The U.S. Dollar’s momentum faded in the FX world as a safe haven to chaos in the form of potential collapse for a Chinese real estate tycoon that could reverberate throughout the commodity-based global community.
Overview
Indeed, Beijing realized that once again they are worried about free markets beyond their liking and decided to address fears. The People’s Bank of China decided to increase its injection of short-term cash into the financial system. Meanwhile, commodities are no longer declining sharply as they look to find a recovery path from the sell-off.
The biggest risk even of the week comes today at 2 PM as Fed Chairman Jerome Powell announces the committee’s decision, which some traders predict will be to remain cautious likely because this meeting comes in the midst of market concerns about the outlook and calamity rather than higher borrowing costs or less aid from loose monetary policy. Things will likely be rather calm until 2 pm when all eyes will look for the dot-plot and any suggestion about delaying taking stimulus away.
What to Watch Today…
- No major economic events scheduled for today
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EUR ⇑
The Euro is not moving much ahead of the FOMC meeting later this afternoon as all Europeans eagerly await the results of the German elections to be held this upcoming Sunday. Armin Laschet, a 60-year-old politician, is the candidate Angela Merkel’s Christian Democrats would like to see elected Chancellor, but it looks as if the party will not be popular enough to give him a mandate. Because of Germany’s post-WWII history being complicated, the idea that this very consistent line of leadership will lose dominance is a bit of a political earthquake. We will know nothing until the final tally is in and what arrangement the country will need to have a trusted government from a global perspective.
GBP ⇑
Sterling is trying to move up at the moment, but we wonder if it has room to decline as there are growing concerns about the country’s ability to provide energy to its constituents. More than a few power companies have stopped signing in new customers because they cannot maintain the low prices advertised. Additionally, U.K. Business Secretary Kwasi Kwarteng warned that the nation needs to brace for long-term energy costs as the natural gas shortage prevents advancement in energy offerings.
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