British, US China hawks call for “Nato for trade” against Beijing – SCMP

Anil Panchal FXStreet

Early Monday morning in Asia, the South China Morning Post (SCMP) published signals to escalate West versus China tussles with its latest news. The Chinese daily said, “Hawkish British politicians and an American industrial lobby group have called on Western allies to form a ‘Nato for trade’ to counter China’s ‘weaponization of policy tools to punish any nation that does not kowtow to Beijing’.”

“The proposal is for democratic nations to create a trade-based alliance along the lines of the North Atlantic military grouping formed to counter the Soviet Union in 1949,” added SCMP.

The news cites a report on the proposal from hardline British and US entities to mention the examples of how such an alliance may work. The group consists of British Conservative members of parliament, and the Information Technology and Innovation Foundation, a science and technology policy think tank with links to the US government and big tech firms, per SCMP.

It’s worth noting that such lines like “backers of the proposed Democracies’ Alliance Treaty Organisation (Dato) advocate retaliation in response to coercive measures by China against any member” can weigh on the market sentiment amid a quiet session.

FX implications

Despite challenging news for the risk appetite, S&P 500 Futures wobble around record top flashed the previous day amid a lack of major data/events.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

AUD/USD flirts with 0.7000, lowest since early August amid bullish USD

AUD/USD hits a fresh low since early August during the Asian session on Friday and looks vulnerable near 0.7000 after breaking below the 200-day SMA overnight. Against the backdrop of the hawkish Fed, a two-day rally in oil prices revives inflation fears and continues to push US bond yields to multi-year highs. Adding to this, geopolitical risks lift the US Dollar to a two-month high, overshadowing RBA rate hike bets and weighing on the pair.

USD/JPY pulls back from three-week high after failing near 159.00

USD/JPY edges lower during the Asian session on Friday, stalling its recent strong move to a three-week high of 159.00 as Japanese Yen bears turn cautious amid intervention fears. Meanwhile, the US Dollar retains a strong bullish undertone as the Fed's hawkish outlook and oil-driven inflation fears continue to push US bond yields to multi-year peaks. Furthermore, the BoJ's dovish rate hike last week might cap JPY and support spot prices.

Gold consolidates below $4,300 amid hawkish Fed, higher bond yields, and bullish USD

Gold extends its consolidative price move, and languishes near the weekly low set the previous day amid a bearish fundamental backdrop. The US Dollar pauses for a breather following a strong rally to a nearly two-month high and offers some support to the commodity. However, the US Federal Reserve's hawkish outlook, elevated US bond yields, and persistent geopolitical uncertainties favor USD bulls.

Ripple, Cardano, Solana: ETF inflows and whale demand signal further rally

Ripple (XRP), Cardano (ADA), and Solana (SOL) continue to experience a steady recovery with double-digit gains so far this month. Ripple and Solana experience firm institutional demand, while the percentage of ADA supply in profit rises, underpinned by interest from large-wallet investors, commonly referred to as whales.

Treasury yields at 2007 highs

The combination of energy prices rising back above $100 a barrel, US PMI’s topping multi-year indexes and FOMC members taking tough tones when discussing future rate paths have all led Treasuries at both ends of the curve with higher yields. Treasury Notes account for close to 52% of all marketable Treasuries, so movements in yields are especially painful for the US fiscal outlook.

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.