Dollar enjoys lull as iffy tax reform data may spoil sentiments
Losing the grip
Bearish sentiments are rising on European currency due to political uncertainty in the eurozone, as Angela Merkel's position has deteriorated significantly after the failure to form a coalition between the four political parties. EURJPY sank to a two-month low during the Asian session, but restored losses during the London trading, as the economic progress of the eurozone continues to be seen as a strong driver for the long-term growth of the common currency. EURUSD also covered losses, having found intraday balance near the level of 1.18.
The lull ahead of the Thanksgiving
Despite growing doubts about the consensus of the House of Representatives and the Senate on the tax reform, strong economic statistics convince in an accelerated rate of increase in the rate for federal funds. Goldman Sachs revised the outlook for the increase to four rates in 2018, while two representatives of the Federal Reserve called for the possibility of an "overshoot" of 2% target inflation rate, as part of the new post-crisis model of the monetary policy of the regulator. The unusual delay in inflation response to the strengthening of the labor market continues to be seen as a transitory phenomenon. In October, the base inflation rate rose to 1.8%, surpassing expectations. The probability of the December rate increase is estimated by the futures market in almost 100%.
The movement potential for the US currency against major opponents this week is somewhat weakened, as officials probably will not spoil the mood of investors before Thanksgiving, which will be held on Thursday. Nevertheless, against the currencies of emerging markets, the dollar shows an upward trend. Trend indirectly confirms the selloff of gold, the main defensive asset, which sank by 0.35% to $1.292 during the London dealing.
Divorce Bill
The British pound is hastily rising against major currencies, as the British government has assured that they will not lose their hands and every effort will be made to ensure that the "divorce bill" with the European Union is maximally favorable for further independent relations with the bloc. Finance Minister Philip Hammond said on Sunday that the country will submit several proposals to the European government before the European summit next month and negotiations on them will be very diligent. The GBPUSD pair reacted upward to $1.3272 on Monday, maintaining mood for further rally.
Sorry, mot interested
Bitcoin, having shown an explosive growth of 700% this year, has failed to prove its attractiveness to large institutional investors, the poll at the Reuters summit showed. The lack of a reliable model for estimating the real value of an asset that is less than 10 years old and which is so different from other assets has become the main reason for the rejection by hedge fund managers. Among other reasons was the use of bitcoin for criminal purposes, mainly money laundering, high volatility and unrestrained growth, whose yield growth rates resemble a bubble.
Speculative yield and limited emission remain the basic, albeit unconvincing, drivers for the growth of the crypto currency, which does not allow attracting investment from conservative sources. Despite the prospects for improving the regulation of the crypto industry, the recognition of bitcoin as a means of payment, which equates it to the fiat currency and allows for a fundamental assessment, is unlikely.
The head of the largest asset management company Black Rock said that he was surprised why bitcoin received such wide coverage of the media despite obvious involvement in fraudulent schemes, including money laundering.
Arthur Idiatulin
Bearish sentiments are rising on European currency due to political uncertainty in the eurozone, as Angela Merkel's position has deteriorated significantly after the failure to form a coalition between the four political parties. EURJPY sank to a two-month low during the Asian session, but restored losses during the London trading, as the economic progress of the eurozone continues to be seen as a strong driver for the long-term growth of the common currency. EURUSD also covered losses, having found intraday balance near the level of 1.18.
The lull ahead of the Thanksgiving
Despite growing doubts about the consensus of the House of Representatives and the Senate on the tax reform, strong economic statistics convince in an accelerated rate of increase in the rate for federal funds. Goldman Sachs revised the outlook for the increase to four rates in 2018, while two representatives of the Federal Reserve called for the possibility of an "overshoot" of 2% target inflation rate, as part of the new post-crisis model of the monetary policy of the regulator. The unusual delay in inflation response to the strengthening of the labor market continues to be seen as a transitory phenomenon. In October, the base inflation rate rose to 1.8%, surpassing expectations. The probability of the December rate increase is estimated by the futures market in almost 100%.
The movement potential for the US currency against major opponents this week is somewhat weakened, as officials probably will not spoil the mood of investors before Thanksgiving, which will be held on Thursday. Nevertheless, against the currencies of emerging markets, the dollar shows an upward trend. Trend indirectly confirms the selloff of gold, the main defensive asset, which sank by 0.35% to $1.292 during the London dealing.
Divorce Bill
The British pound is hastily rising against major currencies, as the British government has assured that they will not lose their hands and every effort will be made to ensure that the "divorce bill" with the European Union is maximally favorable for further independent relations with the bloc. Finance Minister Philip Hammond said on Sunday that the country will submit several proposals to the European government before the European summit next month and negotiations on them will be very diligent. The GBPUSD pair reacted upward to $1.3272 on Monday, maintaining mood for further rally.
Sorry, mot interested
Bitcoin, having shown an explosive growth of 700% this year, has failed to prove its attractiveness to large institutional investors, the poll at the Reuters summit showed. The lack of a reliable model for estimating the real value of an asset that is less than 10 years old and which is so different from other assets has become the main reason for the rejection by hedge fund managers. Among other reasons was the use of bitcoin for criminal purposes, mainly money laundering, high volatility and unrestrained growth, whose yield growth rates resemble a bubble.
Speculative yield and limited emission remain the basic, albeit unconvincing, drivers for the growth of the crypto currency, which does not allow attracting investment from conservative sources. Despite the prospects for improving the regulation of the crypto industry, the recognition of bitcoin as a means of payment, which equates it to the fiat currency and allows for a fundamental assessment, is unlikely.
The head of the largest asset management company Black Rock said that he was surprised why bitcoin received such wide coverage of the media despite obvious involvement in fraudulent schemes, including money laundering.
Arthur Idiatulin
This analysis is provided as general market commentary and does not constitute investment advice. Past performance is not indicative of future results
