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.
Hace 22 horas
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.
Hace 22 horas
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.
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