparent reserves” of the dirham and subject to “regular audits,” the company assures.
The token will offer fast and low-cost transactions, with potential use for various purposes, including business-to-business payments, individual transactions, and investments. The stablecoin aims to foster economic growth and innovation in the UAE by providing a secure and efficient digital currency, the issuer said.
AED Stablecoin added that its token will offer additional features, such as integration with the decentralized finance ecosystem (DeFi), allowing users to make loans and credit transactions on decentralized platforms.
In addition, the ambitious roadmap includes integration with decentralized applications (dApps), listings on exchanges, and ongoing technological advancements. The company also stated its plans to form strategic partnerships and forge alliances with merchants to increase real-world use cases, making the coin more accessible for everyday transactions.
AE Coin is intended to support the UAE’s booming digital economy, enabling simpler and more secure payments that contribute to the country’s financial innovation.
Interest in Stablecoins Grows in the UAE
The news comes at a time of global growth for stablecoins, a type of digital token built on blockchain technology that, unlike most cryptocurrencies, maintains a stable price, often with parity to a fiat currency such as the U.S. dollar.
Banks and other financial institutions in traditional finance have been actively exploring transactions with this class of tokens, as well as issuing their own stablecoins. Additionally, within the cryptocurrency industry, companies such as Ripple are working to advance this field.
Tether’s USDT dominates the stablecoin market, which is valued at more than $170 billion, with a current capitalization of $119 billion, according to CoinMarketCap data.
This development aligns with the UAE’s efforts to position itself as a global hub for cryptocurrency and Web3. Local regulators have been implementing regulatory policies that are more favorable to the new asset class. Dubai has introduced a sector-specific framework with a licensing system for digital currency exchanges.
Earlier this year, the UAE Central Bank’s board of directors approved a new system for overseeing and licensing stablecoins, raising concerns about potential restrictions on using cryptocurrencies other than authorized dirham-linked tokens as payment mechanisms.
A few days ago, UAE regulators removed VAT from cryptocurrency transactions.
Tether had already signaled its intention to launch a dirham-linked stablecoin when it announced a partnership in August with an Abu Dhabi-based company to advance these plans.
Oct 16 at 14:54
Dollar Gains on Cut in Rate Expectations, Pound Falls on Inflation
The U.S. dollar rose on Wednesday, trading near two-month highs on expectations that the Federal Reserve will slightly cut interest rates this year, while the pound slipped after positive inflation data.
Dollar Benefits from Expectations of a Rate Cut
Recent data indicating a resilient economy, combined with slightly higher-than-expected inflation in September, has led market participants to reduce their bets on a sharp cut in U.S. interest rates.
Adding to these expectations on Tuesday were comments from Atlanta Fed President Raphael Bostic, who stated that he anticipated only one more interest rate cut of 25 basis points this year when he updated his forecast for last month’s Fed meeting.
Most market participants expect two more cuts this year, totaling 50 basis points, and traders are currently betting with a 92% probability on a 25-basis-point cut at the next Fed policy meeting on Nov. 7, with an 8% chance of no change, according to CME Group’s FedWatch tool.
Pound Falls After Inflation Release
In Europe, GBP/USD fell 0.5% to 1.3003 after data revealed that U.K. inflation dipped more than expected in September, setting the stage for a possible rate cut in the coming month.
The U.K. inflation rate dropped to 1.7% year-over-year, down from an estimated 1.9% and from 2.2% the previous month.
This marks the first time it has fallen below the Bank of England’s 2% target since April 2021 and follows earlier data this week showing that U.K. wages grew at the slowest pace in more than two years.
“The data is unambiguously dovish for the Bank of England and paves the way for rate cuts at the remaining two meetings this year (November and December),” ING analysts stated in a note.
“Given Governor Andrew Bailey’s comments earlier this month suggesting that the BoE may accelerate the pace of easing, markets may start to consider the possibility of a 50-basis-point rate cut in November.”
EUR/USD Edges Lower Ahead of ECB Meeting
EUR/USD was down 0.1% to 1.0882 ahead of Thursday’s European Central Bank (ECB) meeting.
The ECB has already cut rates twice this year, and financial markets have almost fully priced in a 3.5% deposit rate cut this week.
“EUR/USD is predominantly driven by external factors. The substantial drop in oil prices has reduced the potential for further downside from market influences, but we continue to believe that positioning ahead of the U.S. election may favor a weaker EUR/USD,” ING mentioned.
Yuan Softens Amid Weekly Losses
USD/CNY fell slightly to 7.1179, with the yuan maintaining its losses for the week as sentiment worsened over China’s plans for more stimulus.
China’s Finance Ministry announced a series of fiscal measures to boost growth, although it did not provide specifics on the timing or scale of the estimated measures, raising uncertainty about their effectiveness.
USD/JPY Nears Resistance Level
USD/JPY rose 0.2% to 149.43, approaching the resistance level of 150.
Consumer inflation data due later in the week is expected to provide more insight into the Bank of Japan’s plans regarding potential further rate hikes.
The U.S. dollar rose on Wednesday, trading near two-month highs on expectations that the Federal Reserve will slightly cut interest rates this year, while the pound slipped after positive inflation data.
Dollar Benefits from Expectations of a Rate Cut
Recent data indicating a resilient economy, combined with slightly higher-than-expected inflation in September, has led market participants to reduce their bets on a sharp cut in U.S. interest rates.
Adding to these expectations on Tuesday were comments from Atlanta Fed President Raphael Bostic, who stated that he anticipated only one more interest rate cut of 25 basis points this year when he updated his forecast for last month’s Fed meeting.
Most market participants expect two more cuts this year, totaling 50 basis points, and traders are currently betting with a 92% probability on a 25-basis-point cut at the next Fed policy meeting on Nov. 7, with an 8% chance of no change, according to CME Group’s FedWatch tool.
Pound Falls After Inflation Release
In Europe, GBP/USD fell 0.5% to 1.3003 after data revealed that U.K. inflation dipped more than expected in September, setting the stage for a possible rate cut in the coming month.
The U.K. inflation rate dropped to 1.7% year-over-year, down from an estimated 1.9% and from 2.2% the previous month.
This marks the first time it has fallen below the Bank of England’s 2% target since April 2021 and follows earlier data this week showing that U.K. wages grew at the slowest pace in more than two years.
“The data is unambiguously dovish for the Bank of England and paves the way for rate cuts at the remaining two meetings this year (November and December),” ING analysts stated in a note.
“Given Governor Andrew Bailey’s comments earlier this month suggesting that the BoE may accelerate the pace of easing, markets may start to consider the possibility of a 50-basis-point rate cut in November.”
EUR/USD Edges Lower Ahead of ECB Meeting
EUR/USD was down 0.1% to 1.0882 ahead of Thursday’s European Central Bank (ECB) meeting.
The ECB has already cut rates twice this year, and financial markets have almost fully priced in a 3.5% deposit rate cut this week.
“EUR/USD is predominantly driven by external factors. The substantial drop in oil prices has reduced the potential for further downside from market influences, but we continue to believe that positioning ahead of the U.S. election may favor a weaker EUR/USD,” ING mentioned.
Yuan Softens Amid Weekly Losses
USD/CNY fell slightly to 7.1179, with the yuan maintaining its losses for the week as sentiment worsened over China’s plans for more stimulus.
China’s Finance Ministry announced a series of fiscal measures to boost growth, although it did not provide specifics on the timing or scale of the estimated measures, raising uncertainty about their effectiveness.
USD/JPY Nears Resistance Level
USD/JPY rose 0.2% to 149.43, approaching the resistance level of 150.
Consumer inflation data due later in the week is expected to provide more insight into the Bank of Japan’s plans regarding potential further rate hikes.
Oct 16 at 14:55
U.S. Stock Markets Steady After Tech Sector Losses, Earnings in Focus
U.S. equity markets stabilized on Wednesday after losses in technology stocks, driven by weak results from leading chipmaker ASML (ASML), pulled Wall Street away from its all-time highs.
Losses in the semiconductor sector hit Wall Street on Tuesday, with the NASDAQ Composite down nearly 1%, while both the S&P 500 and Dow Jones Industrial Average fell 0.8%, pulling back from their record highs.
The weakness followed semiconductor equipment maker ASML’s (ASML) decision to cut its full-year estimates due to weak demand for non-artificial intelligence chips. ASML’s stock dropped 16% on Tuesday and continued to decline in premarket trading on Wednesday.
Chipmakers were also rattled by reports that the U.S. government was considering limiting the sale of artificial intelligence-related chips to certain countries, a scenario that could hurt sales.
Nvidia (NVDA) fell 4.5%, while rivals AMD (AMD) and Intel (INTC) dropped about 5.2% and 3.3%, respectively.
Q3 Earnings Season Continues
Third-quarter earnings season continues this week. More results are expected on Wednesday, with Morgan Stanley (MS) rounding out banking sector earnings, following positive results from Goldman Sachs (GS), Citigroup (C), and Bank of America (BAC).
Abbott Laboratories (ABT) and U.S. Bancorp (USB) will also report their earnings on Wednesday, while Netflix (NFLX) is set to release its figures on Thursday.
Next week, earnings season will ramp up with reports from several key tech companies, including Alphabet (GOOGL) and Tesla (TSLA).
Beyond earnings, investors are also focused on speeches from several Federal Reserve officials, amid increasing speculation that interest rates may fall at a slower-than-expected pace.
Oil Stabilizes After Losses
Oil prices stabilized on Wednesday after recent sharp losses, as traders weighed signs of a potential easing of tensions in the Middle East and concerns about slowing demand growth from major oil exporter China.
Weak economic data from China has also added pressure, and both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) have revised their demand growth forecasts for the remainder of 2024 downward.
U.S. equity markets stabilized on Wednesday after losses in technology stocks, driven by weak results from leading chipmaker ASML (ASML), pulled Wall Street away from its all-time highs.
Losses in the semiconductor sector hit Wall Street on Tuesday, with the NASDAQ Composite down nearly 1%, while both the S&P 500 and Dow Jones Industrial Average fell 0.8%, pulling back from their record highs.
The weakness followed semiconductor equipment maker ASML’s (ASML) decision to cut its full-year estimates due to weak demand for non-artificial intelligence chips. ASML’s stock dropped 16% on Tuesday and continued to decline in premarket trading on Wednesday.
Chipmakers were also rattled by reports that the U.S. government was considering limiting the sale of artificial intelligence-related chips to certain countries, a scenario that could hurt sales.
Nvidia (NVDA) fell 4.5%, while rivals AMD (AMD) and Intel (INTC) dropped about 5.2% and 3.3%, respectively.
Q3 Earnings Season Continues
Third-quarter earnings season continues this week. More results are expected on Wednesday, with Morgan Stanley (MS) rounding out banking sector earnings, following positive results from Goldman Sachs (GS), Citigroup (C), and Bank of America (BAC).
Abbott Laboratories (ABT) and U.S. Bancorp (USB) will also report their earnings on Wednesday, while Netflix (NFLX) is set to release its figures on Thursday.
Next week, earnings season will ramp up with reports from several key tech companies, including Alphabet (GOOGL) and Tesla (TSLA).
Beyond earnings, investors are also focused on speeches from several Federal Reserve officials, amid increasing speculation that interest rates may fall at a slower-than-expected pace.
Oil Stabilizes After Losses
Oil prices stabilized on Wednesday after recent sharp losses, as traders weighed signs of a potential easing of tensions in the Middle East and concerns about slowing demand growth from major oil exporter China.
Weak economic data from China has also added pressure, and both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) have revised their demand growth forecasts for the remainder of 2024 downward.
Oct 16 at 14:55
Today’s stocks to watch: ASML, Morgan Stanley and Novocure
Key points:
Luxury stocks, including LVMH, suffer declines on challenging global markets
Morgan Stanley’s earnings beat estimates, outperforming among stocks
Novocure wins FDA approval, which boosts its shares considerably
LVMH faces challenges in global markets
LVMH (MC): LVMH, owner of Louis Vuitton, reported disappointing results and said it faces challenges in most markets. The French company’s shares, as well as other European luxury stocks, declined sharply.
Morgan Stanley beats expectations with earnings
Morgan Stanley (MS): The bank reported quarterly results that beat expectations, with outstanding growth in investment banking revenues. Morgan Stanley shares rose nearly 2.5% in pre-market trading, boosting investor confidence in its results.
Equifax, PPG Industries and Alcoa results
Equifax (EFX), PPG Industries (PPG) and Alcoa (AA) are expected to release their results after the markets close in the U.S. Forecasts are focused on their performance, which could shape investors’ perception of the sector as a whole.
Asml and the fall of the semiconductor sector’s stocks
ASML (ASML): The semiconductor equipment builder continues its slide, with its Amsterdam-listed stocks down around 4%. The fall adds to that of other global semiconductor stocks, such as TSMC and Tokyo Electron, which also showed unfavorable performance.
Intel and security concerns in China
Intel (INTC): The Cybersecurity Association of China said Intel products sold in China should undergo a cybersecurity review, saying the U.S. manufacturer poses a threat to national security. This has resulted in a drop of about 1.5% in Intel stocks in the premarket.
Novocure celebrates the approval of its lung cancer treatment
Novocure (NVCR): Novocure shares rose about a third in after-hours trading after the U.S. Food and Drug Administration cleared its Optune Lua portable lung cancer treatment. The clearance is a major step forward for the company and could strengthen its position in the market.
J.B. Hunt surprises with better-than-expected revenues
J.B. Hunt (JBHT): Transportation and logistics company J.B. Hunt announced a drop in quarterly revenue, but less than analysts expected. As a result, the stock rose nearly 7% in the premarket on the back of a solid performance versus market expectations.
Key points:
Luxury stocks, including LVMH, suffer declines on challenging global markets
Morgan Stanley’s earnings beat estimates, outperforming among stocks
Novocure wins FDA approval, which boosts its shares considerably
LVMH faces challenges in global markets
LVMH (MC): LVMH, owner of Louis Vuitton, reported disappointing results and said it faces challenges in most markets. The French company’s shares, as well as other European luxury stocks, declined sharply.
Morgan Stanley beats expectations with earnings
Morgan Stanley (MS): The bank reported quarterly results that beat expectations, with outstanding growth in investment banking revenues. Morgan Stanley shares rose nearly 2.5% in pre-market trading, boosting investor confidence in its results.
Equifax, PPG Industries and Alcoa results
Equifax (EFX), PPG Industries (PPG) and Alcoa (AA) are expected to release their results after the markets close in the U.S. Forecasts are focused on their performance, which could shape investors’ perception of the sector as a whole.
Asml and the fall of the semiconductor sector’s stocks
ASML (ASML): The semiconductor equipment builder continues its slide, with its Amsterdam-listed stocks down around 4%. The fall adds to that of other global semiconductor stocks, such as TSMC and Tokyo Electron, which also showed unfavorable performance.
Intel and security concerns in China
Intel (INTC): The Cybersecurity Association of China said Intel products sold in China should undergo a cybersecurity review, saying the U.S. manufacturer poses a threat to national security. This has resulted in a drop of about 1.5% in Intel stocks in the premarket.
Novocure celebrates the approval of its lung cancer treatment
Novocure (NVCR): Novocure shares rose about a third in after-hours trading after the U.S. Food and Drug Administration cleared its Optune Lua portable lung cancer treatment. The clearance is a major step forward for the company and could strengthen its position in the market.
J.B. Hunt surprises with better-than-expected revenues
J.B. Hunt (JBHT): Transportation and logistics company J.B. Hunt announced a drop in quarterly revenue, but less than analysts expected. As a result, the stock rose nearly 7% in the premarket on the back of a solid performance versus market expectations.
Oct 17 at 14:52
Elon Musk’s Tesla mobilizes 760 million in Bitcoin, raising fears of a massive liquidation
The cryptocurrency community is abuzz with rumors following Tesla’s transfer of a sizable portion of its Bitcoin (BTC) holdings. More than 11,500 BTC were transferred to wallets linked to the electric car giant to unknown addresses, raising concerns about a possible liquidation.
However, despite these transactions, there are no clear indications that Tesla intends to liquidate its assets. According to Arkham, the target wallets are newly created and not tied to any cryptocurrency exchange, suggesting that these moves could be strategic in nature.
Tesla sold Bitcoin on the OTC market?
The BTC in play, valued at around $760 million, nearly emptied Tesla’s cryptocurrency reserves, leaving only around $8 in its original wallets. This activity comes on top of two years of minimal movements.
Throughout history, Tesla’s engagement with Bitcoin has experienced several ups and downs. Initially, after buying $1.5 billion in Bitcoin in 2020, the electric car company sold approximately 10% in early 2021.
By July 2022, it had moved about 75% of its remaining BTC as market values fell from their peak in November 2021.
Currently, Tesla remains the fourth largest Bitcoin holder among publicly traded U.S. companies. Only MicroStrategy and mining companies Marathon Digital Holdings and Riot Platforms hold more.
The nature of Tesla’s recent trading suggests that they may be preparing for an over-the-counter (OTC) transaction. However, others also see this development as not entirely bearish.
“There is no evidence yet that this is an OTC trade. Even if it was, that means someone else bought it, so it’s not all bearish. Who knows,” says Sir Doge of the Coin.
Tesla’s involvement with Bitcoin goes beyond buying and selling. In 2021, it accepted Bitcoin payments for its vehicles for a short period.
However, it reversed this decision two months later, citing the environmental impact of Bitcoin mining. Its CEO, Elon Musk, has indicated that Tesla could return to accepting Bitcoin if mining becomes more environmentally friendly.
Despite the market’s initial trepidation, the Bitcoin price is holding steady, currently at around $67,000. This resistance is supported by significant inflows into spot Bitcoin ETFs.
On the day Tesla moved its BTC, spot Bitcoin ETFs booked inflows totaling $371 million. BlackRock’s iShares Bitcoin Trust fund alone raised $288.84 million, indicating strong investor appetite.
The cryptocurrency community is abuzz with rumors following Tesla’s transfer of a sizable portion of its Bitcoin (BTC) holdings. More than 11,500 BTC were transferred to wallets linked to the electric car giant to unknown addresses, raising concerns about a possible liquidation.
However, despite these transactions, there are no clear indications that Tesla intends to liquidate its assets. According to Arkham, the target wallets are newly created and not tied to any cryptocurrency exchange, suggesting that these moves could be strategic in nature.
Tesla sold Bitcoin on the OTC market?
The BTC in play, valued at around $760 million, nearly emptied Tesla’s cryptocurrency reserves, leaving only around $8 in its original wallets. This activity comes on top of two years of minimal movements.
Throughout history, Tesla’s engagement with Bitcoin has experienced several ups and downs. Initially, after buying $1.5 billion in Bitcoin in 2020, the electric car company sold approximately 10% in early 2021.
By July 2022, it had moved about 75% of its remaining BTC as market values fell from their peak in November 2021.
Currently, Tesla remains the fourth largest Bitcoin holder among publicly traded U.S. companies. Only MicroStrategy and mining companies Marathon Digital Holdings and Riot Platforms hold more.
The nature of Tesla’s recent trading suggests that they may be preparing for an over-the-counter (OTC) transaction. However, others also see this development as not entirely bearish.
“There is no evidence yet that this is an OTC trade. Even if it was, that means someone else bought it, so it’s not all bearish. Who knows,” says Sir Doge of the Coin.
Tesla’s involvement with Bitcoin goes beyond buying and selling. In 2021, it accepted Bitcoin payments for its vehicles for a short period.
However, it reversed this decision two months later, citing the environmental impact of Bitcoin mining. Its CEO, Elon Musk, has indicated that Tesla could return to accepting Bitcoin if mining becomes more environmentally friendly.
Despite the market’s initial trepidation, the Bitcoin price is holding steady, currently at around $67,000. This resistance is supported by significant inflows into spot Bitcoin ETFs.
On the day Tesla moved its BTC, spot Bitcoin ETFs booked inflows totaling $371 million. BlackRock’s iShares Bitcoin Trust fund alone raised $288.84 million, indicating strong investor appetite.
Oct 22 at 13:53
Dollar Gains on Cut in Rate Expectations, Pound Falls on Inflation
The U.S. dollar rose Monday, maintaining its recent strength as the election for U.S. president approaches and polls point to a growing likelihood that former President Donald Trump will be the winner.
Dollar Boosted by Confidence in Trump
The dollar remained near its highest levels in over two months, bolstered by growing confidence that U.S. interest rates will decrease at a slower pace than initially expected. This is further supported by recent data showing that the U.S. economy remains healthy.
According to the CME FedWatch tool, traders are largely expecting a 25 basis point rate cut by the Federal Reserve in November.
The dollar has also been buoyed by increasing expectations that Donald Trump will defeat Kamala Harris in the 2024 presidential election, now less than two weeks away.
It is considered possible that the tariff and tax policies proposed by Republican candidate Donald Trump could keep U.S. interest rates high and apply downward pressure on the currencies of trading partners.
“Currency markets appear to be positioning for a Trump victory in next month’s U.S. presidential election. October seems to have been a good month for Donald Trump in opinion polls, and the dollar is rising across the board,” ING analysts mentioned in a note.
Euro Hit by Weaker PPI in Germany
In Europe, EUR/USD was down about 0.1%, trading at 1.0850, after German producer prices fell more than expected in September, declining by 1.4% year-over-year instead of the estimated 1.0%.
European Central Bank policymakers are likely to cut the policy rate to a neutral level between 2% and 3%, although further cuts may be necessary if inflation continues to fall, ECB policymaker Gediminas Simkus mentioned on Monday.
“If disinflation processes take hold… it is possible that rates will be lower than the neutral level,” Simkus, governor of the Lithuanian central bank, told reporters in Vilnius.
GBP/USD fell 0.2%, reaching 1.3022, after data revealed that British property sales prices rose just 0.3% during October, well below the average monthly increase of 1.3%, according to property website Rightmove (RTMVY).
This, coupled with the unexpected drop in services inflation last week, signals that further rate cuts by the Bank of England are likely in the coming months, as the bank seeks to stimulate the U.K. economy.
Yuan Declines After PBoC Rate Cut
USD/CNY rose 0.2% to 7.1120 after the People’s Bank of China cut its benchmark lending rate by 25 basis points.
Over the past month, China has announced its most aggressive round of stimulus measures, including monetary and fiscal policies aimed at boosting sluggish growth.
USD/JPY rose about 0.3%, reaching 149.91, though it remained below the 150 level after briefly surpassing it the previous week for the first time since early August.
The U.S. dollar rose Monday, maintaining its recent strength as the election for U.S. president approaches and polls point to a growing likelihood that former President Donald Trump will be the winner.
Dollar Boosted by Confidence in Trump
The dollar remained near its highest levels in over two months, bolstered by growing confidence that U.S. interest rates will decrease at a slower pace than initially expected. This is further supported by recent data showing that the U.S. economy remains healthy.
According to the CME FedWatch tool, traders are largely expecting a 25 basis point rate cut by the Federal Reserve in November.
The dollar has also been buoyed by increasing expectations that Donald Trump will defeat Kamala Harris in the 2024 presidential election, now less than two weeks away.
It is considered possible that the tariff and tax policies proposed by Republican candidate Donald Trump could keep U.S. interest rates high and apply downward pressure on the currencies of trading partners.
“Currency markets appear to be positioning for a Trump victory in next month’s U.S. presidential election. October seems to have been a good month for Donald Trump in opinion polls, and the dollar is rising across the board,” ING analysts mentioned in a note.
Euro Hit by Weaker PPI in Germany
In Europe, EUR/USD was down about 0.1%, trading at 1.0850, after German producer prices fell more than expected in September, declining by 1.4% year-over-year instead of the estimated 1.0%.
European Central Bank policymakers are likely to cut the policy rate to a neutral level between 2% and 3%, although further cuts may be necessary if inflation continues to fall, ECB policymaker Gediminas Simkus mentioned on Monday.
“If disinflation processes take hold… it is possible that rates will be lower than the neutral level,” Simkus, governor of the Lithuanian central bank, told reporters in Vilnius.
GBP/USD fell 0.2%, reaching 1.3022, after data revealed that British property sales prices rose just 0.3% during October, well below the average monthly increase of 1.3%, according to property website Rightmove (RTMVY).
This, coupled with the unexpected drop in services inflation last week, signals that further rate cuts by the Bank of England are likely in the coming months, as the bank seeks to stimulate the U.K. economy.
Yuan Declines After PBoC Rate Cut
USD/CNY rose 0.2% to 7.1120 after the People’s Bank of China cut its benchmark lending rate by 25 basis points.
Over the past month, China has announced its most aggressive round of stimulus measures, including monetary and fiscal policies aimed at boosting sluggish growth.
USD/JPY rose about 0.3%, reaching 149.91, though it remained below the 150 level after briefly surpassing it the previous week for the first time since early August.
Oct 22 at 13:54
U.S. Stock Markets Plummet Amid a Flood of Third-Quarter Results
U.S. equity markets and stock indices were slightly lower on Monday, consolidating near record levels, with attention focused on a series of key results from the technology sector.
Positive results from banks and technology companies in the previous week had driven several of Wall Street’s major indices to record highs, with the S&P 500 and the Dow Jones both posting record highs on Friday. This marked a sixth straight week of gains, the best streak of the year for both indices.
However, momentum appears to be stalling somewhat, as anticipation of both the upcoming Federal Reserve meeting and the tight U.S. presidential election keeps investors cautious. High valuations for U.S. equities have also increased the likelihood of near-term losses.
Key Tech Results of the Week
Tesla (TSLA) will be the most prominent company reporting results this week, with the electric car maker’s earnings under the spotlight following its disappointing robotaxi unveiling earlier this month.
Tesla also missed expectations for third-quarter deliveries, which is expected to weigh on its quarterly earnings when it reports on Wednesday.
Several chipmakers will also release results this week. ASML (ASML) and TSMC (TSM), two key players in the sector, gave mixed signals regarding demand. Texas Instruments (TXN), Western Digital Corporation (WDC), and Lam Research Corp (LRCX) are among the relevant stocks reporting, while in the broader technology sector, IBM (IBM) will also announce its results this week.
Outside the technology sector, this week will feature earnings reports from major defense companies, including RTX Corp (RTX), Lockheed Martin (LMT), L3Harris Technologies (LHX), General Dynamics (GD), and Northrop Grumman (NOC).
Telecommunications giants T-Mobile US (TMUS), Verizon Communications (VZ), and AT&T (T) are also set to report earnings.
Aircraft manufacturer Boeing (NYSE) will report its results on Wednesday, with a particular focus on its cash position as the company faces its first significant strike in over a decade.
A Quiet Week for Economic Data
It will be a relatively quiet week on the U.S. economic calendar, although investors will receive updates on the housing sector with reports on new and existing home sales. Additionally, durable goods orders, consumer confidence, and initial jobless claims will be released.
On Wednesday, the Federal Reserve will release its Beige Book, a report on economic conditions across the central bank’s 12 districts.
Market participants will also hear from several regional Federal Reserve officials throughout the week, including Minneapolis Fed President Neel Kashkari, Kansas City Fed President Jeffrey Schmid, San Francisco Fed President Mary Daly, Philadelphia Fed President Patrick Harker, and Richmond Fed President Thomas Barkin.
Oil Shows Signs of Rebounding
Oil prices rose on Monday, recovering from last week’s steep losses, as energy traders weighed concerns over weak demand from major importer China and the evolving conflict in the Middle East.
Data released on Friday indicated that China’s economy grew in the third quarter at the slowest pace since early 2023, although September consumption and industrial production exceeded forecasts.
Uncertainty remains over how the conflict in the Middle East will develop and whether it will significantly impact oil supply in the region.
U.S. equity markets and stock indices were slightly lower on Monday, consolidating near record levels, with attention focused on a series of key results from the technology sector.
Positive results from banks and technology companies in the previous week had driven several of Wall Street’s major indices to record highs, with the S&P 500 and the Dow Jones both posting record highs on Friday. This marked a sixth straight week of gains, the best streak of the year for both indices.
However, momentum appears to be stalling somewhat, as anticipation of both the upcoming Federal Reserve meeting and the tight U.S. presidential election keeps investors cautious. High valuations for U.S. equities have also increased the likelihood of near-term losses.
Key Tech Results of the Week
Tesla (TSLA) will be the most prominent company reporting results this week, with the electric car maker’s earnings under the spotlight following its disappointing robotaxi unveiling earlier this month.
Tesla also missed expectations for third-quarter deliveries, which is expected to weigh on its quarterly earnings when it reports on Wednesday.
Several chipmakers will also release results this week. ASML (ASML) and TSMC (TSM), two key players in the sector, gave mixed signals regarding demand. Texas Instruments (TXN), Western Digital Corporation (WDC), and Lam Research Corp (LRCX) are among the relevant stocks reporting, while in the broader technology sector, IBM (IBM) will also announce its results this week.
Outside the technology sector, this week will feature earnings reports from major defense companies, including RTX Corp (RTX), Lockheed Martin (LMT), L3Harris Technologies (LHX), General Dynamics (GD), and Northrop Grumman (NOC).
Telecommunications giants T-Mobile US (TMUS), Verizon Communications (VZ), and AT&T (T) are also set to report earnings.
Aircraft manufacturer Boeing (NYSE) will report its results on Wednesday, with a particular focus on its cash position as the company faces its first significant strike in over a decade.
A Quiet Week for Economic Data
It will be a relatively quiet week on the U.S. economic calendar, although investors will receive updates on the housing sector with reports on new and existing home sales. Additionally, durable goods orders, consumer confidence, and initial jobless claims will be released.
On Wednesday, the Federal Reserve will release its Beige Book, a report on economic conditions across the central bank’s 12 districts.
Market participants will also hear from several regional Federal Reserve officials throughout the week, including Minneapolis Fed President Neel Kashkari, Kansas City Fed President Jeffrey Schmid, San Francisco Fed President Mary Daly, Philadelphia Fed President Patrick Harker, and Richmond Fed President Thomas Barkin.
Oil Shows Signs of Rebounding
Oil prices rose on Monday, recovering from last week’s steep losses, as energy traders weighed concerns over weak demand from major importer China and the evolving conflict in the Middle East.
Data released on Friday indicated that China’s economy grew in the third quarter at the slowest pace since early 2023, although September consumption and industrial production exceeded forecasts.
Uncertainty remains over how the conflict in the Middle East will develop and whether it will significantly impact oil supply in the region.
Oct 22 at 13:54
Market Highlights for the Week: Tesla, IMF, and Oil
Tesla will be the first of the “Magnificent Seven” to report in the corporate earnings season. Global financial leaders will meet in Washington, and oil prices remain volatile. Here’s a look at what’s happening in the markets this week.
Tesla Reports Its Results
As earnings season picks up momentum, Tesla (TSLA) will be one of the first major U.S. tech companies to release its results, which are expected on Wednesday after the close of the trading session.
Tesla’s stock has faced losses this month following the unveiling of its eagerly awaited robotaxis, which left some investors disappointed due to the lack of precise details. So far, Tesla shares have underperformed the S&P 500 Index (SPY), with a loss of approximately 11%, compared to the index’s 22.5% gain.
While investors have become more optimistic about the U.S. economy, thanks to strong jobs reports and the Fed’s 50 basis point cut last month, a weak earnings report from Tesla could reignite concerns about the valuations of tech stocks.
Elevated valuations— the S&P 500 trades at nearly 22 times forward earnings—combined with high corporate earnings forecasts and potential volatility from the upcoming U.S. presidential election could leave stocks vulnerable to a correction.
Gains in Semiconductors
This week, corporate earnings will take center stage, with results from Texas Instruments (TXN) and equipment company Lam Research (LRCX) being closely watched after a volatile week for the semiconductor sector.
Chip stocks fell on Tuesday after Europe’s largest tech company, ASML (ASML), forecasted lower-than-expected sales and bookings for 2025. However, the sector bounced back on Thursday after TSMC (TSM), a key producer of advanced chips used in artificial intelligence, announced a 54% increase in quarterly profit, surpassing expectations.
Semiconductor and related equipment stocks account for 11.5% of the S&P 500’s total weight.
Other companies reporting earnings next week include Coca-Cola (KO), IBM (IBM), General Motors (GM), and Verizon (VZ).
U.S. Economic Data
A relatively quiet week is expected on the U.S. economic calendar. However, investors will get updates on the housing sector through new and existing home sales reports. Additional data releases include durable goods orders, consumer confidence, and initial jobless claims.
On Wednesday, the Federal Reserve will release its Beige Book, a report on economic conditions across the central bank’s 12 districts.
Market participants will also have the opportunity to hear from several Fed officials throughout the week, including Minneapolis Fed President Neel Kashkari, Kansas City Fed President Jeffrey Schmid, San Francisco Fed President Mary Daly, Philadelphia Fed President Patrick Harker, and Richmond Fed President Thomas Barkin.
IMF Meetings
Central bank chiefs and finance ministers from around the world will gather in Washington starting Monday for the annual meetings of the International Monetary Fund (IMF) and the World Bank. They will discuss how countries can navigate an environment of low growth and high indebtedness.
Last week, the IMF warned that global public debt is estimated to exceed $100 trillion by the end of this year, driven by the United States and China.
The IMF noted that high debt levels could provoke adverse market reactions and limit countries’ ability to respond to economic shocks.
Meanwhile, Russian President Vladimir Putin will host a summit of BRICS group leaders starting Tuesday, as the Kremlin seeks support in its confrontation with the West. Russia says that leaders from Brazil, India, China, South Africa, Egypt, the United Arab Emirates, and Saudi Arabia—who collectively account for a third of global economic output—will attend.
Oil Prices
Oil prices remain under pressure after a roughly 7% decline last week, as energy traders assess weak demand from major importer China and the ongoing conflict in the Middle East.
Data released on Friday showed that China’s economy grew at its slowest pace since early 2023 in the third quarter, although September consumption and industrial production beat estimates.
Analysts noted that economic weakness in China, coupled with the shift toward electric vehicles, is dampening demand prospects for oil.
At the same time, uncertainty persists over how the Middle East conflict will evolve. U.S. President Joe Biden said on Friday that there is a possibility of a deal between Israel and Iran that could temporarily end the conflict in the region.
However, the Lebanese militant group Hezbollah stated on Friday that it was entering a new phase of escalation in its fight against Israeli troops, dashing hopes that the death of Hamas leader Yahya Sinwar would lead to an end to the war.
Tesla will be the first of the “Magnificent Seven” to report in the corporate earnings season. Global financial leaders will meet in Washington, and oil prices remain volatile. Here’s a look at what’s happening in the markets this week.
Tesla Reports Its Results
As earnings season picks up momentum, Tesla (TSLA) will be one of the first major U.S. tech companies to release its results, which are expected on Wednesday after the close of the trading session.
Tesla’s stock has faced losses this month following the unveiling of its eagerly awaited robotaxis, which left some investors disappointed due to the lack of precise details. So far, Tesla shares have underperformed the S&P 500 Index (SPY), with a loss of approximately 11%, compared to the index’s 22.5% gain.
While investors have become more optimistic about the U.S. economy, thanks to strong jobs reports and the Fed’s 50 basis point cut last month, a weak earnings report from Tesla could reignite concerns about the valuations of tech stocks.
Elevated valuations— the S&P 500 trades at nearly 22 times forward earnings—combined with high corporate earnings forecasts and potential volatility from the upcoming U.S. presidential election could leave stocks vulnerable to a correction.
Gains in Semiconductors
This week, corporate earnings will take center stage, with results from Texas Instruments (TXN) and equipment company Lam Research (LRCX) being closely watched after a volatile week for the semiconductor sector.
Chip stocks fell on Tuesday after Europe’s largest tech company, ASML (ASML), forecasted lower-than-expected sales and bookings for 2025. However, the sector bounced back on Thursday after TSMC (TSM), a key producer of advanced chips used in artificial intelligence, announced a 54% increase in quarterly profit, surpassing expectations.
Semiconductor and related equipment stocks account for 11.5% of the S&P 500’s total weight.
Other companies reporting earnings next week include Coca-Cola (KO), IBM (IBM), General Motors (GM), and Verizon (VZ).
U.S. Economic Data
A relatively quiet week is expected on the U.S. economic calendar. However, investors will get updates on the housing sector through new and existing home sales reports. Additional data releases include durable goods orders, consumer confidence, and initial jobless claims.
On Wednesday, the Federal Reserve will release its Beige Book, a report on economic conditions across the central bank’s 12 districts.
Market participants will also have the opportunity to hear from several Fed officials throughout the week, including Minneapolis Fed President Neel Kashkari, Kansas City Fed President Jeffrey Schmid, San Francisco Fed President Mary Daly, Philadelphia Fed President Patrick Harker, and Richmond Fed President Thomas Barkin.
IMF Meetings
Central bank chiefs and finance ministers from around the world will gather in Washington starting Monday for the annual meetings of the International Monetary Fund (IMF) and the World Bank. They will discuss how countries can navigate an environment of low growth and high indebtedness.
Last week, the IMF warned that global public debt is estimated to exceed $100 trillion by the end of this year, driven by the United States and China.
The IMF noted that high debt levels could provoke adverse market reactions and limit countries’ ability to respond to economic shocks.
Meanwhile, Russian President Vladimir Putin will host a summit of BRICS group leaders starting Tuesday, as the Kremlin seeks support in its confrontation with the West. Russia says that leaders from Brazil, India, China, South Africa, Egypt, the United Arab Emirates, and Saudi Arabia—who collectively account for a third of global economic output—will attend.
Oil Prices
Oil prices remain under pressure after a roughly 7% decline last week, as energy traders assess weak demand from major importer China and the ongoing conflict in the Middle East.
Data released on Friday showed that China’s economy grew at its slowest pace since early 2023 in the third quarter, although September consumption and industrial production beat estimates.
Analysts noted that economic weakness in China, coupled with the shift toward electric vehicles, is dampening demand prospects for oil.
At the same time, uncertainty persists over how the Middle East conflict will evolve. U.S. President Joe Biden said on Friday that there is a possibility of a deal between Israel and Iran that could temporarily end the conflict in the region.
However, the Lebanese militant group Hezbollah stated on Friday that it was entering a new phase of escalation in its fight against Israeli troops, dashing hopes that the death of Hamas leader Yahya Sinwar would lead to an end to the war.
Oct 22 at 13:55
Today’s Stocks to Watch: Boeing, Kenvue, and Humana
Key points:
Humana stock increased due to rumors of a possible acquisition by Cigna.
Starboard Value bought a stake in Kenvue, boosting its stock value.
Boeing reached an agreement in principle that could end the strike.
Boeing (BA) Moves Toward Ending the Strike
Boeing has reached a tentative agreement with the machinists’ union, which could end the strike that has paralyzed much of its production. Boeing shares rose more than 3% in pre-market trading, reflecting the positive impact of the agreement on its valuation. This move is crucial for the company, which had experienced significant delays in its production line due to the strike. Investors are closely watching developments in the negotiation, as it could have long-term implications for Boeing’s operational strength.
Kenvue (KVUE) Rallies After Starboard Value’s Stake Purchase
Kenvue saw a gain of more than 5% in pre-market trading after Starboard Value, an activist investment fund, bought a sizable stake in the company. Starboard intends to implement changes to boost Kenvue’s share price. Kenvue, which spun off from Johnson & Johnson last year, has sparked optimism among investors, who hope these proposed changes will improve the company’s near-term profitability. Kenvue remains a key player in the consumer products sector, and this development could mark a turning point in its financial trajectory.
Humana (HUM) Rises on Strong Cigna (CI) Acquisition Rumors
Humana is up more than 4% in pre-market trading, following Bloomberg reports that Cigna Group has revived its efforts to acquire its rival. These rumors have generated strong interest in Humana shares, as a merger with Cigna could solidify its position in the health insurance market. Investors are closely watching for progress in these talks, as a potential buyout could reshape the competitive landscape of the U.S. healthcare sector.
Walmart (WMT) Reaches Opioid Settlement
Walmart has announced a preliminary settlement of three shareholder lawsuits related to opioid distribution. While the immediate effect on the stock was minimal, this settlement is a significant breakthrough in the company’s ongoing legal battles. Resolving these lawsuits could relieve Walmart of substantial legal burdens, allowing the company to focus its resources on growth and expansion.
Upcoming Earnings Reports
SAP (SAP) is one of the companies set to release its results after the market closes. Other companies reporting earnings this week include General Motors (GM) on Tuesday, Tesla (TSLA) and IBM (IBM) on Wednesday, and United Parcel Service (UPS) on Thursday. Investors will be closely watching these reports, as they could provide a clearer picture of these companies’ performance in a challenging economic environment.
Key points:
Humana stock increased due to rumors of a possible acquisition by Cigna.
Starboard Value bought a stake in Kenvue, boosting its stock value.
Boeing reached an agreement in principle that could end the strike.
Boeing (BA) Moves Toward Ending the Strike
Boeing has reached a tentative agreement with the machinists’ union, which could end the strike that has paralyzed much of its production. Boeing shares rose more than 3% in pre-market trading, reflecting the positive impact of the agreement on its valuation. This move is crucial for the company, which had experienced significant delays in its production line due to the strike. Investors are closely watching developments in the negotiation, as it could have long-term implications for Boeing’s operational strength.
Kenvue (KVUE) Rallies After Starboard Value’s Stake Purchase
Kenvue saw a gain of more than 5% in pre-market trading after Starboard Value, an activist investment fund, bought a sizable stake in the company. Starboard intends to implement changes to boost Kenvue’s share price. Kenvue, which spun off from Johnson & Johnson last year, has sparked optimism among investors, who hope these proposed changes will improve the company’s near-term profitability. Kenvue remains a key player in the consumer products sector, and this development could mark a turning point in its financial trajectory.
Humana (HUM) Rises on Strong Cigna (CI) Acquisition Rumors
Humana is up more than 4% in pre-market trading, following Bloomberg reports that Cigna Group has revived its efforts to acquire its rival. These rumors have generated strong interest in Humana shares, as a merger with Cigna could solidify its position in the health insurance market. Investors are closely watching for progress in these talks, as a potential buyout could reshape the competitive landscape of the U.S. healthcare sector.
Walmart (WMT) Reaches Opioid Settlement
Walmart has announced a preliminary settlement of three shareholder lawsuits related to opioid distribution. While the immediate effect on the stock was minimal, this settlement is a significant breakthrough in the company’s ongoing legal battles. Resolving these lawsuits could relieve Walmart of substantial legal burdens, allowing the company to focus its resources on growth and expansion.
Upcoming Earnings Reports
SAP (SAP) is one of the companies set to release its results after the market closes. Other companies reporting earnings this week include General Motors (GM) on Tuesday, Tesla (TSLA) and IBM (IBM) on Wednesday, and United Parcel Service (UPS) on Thursday. Investors will be closely watching these reports, as they could provide a clearer picture of these companies’ performance in a challenging economic environment.
Oct 22 at 13:56
Dollar falls, euro rises on ECB speakers expectations
The U.S. dollar declined on Tuesday, although it remained near its recent highs in an environment marked by uncertainty related to the pace of interest rate cuts as the date for the U.S. presidential election approaches.
The dollar benefited from rising yields
The dollar retreated slightly on Tuesday, although it benefited from a rise in the yield on 10-year U.S. Treasury bonds, which rose to a 12-week high.
On Monday, four Federal Reserve policymakers favored further interest rate cuts, following the Fed’s decision to cut borrowing costs by about 50 basis points in September.
However, the comments from these officials seemed to signal some lingering disagreement over the pace of the cuts.
Three of them stated that a “modest” or “gradual” rate cut may be warranted as a result of the uncertain outlook, although there is still continued resistance from the U.S. economy, while San Francisco Fed President Mary Daly noted that rates remain “very tight,” adding that a strong economy should not preclude further cuts. N
The dollar has also been helped by demand for safe-haven assets, as investors are currently risk-averse with the 2024 presidential election just two weeks away.
“Our perception is that the magnitude of bond and currency movements is being exacerbated by some deleveraging ahead of the U.S. election,” ING analysts said in a note. “The path should be a stronger dollar if FX liquidity conditions in fact worsen through Nov. 5.”
Euro gains ahead of ECB speeches.
In Europe, EUR/USD rose 0.2% to 1.0833 in anticipation of a series of speeches from European Central Bank officials following the latest rate cut.
“It is quite usual for ECB members to adjust the policy message in the aftermath of a rate decision,” ING reported. Naturally, if we see signs of resistance to easing from hawks like Knot and Holzmann today, expect the euro to feel some additional pressure.” Yesterday, hawkish member Kazimir mentioned that the December decision is “wide open”, a rather bearish change from his comments prior to the October meeting.”
GBP/USD rose 0.2% to 1.3003 after data revealed that UK government borrowing increased by £2.1 billion compared to September last year to £16.6 billion, the highest for a September since records began in 1993.
The Bank of England is poised to cut interest rates in the coming months to stimulate the UK economy, although the data highlight the UK’s complex financial situation ahead of next week’s budget.
Yen weakness on political change
The USD/CNY rose 0.1% to 150.91, trading slightly below its highest level since late July.
The yen’s weakness was due to the change in the top of Japan’s government, which raised doubts about whether the Bank of Japan would be able to continue raising rates. The new Prime Minister, Shigeru Ishiba, explicitly stated that Japan’s economy could not withstand further rate hikes.
USD/CNY rose 0.1% to 7.1214, approaching two-month highs, after the PBOC cut its benchmark prime lending rate on Monday.
The U.S. dollar declined on Tuesday, although it remained near its recent highs in an environment marked by uncertainty related to the pace of interest rate cuts as the date for the U.S. presidential election approaches.
The dollar benefited from rising yields
The dollar retreated slightly on Tuesday, although it benefited from a rise in the yield on 10-year U.S. Treasury bonds, which rose to a 12-week high.
On Monday, four Federal Reserve policymakers favored further interest rate cuts, following the Fed’s decision to cut borrowing costs by about 50 basis points in September.
However, the comments from these officials seemed to signal some lingering disagreement over the pace of the cuts.
Three of them stated that a “modest” or “gradual” rate cut may be warranted as a result of the uncertain outlook, although there is still continued resistance from the U.S. economy, while San Francisco Fed President Mary Daly noted that rates remain “very tight,” adding that a strong economy should not preclude further cuts. N
The dollar has also been helped by demand for safe-haven assets, as investors are currently risk-averse with the 2024 presidential election just two weeks away.
“Our perception is that the magnitude of bond and currency movements is being exacerbated by some deleveraging ahead of the U.S. election,” ING analysts said in a note. “The path should be a stronger dollar if FX liquidity conditions in fact worsen through Nov. 5.”
Euro gains ahead of ECB speeches.
In Europe, EUR/USD rose 0.2% to 1.0833 in anticipation of a series of speeches from European Central Bank officials following the latest rate cut.
“It is quite usual for ECB members to adjust the policy message in the aftermath of a rate decision,” ING reported. Naturally, if we see signs of resistance to easing from hawks like Knot and Holzmann today, expect the euro to feel some additional pressure.” Yesterday, hawkish member Kazimir mentioned that the December decision is “wide open”, a rather bearish change from his comments prior to the October meeting.”
GBP/USD rose 0.2% to 1.3003 after data revealed that UK government borrowing increased by £2.1 billion compared to September last year to £16.6 billion, the highest for a September since records began in 1993.
The Bank of England is poised to cut interest rates in the coming months to stimulate the UK economy, although the data highlight the UK’s complex financial situation ahead of next week’s budget.
Yen weakness on political change
The USD/CNY rose 0.1% to 150.91, trading slightly below its highest level since late July.
The yen’s weakness was due to the change in the top of Japan’s government, which raised doubts about whether the Bank of Japan would be able to continue raising rates. The new Prime Minister, Shigeru Ishiba, explicitly stated that Japan’s economy could not withstand further rate hikes.
USD/CNY rose 0.1% to 7.1214, approaching two-month highs, after the PBOC cut its benchmark prime lending rate on Monday.
Oct 22 at 13:57
U.S. stock markets pull back; large volume of third-quarter results expected
Stock index futures along with U.S. equities were lower on Tuesday, with eyes on the third quarter results of a number of large companies.
Most major Wall Street indexes posted a slightly negative session on Monday, with the Dow Joanes index down 0.8%, ending three straight sessions of gains. The S&P 500 index lost 0.2% while the Nasdaq Composite lost about 113 points, about 0.6%.
A flurry of Q3 results
The results of a large number of U.S. companies will be released on Tuesday.
About one-fifth of the S&P 500 index is scheduled to report results this week, and so far about 14% of the companies in the broad index have reported results, with more than 7 out of 10 beating earnings forecasts, according to FactSet.
Chipmakers Texas Instruments (TXN) and Seagate Technology (STX) will be joined by defense companies GE Aerospace (GE), Rtx Corp (RTX) and Lockheed Martin (LMT), plus with teleco Verizon Communications (VZ), miner Freeport-McMoran (FCX), industrial giant 3M Company (MMM) and automaker General Motors (GM).
Electric car maker Tesla (TSLA) will unveil its results on Wednesday and is the top-ranked company of the week, while other major Wall Street stocks, such as AT&T (T), International Business Machines (IBM), Bank of America (NYSE:BAC) and Coca-Cola (KO), will also report their results on Wednesday.
Additionally, SAP (SAP) shares rose nearly 4% ahead of the market open after the German software company raised its full-year guidance on the back of a strong cloud business in the third quarter, while Zions Bancorporation (ZION) gained nearly 3% on the back of strong earnings.
IMF and Fed in the spotlight
The International Monetary Fund is expected to update its estimates for the global economy later in the day on Tuesday, and investors will also be on the lookout for more statements from the Federal Reserve, as FOMC member Patrick Harker will speak during the session.
Four Fed policymakers on Monday backed further rate cuts following the central bank’s decision to cut borrowing costs by 50 basis points in September.
However, the comments from these officials seemed to signal some continued disagreement over the pace of the cuts.
The U.S. presidential election is still in the spotlight, with GOP candidate Donald Trump gaining ground on Vice President Kamala Harris, according to the latest polls, with two weeks to go before the vote.
Crude oil rebounds, but demand fears continue
Oil prices reversed past losses on Tuesday, although a large amount of uncertainty clouds global demand growth, especially in major crude importer China.
International Energy Agency head Fatih Birol said Monday that China’s economic weakness continued to dampen global oil demand in the coming years.
Birol’s comments, in an interview with Bloomberg, came after both the International Energy Agency and the Organization of the Petroleum Exporting Countries recently cut their demand growth forecasts because of concerns about China.
However, tensions in the Middle East continue to support the crude oil market, as traders fear that an escalation of the conflict between Israel and Hamas and Hezbollah could significantly impact supply in the oil-rich region.
Stock index futures along with U.S. equities were lower on Tuesday, with eyes on the third quarter results of a number of large companies.
Most major Wall Street indexes posted a slightly negative session on Monday, with the Dow Joanes index down 0.8%, ending three straight sessions of gains. The S&P 500 index lost 0.2% while the Nasdaq Composite lost about 113 points, about 0.6%.
A flurry of Q3 results
The results of a large number of U.S. companies will be released on Tuesday.
About one-fifth of the S&P 500 index is scheduled to report results this week, and so far about 14% of the companies in the broad index have reported results, with more than 7 out of 10 beating earnings forecasts, according to FactSet.
Chipmakers Texas Instruments (TXN) and Seagate Technology (STX) will be joined by defense companies GE Aerospace (GE), Rtx Corp (RTX) and Lockheed Martin (LMT), plus with teleco Verizon Communications (VZ), miner Freeport-McMoran (FCX), industrial giant 3M Company (MMM) and automaker General Motors (GM).
Electric car maker Tesla (TSLA) will unveil its results on Wednesday and is the top-ranked company of the week, while other major Wall Street stocks, such as AT&T (T), International Business Machines (IBM), Bank of America (NYSE:BAC) and Coca-Cola (KO), will also report their results on Wednesday.
Additionally, SAP (SAP) shares rose nearly 4% ahead of the market open after the German software company raised its full-year guidance on the back of a strong cloud business in the third quarter, while Zions Bancorporation (ZION) gained nearly 3% on the back of strong earnings.
IMF and Fed in the spotlight
The International Monetary Fund is expected to update its estimates for the global economy later in the day on Tuesday, and investors will also be on the lookout for more statements from the Federal Reserve, as FOMC member Patrick Harker will speak during the session.
Four Fed policymakers on Monday backed further rate cuts following the central bank’s decision to cut borrowing costs by 50 basis points in September.
However, the comments from these officials seemed to signal some continued disagreement over the pace of the cuts.
The U.S. presidential election is still in the spotlight, with GOP candidate Donald Trump gaining ground on Vice President Kamala Harris, according to the latest polls, with two weeks to go before the vote.
Crude oil rebounds, but demand fears continue
Oil prices reversed past losses on Tuesday, although a large amount of uncertainty clouds global demand growth, especially in major crude importer China.
International Energy Agency head Fatih Birol said Monday that China’s economic weakness continued to dampen global oil demand in the coming years.
Birol’s comments, in an interview with Bloomberg, came after both the International Energy Agency and the Organization of the Petroleum Exporting Countries recently cut their demand growth forecasts because of concerns about China.
However, tensions in the Middle East continue to support the crude oil market, as traders fear that an escalation of the conflict between Israel and Hamas and Hezbollah could significantly impact supply in the oil-rich region.
Nov 04 at 15:55
Dollar slips ahead of elections; Fed and BOE also in focus
The U.S. dollar retreated on Monday amid political uncertainty ahead of Tuesday’s presidential election and also amid expectations that the Federal Reserve will cut interest rates this week.
The dollar index, which analyzes the greenback against a basket of six other currencies, fell 0.5% to 103.695, after strong gains in October.
Dollar slips ahead of U.S. elections
At the beginning of this week, attention is focused on the U.S. presidential election scheduled for Tuesday, in which the race between the Republican Party candidate and former president, Donald Trump, and his Democratic rival, Vice President Kamala Harris, is very tight.
However, Harris received a noticeable boost when a respected poll in the generally conservative-leaning state of Iowa found her leading Trump by three percentage points, thanks in large part to support among women.
“Markets are apparently scaling back some Trump trading,” mentioned analysts at ING, in a note, ”and we suspect the next two days may see some abnormal swings in USD crosses due to tighter volatility conditions ahead of a hotly contested and highly binary U.S. election.”
Analysts think Trump’s policies on immigration, tax cuts and tariffs would move inflation, the dollar and bond yields higher.
In addition, markets were also positioning themselves positively for a 25 basis point cut by the Fed at the end of its latest two-day policy meeting next week, following the Fed’s decision to roll out a 50 basis point reduction in September.
Friday’s nonfarm payrolls report revealed a dramatic slowdown in job creation during October, although the release was affected by labor disputes and hurricanes.
“Had it not been for the proximity of the vote, we would have argued that a Fed cut would have been net negative for the dollar, but the FX implications of this Fed decision will only be assessed once election volatility has subsided,” ING added.
Euro rallies on improved eurozone data
In Europe, EUR/USD rose 0.5% to 1.0892, benefiting from a weaker dollar and recent data with a positive tone.
The latest Eurozone manufacturing PMI release saw an increase to 46.0 in October, up from 45.0 last month, according to data released early Monday. Although this data reveals that the sector remains in contractionary territory, it appears that some light may be on the horizon.
“Markets have reduced some pessimistic ECB bets following the latest eurozone growth and inflation figures, but are probably still open to reassessing the possibility of a 50 basis point cut in December if Trump wins this week,” ING added. “The reasoning there is that the ECB will be more inclined to frontload easing given the risk of protectionism under Trump.”
GBP/USD was up 0.3% at 1.2963, bouncing back from the previous week’s losses in the wake of the New Labour government’s budget.
The Bank of England has its meeting scheduled for Thursday and is expected to cut 25 basis points, although this decision has been complicated by a massive sell-off in gilts following the previous week’s budget.
“Markets are likely to be more interested in hearing what the MPC has to say about last week’s budget,” ING mentioned, given that the ”Office for Budget Responsibility views the announced fiscal measures as both pro-growth and inflationary.”
The yen rebounds from three-month lows
USD/JPY was down 0.6% at 152.11 retreating from recent three-month highs on the back of dollar weakness. The yen also benefited from a somewhat hawkish message from the Bank of Japan the previous week.
USD/CNY is down 0.3% to 71.009 and attention is focused on the NFP Standing Committee meeting that starts on Monday.
The NPC is expected to mark plans for more fiscal spending, with recent reports indicating that the body could greenlight $1.4 trillion in additional debt over the next few years.
The U.S. dollar retreated on Monday amid political uncertainty ahead of Tuesday’s presidential election and also amid expectations that the Federal Reserve will cut interest rates this week.
The dollar index, which analyzes the greenback against a basket of six other currencies, fell 0.5% to 103.695, after strong gains in October.
Dollar slips ahead of U.S. elections
At the beginning of this week, attention is focused on the U.S. presidential election scheduled for Tuesday, in which the race between the Republican Party candidate and former president, Donald Trump, and his Democratic rival, Vice President Kamala Harris, is very tight.
However, Harris received a noticeable boost when a respected poll in the generally conservative-leaning state of Iowa found her leading Trump by three percentage points, thanks in large part to support among women.
“Markets are apparently scaling back some Trump trading,” mentioned analysts at ING, in a note, ”and we suspect the next two days may see some abnormal swings in USD crosses due to tighter volatility conditions ahead of a hotly contested and highly binary U.S. election.”
Analysts think Trump’s policies on immigration, tax cuts and tariffs would move inflation, the dollar and bond yields higher.
In addition, markets were also positioning themselves positively for a 25 basis point cut by the Fed at the end of its latest two-day policy meeting next week, following the Fed’s decision to roll out a 50 basis point reduction in September.
Friday’s nonfarm payrolls report revealed a dramatic slowdown in job creation during October, although the release was affected by labor disputes and hurricanes.
“Had it not been for the proximity of the vote, we would have argued that a Fed cut would have been net negative for the dollar, but the FX implications of this Fed decision will only be assessed once election volatility has subsided,” ING added.
Euro rallies on improved eurozone data
In Europe, EUR/USD rose 0.5% to 1.0892, benefiting from a weaker dollar and recent data with a positive tone.
The latest Eurozone manufacturing PMI release saw an increase to 46.0 in October, up from 45.0 last month, according to data released early Monday. Although this data reveals that the sector remains in contractionary territory, it appears that some light may be on the horizon.
“Markets have reduced some pessimistic ECB bets following the latest eurozone growth and inflation figures, but are probably still open to reassessing the possibility of a 50 basis point cut in December if Trump wins this week,” ING added. “The reasoning there is that the ECB will be more inclined to frontload easing given the risk of protectionism under Trump.”
GBP/USD was up 0.3% at 1.2963, bouncing back from the previous week’s losses in the wake of the New Labour government’s budget.
The Bank of England has its meeting scheduled for Thursday and is expected to cut 25 basis points, although this decision has been complicated by a massive sell-off in gilts following the previous week’s budget.
“Markets are likely to be more interested in hearing what the MPC has to say about last week’s budget,” ING mentioned, given that the ”Office for Budget Responsibility views the announced fiscal measures as both pro-growth and inflationary.”
The yen rebounds from three-month lows
USD/JPY was down 0.6% at 152.11 retreating from recent three-month highs on the back of dollar weakness. The yen also benefited from a somewhat hawkish message from the Bank of Japan the previous week.
USD/CNY is down 0.3% to 71.009 and attention is focused on the NFP Standing Committee meeting that starts on Monday.
The NPC is expected to mark plans for more fiscal spending, with recent reports indicating that the body could greenlight $1.4 trillion in additional debt over the next few years.
