Morning Brew September 8 2021
Senior Relationship Manager
Summary: USD rises on higher yields and technical failure to break resistance.
Yesterday proved to be more interesting that initially anticipated, we saw The USD gaining across the board but Crypto, Gold and Silver particularly hard hit. Bitcoin fell to near 42.000 before recovering to 46500 and Ethereum dropped to near 3.000- Gold and Silver fell to 1791 and 24.15 before recovering to 1797 and 24.35. US 10 year rates rose to almost 1.40 yesterday supporting the USD, the USD index gained to 92.6 from a low of below 92 just Friday. EURUSD is trading at 1.1830.
With regards to Gold, Ole Hansen states that the repeated failure to breach the 1835 and the relatively limited interest by money managers a strong rally seems not to be imminent. Positive impact comes from central banks and investors moving away from cash to avoid negative interest rates.
The Stock market remained calmer than FX with US Indexes closing mixed, Tech curiously gained (the Nasdaq ended up 0.07%), the S&P 500 and the Dow fall 0.34 and 0.76% respectively. The Dax dropped from neat 16000 to 15840.
The moves are particularly interesting before the ECB meeting tomorrow where it is possible that that the ECB begins the tapering process before the Fed does. I had mentioned this before, the Bundesbank is not happy with the elevated inflation levels. It is worth to note that while the ECB may reduce the PEPP that was launched to alleviate the impact of the Pandemic, the older APP remains in place.
El Salvador introduced adopted Bitcoin as official tender yesterday and picked a bumpy day for it. Rumors state that IT issues it the country sparked sharp drop while other sources cite technical with the market failing to reise above 53k sparking profit taking and compounding sales. The U.S. SEC is threatening to sue Coinbase if the company launches a program allowing users to earn interest by lending crypto assets.
Japan reported a better than expected GDP at 1.9% vs 1.3% expected.
Today the only economic event of note is the Canadian rate decision at 16:00 CET. Watch out for nervousness like we saw yesterday on any hint on ECB or US policy adjustments.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.