The US and European stock futures are trading cautiously lower as traders react to the employment news from the tech giant Apple which said that it would slow down its hiring and keep a closer eye on its cost. When it comes to Apple, traders must pay attention to the bigger picture, which is that the company is set to launch an aggressive line of new products next year which means a slow down in the hiring process is only going to be a very short term game while the future of the company looks solid.
The strength and weakness of the dollar index matter the most in the currency market at the moment. Yesterday, we saw the dollar index easing off its highs, and today we see some bids coming back to the market. But overall, it is not wrong to say that the king dollar’s crown may begin to look a bit tarnished soon as the Fed officials do not believe that the US economy needs a 100 basis point interest rate hike. The FOMC meeting is taking place next week, and in between, several important data points will drive the price action for the greenback.
The currency pair which will remain the most intriguing is the EUR/USD as the ECB will take the stage on Thursday, and traders believe that it is not the ECB alone that can save the currency from its recent plunge. The expectations are that we will see a little different ECB this time. But the key for the ECB is to show its firm side against tackling inflation and, at the same time, show enough flexibility, which, if the region falls into a deep recession, will allow it to bring back the old policies along with the new one still on the table.
Bitcoin made one month high yesterday, and that improved the sentiment among investors and traders. As we mentioned yesterday, that bad news isn’t influencing the price of bitcoin; for instance, yesterday was the first day that all markets were opened and had the chance to react to the bankruptcy news of Celsius, a project which made unrealistic promises.
Traders believe that from here onwards, it will be more about round numbers and capitulations. Bearish bets need to be squeezed out, and it is highly possible that in the coming days, we may see the bitcoin price crossing above the 25K price, bringing more life to the bitcoin price. Remember, bitcoin is a different beast, and it can recover all of its losses and make a new high. But for now, even if the price exceeds 25K, it will still be a long way from 68K, the current all-time high for the BTC.
Oil prices saw a decent rally yesterday as Biden came empty-handed from his Saudi Arabia and achieved nothing in terms of oil supply. The Saudis gave him the straight answer, which is that there is no unilateral decision when it comes to oil supply, although Saudi Arabia is the key player in the OPEC cartel. The critical price point remains the $100 price mark, and we believe that traders should keep a close eye on this price mark as this differentiates the price action from being bullish to bearish.
The Big Question
The one question on every trader’s and investor’s mind is how far the Fed will push the curve when they meet next week to decide their interest rate hike. The FOMC members have already given clues about this, and there is no coherent message and a lot of noise in relation to what the Fed should do. But overall, looking at the current expectations and the Treasury Market, it seems more plausible that the Fed is more likely to increase the interest rate by 75 basis points for now. If the inflation reading in the coming months shows that we have reached a peak, we will likely see an interest rate of 100 basis points receding.
The scorching heatwaves in Europe are pushing the power grids to their crash level, making the energy supplier bring policies primarily implemented during extreme winter months. Today, we are likely to see the temperature rising above 38 degrees Celsius in the UK, which is likely to bring productivity lower as more people may take time off to switch off while energy consumption increases further.