The implosion at FTX — the cryptocurrency exchange once valued at USD 32 billion — sent ripples across the cryptocurrencies market, resulting in huge crashes for most digital coins. However, it was not all gloom and doom in the financial markets as Dow Jones, S&P, and the Nasdaq posted their best day since 2020.
Forex
Source: Bloomberg. Click to see full size.
The EUR/USD pair surged above parity and reached a new monthly high after the lower-than-expected US Consumer Price Index (CPI) data, extending the pair’s positive momentum ahead of the weekly close. As a result, the possibility of the US Federal Reserve becoming less hawkish has grown after four consecutive 75 bps hikes in the federal funds rate.
As the dollar repositioned after Thursday’s softer CPI print, the GBP/USD pair posted a phenomenal week. A weaker dollar, not a stronger pound, has driven the recent advance. Meanwhile, USD/JPY remains under pressure at the start of this week.
The Eurozone will issue a preliminary estimate of its Q3 gross domestic product (GDP), while the United States will post October retail sales data. The United Kingdom’s data drought will end this week, with the release of high-tier CPI and employment figures. The primary event risk, however, will be the UK Prime Minister Rishi Sunak’s fiscal statement on Thursday.
In Asia, the Japanese data week is going to be big. This week’s highlights include GDP and national CPI reports. With market reactions to the US CPI and its implications for the Bank of Japan’s (BoJ) approach to monetary policy on the horizon, the inflation print will be especially important.
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Commodities
Source: Bloomberg. Click to see full size.
A weaker USD and falling US yields boosted gold prices. As reported by the Bureau of Labor Statistics, the annual Consumer Price Index in the US decreased to 7.7% in October from 8.2% in September. The dollar came under heavy selling pressure as a result of the lower-than-expected CPI data.
Participants will pay particular attention to Fed remarks and the general risk sentiment. If global share indices maintain their strong pace this week, XAU/USD might benefit from the weakening of the US dollar.
Oil prices rose on Friday but fell for the week after China, the world’s top oil importer, lifted some Covid-19 restrictions that were imposed after fresh outbreaks of the disease. The larger-than-expected build-up in US crude stocks also contributed to the fall in oil prices.
According to the US Energy Information Administration, commercial crude oil stocks in the United States climbed by 3.9 million barrels in the week ending 4 November, reaching its highest level since July 2021.
Cryptocurrencies
Source: Bloomberg. Click to see full size.
The cryptocurrency market faced a tumultuous week after the implosion at FTX, one of the largest players in the industry. The cryptocurrency exchange, which had over a million registered users, went from a USD 32 billion valuation to bankruptcy in a span of a few days as liquidity dried up and customers fled over fears of insufficient capital.
BlockFi, a crypto lending platform that Sam Bankman-Fried, the CEO of FTX, had helped finance, suspended its operations after the fiasco. At the start of this week, the global market cap of cryptocurrencies was approximately USD 840 billion.
Bitcoin, the world’s largest cryptocurrency plunged from USD 20,591 to a low of USD 15,757 during the week and is currently trading at USD 16,704 at the time of writing.
Ethereum isn’t faring much better either. The world’s second most valuable cryptocurrency is trading at $1,253, having sunk over 20% over the past week.
This event has not just destroyed confidence in the cryptocurrency industry, but it will potentially encourage regulators around the world to establish stricter frameworks.
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US stock markets
|
Name of the index |
Friday’s close | *Net change | *Net change (%) |
| Dow Jones Industrial Avg (Wall Street 30) | 33,747.86 | 1,344.64 | 4.15% |
| Nasdaq (US Tech 100) | 11,817.01 | 959.98 | 8.84% |
| S&P 500 (US 500) | 3,992.93 | 222.38 | 5.90% |
Source: Bloomberg
*Net change and net change (%) are based on the weekly closing price change from Friday to Friday.
The stock market saw some respite as investors welcomed the lighter-than-expected inflation numbers.
On Thursday, 10 November 2022, the 3 major US indices posted their best day since 2020. The Dow Jones index climbed over 3.7%, S&P rallied 5.54%, and the Nasdaq rose a whopping 7.49%, all owing to the inflation data released last week.
Going forward, investors hope that the Fed continues to throttle back the interest rate hikes and the monetary policy shifts. However, these hopes will soon be put to the test as the retail sector unveils its financial reports.
Retail giants such as Walmart sit on top of a lengthy list of companies expected to release their earning numbers this week, which would likely impact the stock market trends.
Additionally, the US Department of Commerce will publish its monthly retail sales report for October this week. Economists expect the report will have an effect on the stock market as the spending remained relatively flat last month.
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