Frank Walbaum
FX Strategies.Asia
Important news for the day
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BRICS
Former US President Trump announced that BRICS nations would face 100% tariffs if they pursue a new currency and shift trade away from the US Dollar. This move appears aimed at pressuring the bloc but risks accelerating de-dollarization efforts and alienating key trade partners. Given the U.S.'s reliance on imports from BRICS nations, such tariffs could exacerbate domestic inflation and disrupt global supply chains. The strategy may backfire, potentially driving BRICS members closer in their economic cooperation and diversification plans.
Market talk
The weakness of the Dollar seems to continue. The Dollar index shows fresh downside momentum based on the daily chart and might hence remain capped below the technical resistance zone at 107.50. The weakness could also help equities to the upside, which might cause the S&P 500 to run higher for now. Crypto markets remain mixed. Bitcoin is still heading lower, with the upside still intact, though. XRP had another tremendous run and seems unstoppable for now. A strong correction seems overdue - the question is when?
Tendencies in the markets
- Equities positive, USD weaker, cryptos strong, oil weak, metals positive, JPY stronger.
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USD/JPY consolidates the uptick to near 150.10
USD/JPY is back below 150.00 in Wednesday's Asian session, struggling to extend the latest leg higher as bets for a December BoJ rate hike underpin the the Japanese Yen. However, the downside remains capped amid increased haven demand for the US Dollar on growing tariff war fears.
Gold price remains confined in a familiar range; looks to Fed’s Powell for fresh impetus
Gold price continues its struggle to gain any meaningful traction on Wednesday. Bets for a less dovish Fed and an uptick in the US bond yields cap the precious metal. Geopolitical risks and trade war fears lend some support amid subdued USD demand.
Paul Atkins shows reluctance to replace SEC Chair Gary Gensler
Paul Atkins, regarded as a leading candidate to succeed Gary Gensler as Chairman of the Securities & Exchange Commission, has reportedly expressed a lack of enthusiasm for the position.
The fall of Barnier’s government would be bad news for the French economy
This French political stand-off is just one more negative for the euro. With the eurozone economy facing the threat of tariffs in 2025 and the region lacking any prospect of cohesive fiscal support, the potential fall of the French government merely adds to views that the ECB will have to do the heavy lifting in 2025.
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