|

Will the Fed be Finally Convinced to Slash Rates? [Video]

The dollar weakened last week after a deluge of disappointing data like the ISM and the NFP while safe-havens gained as investors nervously await U.S.-China talks this week for signs of whether the two sides can de-escalate or end their simmering trade war. The streak of weak U.S. data has meanwhile put more pressure on the Federal Reserve to slash rates sooner rather than later so investors will be closely monitoring the release of the latest FOMC minutes this Wednesday. 

Markets Turn Red as Optimism Fades

Global bourses pushed in negative territory today amid broader fears that the U.S. and China will fail to resolve their trade differences while a fresh wave of violent incidents in Hong Kong weighed on Asian Markets. In Europe major indices opened on a bearish note this morning as traders search for hints on the direction of Brexit and U.S.-China trade talks. On the Brexit front, markets are also uncertain as there is no resolution in sight ahead of the Oct 31st deadline. 

Brexit: What’s Happening? 

British negotiators will be given another chance today to explain their Brexit plan, while President Emmanuel Macron of France said he had given Boris Johnson, Britain’s prime minister, until this Friday to come up with a totally revised plan — emphasizing that the current one is unacceptable.

USD Subdued on Weak Data and Impeachment Investigation

The dollar remains subdued on weak data, deflated hopes of a U.S./China agreement and mounting pressure on U.S. President Donald Trump during a fresh impeachment investigation. The number of “whistle-blowers” has also increased to two after a second intelligence official with “firsthand knowledge” provided information related to President Trump’s dealings in Ukraine, according to the legal team now representing both whistle-blowers. The lawyers said their new client, whose identity is not known, had grown alarmed by the president’s behaviour and was among those interviewed to corroborate the allegations of the first whistle-blower.

eurusd

Will CAD Slip to Fresh Lows? 

The Canadian dollar is rounding up the week with unemployment numbers and might show another bearish round, especially with as oil prices continue to dip lower. Oil prices extended last week’s heavy losses, with traders fearing the global economic slowdown will weigh on future oil demand growth while pegging hopes for a rebound on progress in talks this week on ending the U.S.-China trade war.

Author

More from Frank Walbaum
Share:

Editor's Picks

AUD/USD sticks to neutral bias above 0.7100 amid cautious markets

AUD/USD holds steady above 0.7100 in the Asian session on Monday as the US Dollar stalls its modest pullback from the highest level since late July amid persistent geopolitical uncertainties. The PBOC status quo on Loan Prime Rates also weighs on the Aussie. However, bets on another RBA rate hike continue to underpin the Australian Dollar ahead of the Trump-Xi Summit.

USD/JPY eases below 157.00 amid looming intervention risks

USD/JPY is easing back below 157.00 in Asia on Monday, undermined by modest Japanese Yen strength amid looming intervention risks after Friday's BoJ rate check. A Japanese holiday also keeps traders on edge amid escalating geopolitical tensions between Russia and Ukraine and in the Middle East. As a result, the US Dollar pauses its pullback, limiting the pair's downside.

Gold feeling the heat as geopolitics is back in play

Gold snaps recent recovery from six-week lows on Monday after facing rejection at $4,400. US Dollar stalls correction amid renewed geopolitical jitters, ahead of the Trump-Xi meeting. Gold’s daily technical setup paints a mixed picture, with a neutral daily RSI.

Solana extends rally as tokenized equity holders hit a record

Solana (SOL) extends its gains, trading above $111.70 after rallying nearly 12% last week. The bullish price action comes as growth in Solana’s tokenized equity ecosystem reaches a new milestone. Meanwhile, improving momentum indicators and strengthening institutional demand point to further gains in SOL.

Economics week ahead

This week is light on the domestic data front, with focus on Thursday's new home sales report. We expect sales to partially recover in August, rising 2.6% to a 623K pace after a sharp decline in July. Higher mortgage rates continue to weigh on affordability and demand, though builder incentives remained in place and conditions did not worsen materially during the month.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.