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Prior To The European Central Bank’s Interest Rate Decision, The Euro Was Under Pressure.

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1 month ago

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European Central Bank

(VOR News) – The euro continued to lose momentum versus the US dollar prior to today’s crucial European Central Bank (ECB) interest rate decision, which is anticipated to be made public.

The EUR/USD pair fell nearly 3% from its September peak of over 1.12, and on Thursday during the Asian session, it settled in the mid-1.18 zone.

Due to market expectations that the European Central Bank will reduce interest rates by an additional 0.25%, the deposit rate will decrease to 3.25%.

If the European Central Bank (ECB) adopts a more hawkish posture than expected, the euro may gain as the markets have already reacted to the expected third rate cut.

Potential results of a rate decrease by hawks

Contrary to expectations, the European Central Bank may not be as dovish as the market believes. A hawkish surprise might cause the euro to spike considerably higher and hike the yields on European government bonds.

Market participants expect a swift rate-cutting trajectory, although the central bank will most likely maintain a gradual pace throughout its easing cycle.

The eurozone’s inflation rate dropped to 1.8% year over year in September, below the target level, according to preliminary statistics from Eurostat. Prior to the ECB’s decision, the final data will be released today.

Since the preliminary estimate and final data typically agree, expectations for a 0.25% rate cut are unlikely to alter unless inflation is revised higher.

At a meeting of the European Parliament’s Committee on Economic and Monetary Affairs, European Central Bank President Christine Lagarde said, “Looking ahead, inflation might temporarily increase in the fourth quarter of this year as previous sharp drops in energy prices drop out of annual rates, but the latest developments strengthen our confidence that inflation will return to target in a timely manner.”

The phrase “We will take that into account in our next monetary policy meeting in October” validates the likelihood of a rate cut in October.

She did, however, add that the European Central Bank will use a “data-dependent approach” and that policy rates will be maintained at a low level for the duration necessary to achieve our objective. We’re not precluding ourselves to a certain rate path.”

According to a study by Carsten Brzeski, Global Head of Macro at ING Research, “a hawkish surprise cannot be entirely ruled out.” He went on, “The decision to cut rates will be far more contentious than the markets currently anticipate.”

The European Central Bank may remain weak in the long run.

Both fundamental and market-driven factors influence a currency’s value. Important variables include European Central Bank inflation, the path of the economy, central bank interest rates, and the stability of political and economic institutions.

The euro appears to be suffering at the moment due to below-target inflation, a slowing economy, unpredictable politics, and the ECB’s easing cycle.

Michael McCarthy, market strategist and chief commercial officer of Moomoo Financial Inc., told Euronews that “the downtrend in growth and inflation data suggests this statement will likely be disregarded,” even though Lagarde will almost certainly re-emphasize a “meeting by meeting” approach.

I expect the euro to slightly rise on the announcement, but it will most likely then resume its medium-term drop and decline from its high over the preceding 2.5 years.

Furthermore, he pointed out that the recent downward pressure on the euro has been made worse by the strength of the US dollar as markets moved away from “the most dovish scenarios in the United States.”

The Federal Reserve (Fed) began its easing cycle in September with a significant 0.5% rate drop, which initially led to a decline in the value of the US dollar.

However, a number of positive economic reports this month, particularly in the labor market, have helped to bolster the US dollar. Money markets are now pricing in a 0.25% rate decrease by the Fed in November, as opposed to the previously anticipated 0.5% rate cut.

The contrasting policy outlooks of the two central banks have been cited as the reason for the euro’s decline against the US dollar.

SOURCE: EN

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Trudeau Accelerates Bond Selloff Over Mass Spending Fears

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2 days ago

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2024-11-23

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Trudeau, Bond Market
Trudeau accelerated a bond selloff due to expectations of faster growth and a deeper deficit

Prime Minister Justin Trudeau has accelerated bond selloffs, citing fears of a larger deficit over his GST giveaway. Investors were concerned he was returning to his free-spending strategy as an election loom.

On Thursday, Trudeau unveiled a C$6.3 billion ($4.5 billion) tax relief and rebate program. It includes a two-month moratorium on federal sales tax on various commodities such as Christmas trees, wine, toys, and books and a C$250 check for almost 19 million Canadians, or over half of the population.

The declaration looked to mark the end of a brief period of fiscal restraint, as Finance Minister Chrystia Freeland committed to contain budget deficits to prevent stoking inflationary pressures.

Now that inflation has returned to the Bank of Canada’s 2% target, policymakers have reduced the benchmark interest rate by 125 basis points since June.

Trudeau’s Liberal government sees an opportunity to dig deeper into the public purse, but some analysts believe investors are keeping a careful eye on the country’s debt.

Bonds continued to fall on Thursday following the announcement, as the 10-year benchmark yield rose 7 basis points to 3.457%. After retail data showed a rise in consumer spending on Friday, it increased by up to 3.488%.

As the Trudeau government considers additional fiscal spending, concerns about Canada’s financial situation persist.

Budget Shortfall

Freeland has yet to publish final spending and income figures for the fiscal year that ended in October. Parliamentary Budget Officer Yves Giroux predicts a deficit of C$46.8 billion, much exceeding Freeland’s self-imposed aim of a C$40 billion shortfall.

Despite promises to reduce deficits, the Trudeau government continues to increase expenditure. This year’s budget includes a new capital gains tax inclusion rate to balance the cost of new housing and social initiatives.

This sparked anger from investors and entrepreneurs but allowed Freeland to present a consistent deficit despite significant spending.

The recent declaration indicates that Trudeau’s government no longer feels restrained in its capacity to use economic stimulus to restore favor.

Pierre Poilievre’s Conservatives have led most surveys by roughly 20 points for over a year. They have pounded the prime minister on affordability and promised to reduce taxes, especially income taxes. An election is expected in late October 2025.

The sales tax break will run from December 14 to February 15. The left-wing New Democratic Party intends to support it but has stated that it will continue to advocate for its permanent implementation and expansion to include additional items.

Let the Bankers Worry

Following Trudeau’s announcement, traders in overnight swap markets reduced their bets that the Bank of Canada will drop interest rates by 50 basis points for the second time in December, lowering the odds to fewer than 25% by the end of Thursday. As of late Friday morning, the odds were less than 17%.

The announcement also encouraged several experts to improve their short-term projections for Canada’s GDP. Analysts at the Bank of Montreal predict that the country’s GDP will increase at a 2.5% annualized rate in the first three months of 2025, up from 1.7%.

Speaking to reporters on Friday, Trudeau praised his government’s approach to program expenditure, claiming it fosters optimism and possibilities for families and the middle class.

“We’re focusing on Canadians. “Let the bankers worry about the economy,” Trudeau stated.

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Forced Sale Google Chrome Could Fetch $20 Billion

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3 days ago

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2024-11-21

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Sale Google Chrome

Antitrust officials in the US could force the sale of Google’s Chrome browser for up to $20 billion, demonstrating the tremendous worth of the world’s most popular web browser.

Bloomberg Intelligence attributes Chrome’s projected worth to its more than 3 billion monthly active users. The US Department of Justice is preparing to request a federal judge order the browser’s separation from Google’s parent company, Alphabet.

Chrome’s worth comes from its overwhelming 61% market share and its crucial role in Google’s advertising ecosystem. User data enables businesses to better target adverts, and the browser also acts as an important distribution mechanism for Google’s AI technologies.

Industry analysts think it may be difficult to find a suitable buyer. While tech behemoths like Amazon could finance the purchase, they would likely face regulatory scrutiny.

AI businesses, such as OpenAI, may emerge as more viable contenders. They could potentially leverage Chrome to broaden their reach and develop an advertising business.

“It’s not directly monetizable,” one analyst told Bloomberg. “It functions as a gateway to other things. It’s unclear how you would assess that in terms of pure revenue generation.”

Google opposes prospective sales, claiming that they will hamper innovation. The firm does not break out Chrome’s revenue individually in its financial filings, even though the browser’s user data plays an important part in the company’s principal revenue stream, advertising.

The DOJ’s suggestion follows Judge Amit Mehta’s August decision that Google had illegally monopolized the search industry. The judge will consider the recommended remedies at a two-week hearing in April 2024, with a final judgment due in August 2025.

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Bitcoin Has Set a New Record And Is Approaching $100,000.

Published

3 days ago

on

2024-11-21

By

Bitcoin

(VOR News) – Bitcoin broke beyond the $98,000 mark for the first time on Thursday as investors awaited Donald Trump’s second term as president. All of this happened during the day. As such, cryptocurrency has reached a significant turning point.

According to Coin Metrics, the top cryptocurrency was trading at $97,541.61 during the most recent trading session. Merchants provided this information. This suggests a price gain of more than three percent during the previous trading session.

When the period began, Bitcoin peaked at $98,367.00.

During the premarket trading session, MicroStrategy, a platform that facilitates cryptocurrency foreign exchange trading and serves as a bitcoin proxy, saw a 13% gain. Coinbase, on the other hand, had a 2% rise during that period. Furthermore, all of these increases occurred simultaneously.

The market value of Mara Holdings increased by 9%, which helped raise the valuation of mining companies overall. This was among the factors that led to the total rise.

Because of the widespread belief that President Trump will usher in a new era of prosperity for cryptocurrencies, one marked by more favorable laws and the possible creation of a national strategic bitcoin reserve, the price of Bitcoin has been rising steadily this month.

The most recent change brought about by the increase was the consequence of higher financing rates and more open interest in the futures market during Asian trading hours. The rise was the catalyst for this change. This action was prompted by the ensuing rush.

Throughout its lifespan, this legislation was the catalyst for this change for a variety of reasons. At the same time, spot market premiums decreased, according to CryptoQuant statistics. All of this happened at the same time.

Furthermore, a number of short liquidations have been sparked by the recent spikes in Bitcoin’s price, which has caused the price to rise overnight. As a result, the price has gone up much more. As a result, the total number of short liquidations has increased.

According to CoinGlass, these liquidations have effectively produced more than $88 million in capital during the last 24 hours.

Rob Ginsberg, an analyst at Wolfe Research, noted in a study released on Wednesday that “historically, following previous movements of this magnitude, Bitcoin has either entered a consolidation phase or disregarded the overbought condition as investors accumulate.” This phrase relates to the fact that this particular move has happened before.

Ginsberg stated this in reference to the evolution of Bitcoin over time.

Ginsberg’s answer makes reference to Bitcoin’s propensity to go through a period of consolidation. The comment also made reference to this.

He said, “Considering we are emerging from an extended consolidation phase and the price has reached a new high, it suggests that the pursuit is underway.”

The crucial psychological milestone of $100,000 is expected to be reached in the upcoming weeks, and this breakthrough could happen as early as Thursday. It seems likely that this level will be reached. There is a chance that this new development will take place.

This task will be carried out against the backdrop of this historical era. In addition, if Trump were to win a second term, federal budget deficits would increase, inflation would likely increase, and the dollar’s position in international affairs would change.

The administration that Trump would run during his presidency would be responsible for these consequences. All of these characteristics would positively impact the value of Bitcoin as a currency if they were taken into account in the order that they are presented.

The price of bitcoin had risen by more than 130% by the beginning of 2024.

SOUREC: CNBC

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