Temporary Relief for Bears in Crypto

The crypto market capitalisation rose 1.2% in 24 hours to $1,043. The market’s fall to almost $1 trillion at the beginning of the week satisfied the sellers. The question is whether the recent dip will be the starting point for the next rally. Keep an eye on the activity near the recent highs; for now, the market is not allowed to go higher.

EUR/USD: ECB Hikes and Euro Falls as Stagflation Risks Grow; Dollar Strength Extends after US Retail Sales Data

Euro falls to the lowest levels in May after ECB hikes rates and delivers an abysmal growth forecasts, while upgrading 2023 and 2024 inflation outlooks Post ECB decision – October 26th ECB rate hike odds hover around 35.4% US retail sales remained strong on back-to-school spending and despite the extra energy costs at the pump […]

U.S. Retail Sales Rise in August, Beating Expectations 

Retail sales continued to pull ahead  in August, although downward revisions to July's numbers tempered pervious gains. With two months of data in for the third quarter, sales are currently tracking 4.4% annualized for 2023 Q3, notably above the revised 0.4% annualized gain recorded in Q2 (previously 0.6%). This should give a decent boost to consumer spending which continues to defy expectations for a major slowdown.

Sunset Market Commentary

The ECB today hiked rates by 25 bps in a decision supported by a “solid majority”. The deposit rate now stands at a record 4%. As per bond portfolios, Lagarde explained there was no discussion about a potential quicker rundown of APP (through active sales) or PEPP (through a sooner than currently communicated ending of reinvestments).

ECB Delivers Dovish Final Rate Hike of the Tightening Cycle

The ECB raised interest rates again today, probably for the last time in the tightening cycle although it did leave itself some flexibility on that front.

Dollar in Case of Strong Data Has Further Upward Potential

However, the dollar in case of strong data has further upward potential. A break of EUR/USD below 1.0635/32 opens the way to the 1.0516/1.0484 area.

Resilient Chinese Yuan Supporting Hong Kong Equities and Antipodean Currencies

Since the bullish momentum of USD/CNH has started to abate which in turn has led the HSI and HSCEI to erase their earlier losses at the start of this week and recorded intra-session weekly gains of +0.20% for both indices at this time of the writing.

AUD/USD Extends Gains on Strong Chinese Data

The Australian dollar has edged higher on Friday. In the European session, AUD/USD is trading at 0.6452, up 0.18%. Earlier, AUD/USD touched a high of 0.6473, its highest level since September 4th.

Sunset Market Commentary

In FX, the dollar rally shifted into a lower gear, but there is no sign at all that any meaningful correction might be on the cards. EUR/USD stabilized in the 1.0635/1.067 area. The 1.0635 support is far from save. The DXY is holding well north of 105. (105.37). USD/JPY set a minor YTD top just below 148. Markets are looking out for a potential policy reaction (or the absence of it) as the BOJ meets next Friday.

Week Ahead – Fed, BoE, and BoJ Meetings to Fuel FX Volatility

The central bank bonanza will kick off with the Fed on Wednesday. Markets are pricing in almost no chance of a rate increase, following several remarks from FOCM officials calling for patience and more time to examine incoming data before making their next move.