2023-11-01 05:29

Copyrighted Image by: Reuters. The Thai baht has reached a six-week peak against the US dollar, according to analysts at Kasikorn Research Centre. The surge is largely due to investors offloading US currency in anticipation of the Federal Reserve meeting and a spike in domestic gold prices, fueled by escalating conflict in the Middle East. This situation has led to a boom in gold shop sales and gold exports. Despite the baht's recent strength, it experienced volatility, falling below 36.10 against the dollar. The future of the Federal Reserve's rate decision remains unclear due to high US inflation and oil prices. A strong US labor market could potentially lead to a rate increase or sustain high interest rates. Krungthai Bank pointed out the baht's stronger-than-expected rebound, influenced by profit-taking in gold trade and increased risk in the US stock market. They attribute the stronger-than-expected baht rebound to gold trade profit-taking. Increased risk in the US stock market is due to better-than-expected company performance. BMI, a unit of Fitch Solutions, anticipates that the Federal Reserve will loosen monetary policy in H2 2024, with the Bank of Thailand expected to follow suit. However, any premature action by the Bank of Thailand could further weaken the baht, which has already depreciated by about 5.0% year-to-date. Earlier this week, Kasikorn Research Center suggested that if the Federal Reserve fails to clarify US interest rate trends at its meeting, the Thai baht could appreciate further. The escalating Israel-Hamas conflict has increased domestic gold prices and exports, causing the dollar to weaken against the baht. However, volatility persists in the baht due to uncertainties over the December Fed meeting, with US inflation surpassing Fed targets and potential inflationary pressure from high oil prices. The strong US labor market may prompt the Fed to maintain or hike interest rates longer than anticipated. Predictions suggest that the baht could hit 35.80 and potentially even 35.60 against the dollar. https://www.investing.com/news/forex-news/thai-baht-hits-sixweek-high-amid-federal-reserve-uncertainty-93CH-3216237

2023-11-01 05:25

In the ongoing bankruptcy trial of crypto exchange FTX and Alameda Research, Sam Bankman-Fried, founder of both companies, is facing criminal charges. This development follows the collapse of FTX in November, when it was unable to return customer funds on demand, leading to bankruptcy filings for both FTX and Alameda. Bankman-Fried's co-defendants, Gary Wang, Caroline Ellison, and Nishad Singh, have already pleaded guilty to fraud and are now testifying against him. They argue that Bankman-Fried was aware of Alameda's $10 billion debt to FTX but allowed further borrowing. The prosecution has presented private notes written by Bankman-Fried and customer testimonies as evidence. Two customers testified that they kept money in their FTX accounts based on reassuring tweets from Bankman-Fried. Assistant US Attorney Danielle Sassoon questioned Bankman-Fried's comprehension of Alameda's precarious financial situation given his academic background from MIT and professional experience at Jane Street Capital. The prosecution also suggested that Bankman-Fried set his encrypted chats to auto-delete, implying a deliberate destruction of potentially incriminating messages. Bankman-Fried admitted to some mistakes but assigned the responsibility for most critical decisions to others. He claimed he believed Alameda’s debts to FTX were manageable at an estimated $2 billion. However, he expressed surprise in October when he discovered more than $8 billion accounted for in a different part of the FTX systems. The spending included billions on venture investments, real estate, and high-profile marketing. The case hinges largely on the "he said, they said" nature of the testimonies — and which side the jury will believe. The events leading up to this trial began with a key meeting at FTX's Bahamas office in June last year, where concerns over Alameda's possible bankruptcy were raised. Despite unsuccessful attempts at raising more equity for FTX, Bankman-Fried assured investors of both companies' financial stability. https://www.investing.com/news/cryptocurrency-news/ftx-and-alameda-bankruptcy-trial-bankmanfried-in-hot-seat-over-10-billion-debt-93CH-3216235

2023-11-01 04:56

Copyrighted Image by: Reuters. Investing.com-- Gold prices fell further on Wednesday as uncertainty grew before the conclusion of a Federal Reserve meeting and a key Treasury announcement later in the day, while weak economic data from China dented copper prices. Easing concerns over the Israel-Hamas war also saw traders pricing in a smaller risk premium for gold, as a lack of major escalation in the conflict lessened concerns over its potential economic impact. While gold logged stellar gains in October on the back of the conflict, it was hit with a high degree of profit taking in recent sessions, especially as the dollar and Treasury yields advanced before a Fed meeting this week. Spot gold fell 0.4% to $1,975.99 an ounce, while December gold futures fell 0.5% to $1,984.45 an ounce by 00:23 ET (04:23 GMT). Fed rate decision, Treasury auction in focus Markets were now focused squarely on the conclusion of a Fed meeting later in the day, where the central bank is widely expected to keep interest rates on hold. But the bank is also likely to reiterate its higher-for-longer stance on rates, given recent signs of sticky U.S. inflation, strength in the jobs market and overall economic resilience. Such a scenario bodes poorly for gold, given that higher interest rates push up the opportunity cost of holding bullion. But before the Fed decision, markets will be on watch for an announcement from the U.S. Treasury regarding its plans to refinance its massive debt load. The announcement is expected to provide more cues on the size and mix of planned Treasury auctions, especially in the face of a severe rout in bond markets over the past month. Treasury yields rose on Wednesday, with the 10-year rate rising 0.8% to 4.9%- just a hair away from a 16-year peak hit in October. Copper prices dip as China PMI pain continues Among industrial metals, copper prices fell further on Wednesday following the release of more weak economic data from China. Copper futures fell 0.2% to $3.6452 a pound. A private purchasing managers index (PMI) survey showed that China’s manufacturing sector unexpectedly contracted in October. The reading followed a similar decline seen in a government survey released on Tuesday, and pointed to further economic weakness in the world’s largest copper importer. The manufacturing sector- which is a key driver of Chinese copper demand- is facing renewed headwinds from slowing overseas demand, as economic conditions in China’s biggest trading partners worsen. https://www.investing.com/news/commodities-news/gold-losses-deepen-before-fed-rate-decision-copper-hit-by-china-woes-3216217

2023-11-01 04:00

Copyrighted Image by: Reuters. Investing.com-- Most Asian currencies retreated on Wednesday, while the dollar sat on strong gains as markets hunkered down before the conclusion of a Federal Reserve meeting later in the day. Weak purchasing managers index (PMI) data from China also kept sentiment towards regional markets frail, as the region’s biggest economy and trading hub saw sustained economic weakness through October. The Chinese yuan was flat, taking some support from a stronger midpoint fix from the People’s Bank of China. But sentiment towards the currency remained largely negative, as a private PMI survey showed that China’s manufacturing sector contracted in October. The reading followed a government survey on Tuesday which showed a similar decline, and saw markets grow even more doubtful over a Chinese economic rebound this year. Other China-exposed currencies moved in a flat-to-low range. The Australian dollar fell slightly, while the South Korean won shed 0.3% as data showed disappointing exports and imports for October. The Indian rupee rose 0.1%, taking some relief from a recent slide in oil prices. Japanese yen on intervention watch after BOJ-driven selloff The Japanese yen rose 0.3% on Wednesday, recovering slightly from a one-year low as the country’s top financial officials warned investors over speculating against the yen. The yen slumped 1.7% to 151.77 against the dollar on Tuesday after the Bank of Japan largely disappointed investors with minimal changes to its ultra-dovish policy. The drop brewed increased speculation that Japanese authorities will intervene in currency markets, given that the yen was close to a threshold that had triggered over $60 billion worth of intervention by the government in late-2022. The currency also saw increased pressure from uncertainty over the Fed meeting this week, given that a widening gap between U.S. and Japanese yields was a key source of pain for the yen over the past year. Dollar strong with Fed meeting, Treasury auctions in focus The dollar index and dollar index futures rose slightly in Asian trade after a strong overnight rally against a weaker yen. Markets were focused squarely on the conclusion of a Fed meeting later in the day. While the central bank is expected to hold rates, it is also set to reiterate its higher-for-longer stance- a scenario that bodes well for the dollar but poorly for Asian markets. But before the Fed, focus will be on an announcement from the U.S. Treasury on its plans to refund government debt, especially amid a prolonged rout in bonds over the past month. The refunding announcement is expected to provide cues on the sizes and mixes of the planned government Treasury auctions, and will also offer insight into how the government plans to replenish its massive debt load in the face of a severe bond sell-off. https://www.investing.com/news/forex-news/asia-fx-falls-dollar-strong-as-fed-rate-decision-looms-3216169

2023-11-01 01:34

Copyrighted Image by: Reuters. Investing.com-- Traders remained on edge over any potential intervention in currency markets by Japanese authorities, as the yen plummeted to a one-year low after the Bank of Japan disappointed markets with only minimal changes to its yield curve control policy. The Japanese currency slid 1.7% on Tuesday to 151.77- its weakest level against the dollar since late-October 2022. But the yen rose 0.2% on Wednesday morning to 151.40, recovering some ground after top currency official Masato Kanda said that the government was ready to act against “one-sided” moves in currency markets. Kanda’s comments were the latest verbal warnings from the Japanese government over speculation against the yen. But they carried more weight this time around, given that the yen was close to the threshold that had triggered over $60 billion worth of intervention by the Japanese government in 2022. Before October 2022, the last time the yen had breached the 150 level was in early-1990, during the onset of the lost decade, after the unwinding of a massive speculative bubble in Japan. The yen’s latest decline came after the Bank of Japan made limited changes to its yield curve control policy on Tuesday. While the bank still flagged some more flexibility in how it allows bond yields to fluctuate, the move largely disappointed investors hoping for a more aggressive change. It also indicated that a shift away from the BOJ’s ultra-dovish stance will take longer to play out than initially expected. The BOJ's dovish signaling was particularly damaging this week, given that it came just a day before the conclusion of a Federal Reserve meeting, where the bank is expected to signal higher-for-longer rates. A dovish BOJ has been the biggest weight on the yen over the past year, as a widening gap between local and U.S. interest rates, following a series of interest rate hikes by the Fed, made the Japanese currency appear substantially less attractive. Volatility across global financial markets also diminished the yen’s appeal as a vehicle for carry trade. The BOJ and the government have warned that a weakening yen threatens to potentially destabilize the Japanese economy, given that it pushes up import costs and factors into higher inflation. This notion has been the key driver of government intervention in currency markets over the past year. https://www.investing.com/news/forex-news/yen-on-intervention-watch-after-hitting-1year-low-on-boj-disappointment-3216134

2023-11-01 00:44

Copyrighted Image by: Reuters. Investing.com — The oil bull has come up for gasping for air after October’s sinking of crude prices — and isn’t finding relief from a Federal Reserve indicating that current US interest rates may not be high enough to effectively curb inflation. The Fed is still quite some way from its 2% annual target for inflation, with latest data on US personal consumption expenditure standing at 3.4%. That suggested that another rate hike might come as early as December and was enough to send crude prices lower for a third day in a row. New York-traded West Texas Intermediate, or WTI, crude for December delivery, settled at $80.44 per barrel, down 58 cents, or 0.7% on the day. The slide added to WTI’s drop of more than 10% for October, which came at Tuesday’s close, as oil traders conceded that the Israel-Hamas war wasn’t really in a position to deliver a geopolitical risk premium for crude, given its virtually zero impact thus far on oil traffic out of the Middle East. Earlier on Wednesday, the US crude benchmark rallied nearly 3%, attempting to move on from October, its worst losing month in five. Week-to-date WTI is down almost 6%, after last week’s loss of nearly 3%. UK-origin Brent crude’s most-active January contract settled at $84.63, down 39 cents, or 0.5%. Like WTI, Brent, the global crude benchmark, fell more than 10% in October and is down 6% week-to-date. The Fed is not sure if US interest rates are high enough to bring inflation back to its target of 2% per year, Chairman Jerome Powell told a news conference on Wednesday, indicating that the central bank might impose another rate hike at its December policy meeting. “We are not confident policy is sufficiently restrictive,” Powell said after the Fed, at the end of its November policy meeting, opted to leave rates unchanged in a range of 5.25-5.5%. Prior to that, the central bank had raised rates 11 times between March 2022 and July 2023. https://www.investing.com/news/commodities-news/oil-prices-creep-higher-after-crushing-oct-fed-squarely-in-focus-3216125