On Tuesday (September 5) in the Asian market, the US dollar index fell to 104.16. China's top leaders expressed their readiness to open up the service industry and the development of manufacturing activities, and a series of Chinese stimulus policies exerted downward pressure on the US dollar. Tharman Shanmugaratnam, former Singaporean finance minister and central bank chairman, won the new presidential election. He mentioned that cryptocurrencies are purely speculative and a bit crazy. The bad news may cause Bitcoin to further break below $22,000.
China's top leader speaks, real estate companies resolve default crisis: US dollar faces pressure from the East
China's top leader said early this week that he was ready to open up the service industry as well as the development of manufacturing activities, and a series of measures to lower mortgage rates and inject more liquidity showed China's confidence in boosting the yuan. In addition, after China's troubled real estate company Country Garden successfully obtained creditors' approval to postpone the repayment of about 3.9 billion yuan, or about 536 million U.S. dollars, the optimism about it also put downward pressure on the U.S. dollar index.
With the recent improvement in German Bund yields and a reassessment of Fed concerns, especially as markets return across the board, the US Dollar Index recovered the previous day's losses but sought more cues to recall buyers.
The US Dollar Index remained hovering around 104.10-15 during Tuesday's Asian session as bulls and bears battled it out in a light calendar. Also challenging US Dollar Index traders were mixed concerns over the Fed and China, as well as caution before the entire market reacted to the latest developments, as well as mid-tier US data and risk catalysts.
Still, the contrast between market bets on the Fed's status quo in September and recent improved odds supporting a rate hike in late 2023 appears to have spurred the dollar. Nonetheless, Cleveland Fed President Loretta Mester defended the Fed's hawkish approach and ruled out a rate cut bias in a speech on Friday.
Last Friday's non-farm payrolls (NFP) data showed that August data initially showed a hawkish bias against the Fed again, although subsequent unemployment and average hourly earnings continued to make people worry about the policy pivot. Subsequently, global rating agency Moody's raised its forecast for US gross domestic product (GDP) in 2023 to 1.9%, compared with the 1.1% expected in May.
Looking ahead, China's August Caixin Services PMI and US factory orders for the same month will be important to watch for clear direction. Most importantly, risk catalysts and bond moves should be carefully watched for clear direction.
FXStreet analyst Anil Panchal said that although the dollar index bulls still hold out hope of breaking through the 21-day moving average support level of 103.45, the downward sloping resistance line since the end of May, currently close to 104.45, limits the immediate upside of the dollar.
USD/CAD maintained its gains from last Friday but struggled to decisively break through 1.3600 ahead of the Bank of Canada’s monetary policy meeting on Wednesday.
FXEmpire analyst Bruce Powers mentioned that gold prices remained around $1,940 as traders waited for more catalysts, and the dollar's pullback at the beginning of the week did not provide sufficient support for the gold market.
If gold falls below the $1,935 level, it will move towards the nearest support level, which is located in the $1,900 to $1,910 range.
(Source: FXEmpire)
Singapore's new president: Cryptocurrency is purely speculative and a bit crazy
Shanmugaratnam said that cryptocurrencies are purely speculative and a bit crazy, and his past financial experience may give him some influence on related policies. Singapore has transformed from an early adopter of cryptocurrency to a jurisdiction trying to find the right regulatory balance, especially after the collapse of Terraform Labs and Three Arrows Capital (3AC).
Shang Geman also served as the chairman of the Monetary Authority of Singapore (MAS), the central bank of Singapore, from 2011 to 2023. But in the early days, Shang Geman's stance on cryptocurrencies was laissez-faire. At the 2023 World Economic Forum, he said that cryptocurrencies are essentially pure investment behaviors, which are actually a bit crazy, and suggested that authorities should provide "super clarity" on the risks associated with cryptocurrencies.
The Bitcoin spot ETF hype is fading, and by August 18, the 19% gain seen after the BlackRock ETF’s initial filing had been fully reversed as Bitcoin rallied back to $26,000. Next, investors raised the odds of ETF approval following positive news about the Grayscale Bitcoin Trust’s request, attempting to retake the $28,000 support level, but ultimately failed.
Morale among crypto investors has deteriorated, with the S&P 500 closing at 4,515 on September 1, just 6.3% below its all-time high from January 2022. Even gold, which has not been able to break above the $2,000 level since mid-May, is still 6.5% away from its all-time high. So, with only seven months until the 2024 halving, the overall feeling among Bitcoin investors is certainly less positive than expected.
Some analysts have attributed Bitcoin’s poor performance to ongoing regulatory actions against two leading exchanges, Binance and Coinbase, with multiple sources saying the U.S. Department of Justice is likely to sue Binance in a criminal investigation based on allegations of money laundering and possible sanctions violations involving Russian entities.
Pentoshi, chief investment officer of North Node Capital and a Bitcoin supporter, said that the potential gains from the approval of a Bitcoin spot ETF outweigh the impact of regulatory actions against exchanges on prices. It is impossible to determine whether this assumption is valid, but this analysis does not take into account that the US inflation rate measured by the Consumer Price Index has fallen from 9.1% in June 2022 to 3.2% in July 2023.
Furthermore, the Fed’s total assets have fallen to $8.12 trillion from a peak of $8.73 trillion in March 2023. This suggests that monetary authorities have been withdrawing liquidity from the market, which is not conducive to Bitcoin’s inflation protection thesis. In the longer term, Bitcoin’s price has remained at $25,000 since mid-March, but a closer look at derivatives data shows that bulls’ conviction is being tested.
CoinTelegraph said that Bitcoin derivatives data showed that bearish momentum was building, especially given that the SEC was concerned about the lack of measures to prevent most trading from taking place on unregulated offshore exchanges, so the approval of a Bitcoin spot ETF could be delayed until 2024.
At the same time, the uncertainty in the regulatory environment does work in the shorts’ favor, as there is no way to dispel the fear, uncertainty and doubt surrounding potential actions by the DOJ or ongoing SEC litigation against exchanges.
