Russia’s War Takes a Provocative Step, and Crypto Experiences Another Strong Session – Currency Thoughts
Russia’s War Takes a Provocative Step, and Crypto Experiences Another Strong Session
November 21, 2024
Geopolitical tensions dominated overnight financial market trading. Data flow has been light, but still ahead are several U.S. releases plus the outcomes of monetary policy reviews in Turkey and South Africa.
For the first time since Russia invaded Ukraine nearly three years ago, Russia fired an ICBM aimed at the city of Dnipro. No word is out yet on what type of explosive it carried or the damages caused.
Trump’s election has buoyed the dollar especially versus the yen. In a speech today, Bank of Japan Governor Ueda explicitly included the yen as a factor potentially influencing the future path of the central bank’s interest rate. More generally, Ueda’s tone was more hawkish and piqued expectations that the next rate hike could come at December’s Board meeting.
Nvidia‘s eagerly awaited quarterly earnings release after the closing bell yesterday included forward guidance on revenues that disappointed investors. After falling 0.8% Wednesday, the AI chipmaker’s share price has dropped 3% additionally in pre-market trading today.
Bracing for a U.S.-inspired trade war in President-Elect Trump’s second term, the Xi government in China rolled out several new measures to promote trade.
Bitcoin’s amazing rally continued overnight, withe a price rise of 3.4% overnight that brought its gain since the U.S. November 5th election to 42%.
The dollar declined 0.8% overnight against the Japanese yen but firmed 0.2% against the euro, peso and Turkish lira and Aussie dollar and 0.1% versus sterling and the kiwi.
Major European stock markets and U.S. stock futures are modestly lower. Share prices this Thursday closed down 0.9% in Japan, 0.6% in Taiwan and Indonesia and 0.5% in Hong Kong and India.
Ten-year sovereign debt yields slipped by three basis points so far today in the U.S., Germany and Great Britain and by a basis point in both France and Italy, but the 10-year JGB yield rose two bps on expectations that the central bank there will lift its interest rate next month.
Like crypto currencies, prices for oil (+1.4%) and gold (+0.7%) are higher.
French business confidence fell deeper into pessimistic territory this month, dropping to a 4-month low of 96.1, 3.9 points south of its best reading thus far in 2024. The climate in manufacturing and the labor market rebounded to 2-month highs, but that was more than neutralized by the lowest readings in services since August and construction since July.
Turkish consumer sentiment settled back 0.8 points in November below October’s 16-month high.
Consumer confidence in Denmark fell to an 11-month low this month, while household sentiment dropped to nine- and seven-month lows in the Netherlands and Slovenia.
Mainland GDP in Norway rose 0.5% last quarter, but its year-on-year growth rate was halved to 1.6%. Overall Norwegian GDP slumped 1.8% on quarter, depressed by weaker off-shore energy and overall trade. That was the weakest quarterly performance since the spring of 2022.
Icelandic consumer price inflation of 5.1% last month was at a 46-month low and exactly half of the peak 10.2% on-year advance in February 2023.
CPI inflation in Hong Kong slowed to a 5-month low of 1.4% in October 2024, three percentage points below its peak of 4.4% in September 2022.
Slovenian producer prices dropped 0.5% on month and 1.3% on year in October, constituting the tenth straight sub-zero on-year reading.
In addition to the usual Thursday release of jobless insurance claims, the U.S. menu of data arriving today also includes the Kansas City and Philly Fed manufacturing surveys, existing home sales, and the Conference Board-compiled indices of leading and coincident economic indicators. Mexican retail sales and Canadian new home prices and producer price figures are also due.
Just In: Although the Central Bank of Turkey’s monetary policy committee did what analysts were expecting, that is again keeping the one-week repo rate at a 22-year high of 50.0%, a statement was released that depicts more confidence in Turkey’s disinflationary process that expressed after previous policy reviews. This could foreshadow a rate cut happening sooner rather than later. Turkish consumer price inflation in October had eased to a 15-month low but still lofty 48.6%. Officials now assert that “the decisiveness regarding tight monetary stance will bring down the underlying trend of monthly inflation through moderation in domestic demand, real appreciation in Turkish lira, and improvement in inflation expectations…. Domestic demand continues to slow down, reaching disinflationary levels. While core goods inflation remains low, signs for an improvement in services inflation have become more apparent.”
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: BOJ Governor Ueda, Central Bank of Turkey, crypto currency boom, French business confidence, Russian ICBM fired at Ukraine
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