DIFX Buzz: Here’s a weekly market recap for you to start your Monday with the top news of the week.
Read the Data
Let’s take a quick look at some market data:
USD Net Short
❖ Hedge funds are over $20bn net short the dollar which is the most since Q1 2021.
❖ The Dollar Index has managed to make some gains this week as Powell kept the door open to further rate hikes.
❖ At the moment, there is a 20% chance of a 25 basis point rate hike in September.
Timeline of Rate Hikes and Inflation
❖ As we can see here, Powell had a strong opinion about inflation being transitory in 2020.
❖ As Inflation rose to 4%, he kept rates low, near 0%, as he expected inflation to drop and was not prepared to put extra stress on the market.
❖ We then saw a complete U-turn and aggressive policy to tame inflation as PCE was heading for 7%.
❖ We now see the Fed’s inflation target is in sight and it’s been quite an effective hiking cycle as they beat expectations on how long it would take to tighten the economy.
Bitcoin HODL Waves
❖ If we look at the last recorded date which was the 27th of July, we see that the majority of holders have kept their Bitcoin for 2-3 years.
❖ This coincides with the cyclical attributes of Bitcoin as we approach the halving in 2024.
❖ It is worth noting that almost 15% of all Bitcoin has remained intact for over 10 years which is a testament to the community that has built this “HODL” mentality.
Look into Markets
Let’s see what happened in markets this week:
Forex
❖ The Yen has fallen at the start of the week on the back of the Yield Curve Control policies being tweaked by the BoJ, a move to shift away from ultra-dovish policy.
❖ The Australian Dollar slid as the RBA left rates unchanged.
❖ The Pound is bearish with traders anticipating the rate decision coming out on Thursday. Markets are split between a 25bp or 50bp rate hike from the BoE.
Equities
❖ Earnings week continues with Toyato, AMD, and Uber releasing financials.
❖ META plans to release AI chatbots with different personalities as early as September in its battle to retain users.
❖ US markets are ending July strong after upbeat earnings over the past couple of weeks.
Crypto
❖ Nomura, a Japanese investment banking brokerage firm, has received the VARA license which allows its crypto arm to offer crypto-related investment services in Dubai.
❖ A German data watchdog has been probing Worldcoin since last year over privacy concerns as the crypto project is processing large-scale biometric data.
❖ Tether assets rose to $86.3bn in Q2 with operating profit reaching as high as $1bn. This is a 30% increase from the previous quarter.
Commodities
❖ Gold started the week bullish toward $1970 on Monday trading.
❖Chinese manufacturing PMI came out at 49.3 which is higher than June’s reading. This is the third month in a row that signals contraction in the manufacturing sector.
❖ This consistent weakness in the Chinese economy has led to Beijing stepping in to bolster the economy as they “study and formulate policies” which can kickstart growth.
❖ Oil has slid at the start of the trading week with investors potentially taking profits after the global tightening of supplies resulted in a rally throughout July.
