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US Dollar Index Slides As Jobless Claims Surge to 861k

The US dollar weakened on Thursday, joining the decline in the broader financial markets. The greenback is slumping after the US government reported a larger-than-expected reading for initial jobless claims. While the dollar has rebounded over…

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The US dollar weakened on Thursday, joining the decline in the broader financial markets. The greenback is slumping after the US government reported a larger-than-expected reading for initial jobless claims. While the dollar has rebounded over the last week, the greenback has ostensibly hit the pause button on its meteoric ascent to kick off 2021.

According to the Bureau of Labor Statistics (BLS), the number of Americans filing for unemployment benefits climbed to 861,000 in the week ending February 13, coming in much higher than the median estimate of 765,000. This is up from last week’s figure of 848,000.

Continuing jobless claims came in just below 4.5 million, while the four-week average, which removes week-to-week volatility, topped 833,000.

The weekly report highlighted an additional 516,2999 applications were submitted through a temporary federal-relief program. When the new federal and state claims were are combined, the government received 1.38 million applications for jobless benefits. These claims have yet to slide below one million per week since the early days of the COVID-19 pandemic.

New applications surged the most in California, Illinois, and Virginia. The largest declines occurred in Georgia and Texas.

In other economic data, building permits surged 10.4% to 1.881 million in January, up from 4.2% in December. Housing starts tumbled 6% to 1.58 million, down from the 8.2% gain in the previous month.

Export prices rose 2.5% in January, while import prices picked up 1.4%. The Federal Reserve Bank of Philadelphia’s Manufacturing Index fell to 23.1 in February, down from 26.5 in January. The market had penciled in a reading of 20.

Financial markets may have been spooked by reports that Pfizer is warning that the South African variant could significantly reduce vaccine protection by as much as two-thirds. While cases have been coming down in the US and in many parts of the world, the medical experts have sounded the alarm about an explosion in new infections from these variants.

The bond market was mostly in the green toward the end of the trading week, with the benchmark 10-year Treasury edging up 0.012% to 1.311%. The one-year note dipped 0.002% to 0.066%, while the 30-year bond tacked on 0.022% to 2.091%.

The US Dollar Index (DXY) tumbled 0.41% to 90.58, from an opening of 90.90. The DXY’s weekly gain is being threatened as its rally has eroded to 18%. The index has defied market expectations so far this year, increasing as much as 1.4% in the first two months of the calendar year.

The USD/CAD currency pair dipped 0.05% to 1.2695, from an opening of 1.2700, at 13:09 GMT on Thursday. The EUR/USD advanced 0.32% to 1.2081, from an opening of 1.2039.


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Shiba Inu and other dog coins on heat despite market dip; will ASS explode next?

While Bitcoin and most other top coins take a bath, Shiba Inu is still leg-humping its way up the market. … Read More
The post Shiba Inu and other dog…

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While Bitcoin and most other top coins take a bath, Shiba Inu is still leg-humping its way up the market. Meanwhile, an Aussie-themed dog coins is having a crack, and FLOKI is being flogged on the London Underground.

Bitcoin (BTC), Ethereum (ETH) and most other cryptos are having a dog of a day so far, so what’s with Shiba Inu (SHIB) and why is it up 22 per cent since this time yesterday, when it was already pumping like crazy?

In fact, the surging dog memecoin hit a fresh all time high a few hours ago, amid the market dump. And it’s up 100 per cent over the past week, 689 per cent over the past month, and… um… 66.6 MILLION per cent over the past 12 months.

SHIB still seems to be riding on the fervent speculation it has an imminent listing on the popular Robinhood trading exchange. It’s now number 11 on the CoinGecko market-cap leaderboard, with a valuation of US$27.9 billion, ahead of Afterpay and Fox Corporation and closing in on Deutsche Bank. Ridiculous? Hell yeah. But, woof… welcome to crypto.

As Fortune reports, a petition on Change.org is requesting  Robinhood list SHIB — and it now has more than 326,000 signatures. On the company’s earnings call Tuesday, Robinhood CEO Vlad Tenev said the exchange is “carefully” considering adding new coins to its offerings.

“We feel very, very good about the coins that we’re currently listing on our platform and any new coins that we add we want to feel equally, if not more good,” Tenev said, making a slight dog’s breakfast of his sentence.

 

Is Shiba Inu ‘pointless’?

Shiba Inu – it’s just a complete joke coin for pure speculators who don’t understand market cap and think it can hit one US dollar… right? Yes, and no.

Despite Michael “Big Short” dismissing the coin as “pointless” just recently, the project does actually have a bit more to it than first memes the eye.

Looking at the project’s website, and as the YouTuber Altcoin Daily recently admitted, the thing actually has some surprising utility and an ecosystem built around decentralised finance tenets. These include liquidity provision through ShibaSwap to earn yield in a sub-token called BONE; staking tokens (“burying” BONE); an upcoming layer 2 scaling solution and more. It even has its own NFT marketplace.

So, yep, it’s a meme coin, but as Altcoin Daily points out in a video essentially apologising to the “SHIB Army”, it’s clearly developed into something quite a bit more.

Not financial advice, but especially after the kind of pumps it’s had, investors might consider SHIB a pretty risky buy right now. A Robinhood listing, though, and who knows what could happen. Buy-the-rumour, sell the mutt? Maybe, maybe not.

 

More canine coins on heat: ASS exploding

A quick scan of some other pooch-powered tokens humping and pumping today, and we can see an Aussie-themed mongrel doing pretty well today, too.

Australian Safe Shepherd, which goes by the ticker ASS, is up a cool 69 per cent (in a coincidental NSFW meme continuation) since this time yesterday.

While this reporter is certainly more of a dog than cat fan, he remains cautious about all this. That said, fans of ASS certainly believe it’s going to “explode”.

Australian Safe Shepherd appears be building some expansive DeFi utility around its ASS token, too, as well as having numerous other community-driven activities on its roadmap.

As for some other hounds in the crypto pack today, “the Bitcoin” of meme coins, Dogecoin (DOGE) needs to stock up on its worming tablets – it’s down about 10 per cent.

Others posting ridiculously healthy gains, though, include Safemoon Inu (SMI), +82%; CorgiCoin (CORGI), +41%; Dogelon Mars (ELON) +22%; Baby Doge Coin (BABYDOGE), +20%; and Kuma Inu (KUMA), +15%.

 

 

The post Shiba Inu and other dog coins on heat despite market dip; will ASS explode next? appeared first on Stockhead.


Author: Rob Badman

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Economics

Loonie Soars After Bank of Canada Ends QE Early, Accelerates Potential Timing Of Rate Hikes

Loonie Soars After Bank of Canada Ends QE Early, Accelerates Potential Timing Of Rate Hikes

Another day, another hawkish surprise from a developed…

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Loonie Soars After Bank of Canada Ends QE Early, Accelerates Potential Timing Of Rate Hikes

Another day, another hawkish surprise from a developed central bank.

While nobody expected the Bank of Canada to hike rates today despite soaring inflation, the BOC did surprise most most traders when it announced it is ending its bond buying stimulus program, and accelerated the potential timing of future interest rate increases amid worries that supply disruptions are driving up inflation.

In a policy statement on Wednesday, Canadian central bankers led by Governor Tiff Macklem announced they would stop growing holdings of Canadian government bonds, ending a quantitative easing program that has poured hundreds of billions into the financial system since the start of the Covid-19 pandemic, to wit: “The Bank is ending quantitative easing (QE) and moving into the reinvestment phase, during which it will purchase Government of Canada bonds solely to replace maturing bonds.” Then again, one look at the BOC’s balance sheet makes one wonder just how long this QE halt will survive…

The Bank of Canada will release details of how it will implement the “reinvestment phase’’ of bond purchases in a market notice at 10:30 a.m. That will be a situation where it acquires bonds only to offset maturities, keeping overall holdings and stimulus constant. Most recently, weekly bond purchases had been C$2 billion. BOC head Macklem will also provide more insight into his policy decision at an 11 a.m. press conference.

In any case, the BOC also signaled it could be ready to hike borrowing costs as early as April, as supply constraints limit the economy’s ability to grow without fueling inflation.

Macklem maintained his pledge not to raise the benchmark overnight policy rate until the recovery is complete, but officials now believe that will happen in the “middle quarters’’ of 2022, bringing it forward from the second half of next year as previously thought.

We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Bank’s projection, this happens sometime in the middle quarters of 2022. In light of the progress made in the economic recovery, the Governing Council has decided to end quantitative easing and keep its overall holdings of Government of Canada bonds roughly constant.

The language will reinforce market expectations the Bank of Canada is poised to quickly pivot to a tightening cycle amid growing price pressures. Investors are anticipating the Canadian central bank will start raising interest rates within the next six months, with markets pricing in four rate hikes next year.

The Bank of Canada has been using two major tools to keep borrowing costs low: maintaining its policy interest rate near zero and buying up Canadian government bonds from investors to keep longer-term borrowing costs in check. The benchmark interest rate was left unchanged at 0.25% on Wednesday. The central bank has increased its bond holdings by about C$350 billion since the start of the pandemic.

“Shortages of manufacturing inputs, transportation bottlenecks, and difficulties in matching jobs to workers are limiting the economy’s productive capacity,’’ the BOC said adding that “although the impact and persistence of these supply factors are hard to quantify, the output gap is likely to be narrower than the bank had forecast.’’

The more hawkish tone at the bank on Wednesday comes even amid a less rosy outlook for the economy. The central bank cut its growth estimates for both 2021 and 2022, but officials said much of that reflects worse-than-expected supply disruptions in the global economy.

Because of those disruptions, the Bank of Canada marked down estimates of “supply’’ by more than their downward revisions to output. That means the central bank now sees less excess capacity in the economy, and less reason to accommodate demand with cheap borrowing costs.  The build-up of inflationary pressures also appears to be testing the Bank of Canada’s patience. The Bank of Canada revised higher its forecasts for inflation — to 3.4% in both 2021 and 2022.

This means that the BOC is joining the Fed in tightening into a stagflation.

“The main forces pushing up prices — higher energy prices and pandemic-related supply bottlenecks — now appear to be stronger and more persistent than expected,’’ policy makers said. “The bank is closely watching inflation expectations and labor costs to ensure that the temporary forces pushing up prices do not become embedded in ongoing inflation.”

In the accompanying Monetary Policy Report that contains the Bank of Canada’s new forecasts, policy makers also said upside risks to inflation have become a greater concern because price increases are above the central bank’s 1% to 3% control range.

In response to the surprise announcement, the Canadian Dollar soared as much as 0.6%, rising to 1.2309 against the USD…

… while the Canadian 2Y yield spiked more than 24bps above 1.00%…

… in a day defined by violent treasury moves, first in the UK and now in Canada.

Tyler Durden
Wed, 10/27/2021 – 10:16










Author: Tyler Durden

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Will The ‘Billionaire Tax’ Collapse The Market (And Other Anti-Fragile Talebian Takes)

Will The ‘Billionaire Tax’ Collapse The Market (And Other Anti-Fragile Talebian Takes)

By Michael Every of Rabobank

A Talebian Treatise

One…

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Will The ‘Billionaire Tax’ Collapse The Market (And Other Anti-Fragile Talebian Takes)

By Michael Every of Rabobank

A Talebian Treatise

One of the (few) joys of social media, at least for a (very) narrow subset of users, is the ability to watch intellectuals thrash out great ideas, or each other, in real time. It’s like being in a 17th century London coffee house, but with less syphilis and scrofula. In the highest pantheon of such is flaneur Nassim Taleb, who has something provocative, profound, and logically consistent to say about a staggering array of topics. And it is a particularly Talebian news-day today.

On Twitter, Taleb notes of the White House’s proposed wealth tax on billionaires: “Consider that if  we established a capital gain tax on *large* unrealized earnings (as a “draw” against future realization) we could pretty much close the deficit. At 45% Fed+State, just half the owners of Tesla would owe half a trillion! Unless, of course, it collapses the market.” Which it almost certainly would. And on US tax, the latest proposal is a 15% minimum rate for all firms earning over $1bn for three consecutive years. So, watch them all suddenly earn $999,999,999 in year three.

China says Evergrande’s billionaire owner should pay some of the firm’s massive debts with his own wealth: what is that if not Taleb’s ‘skin in the game’? Presumably, as regulators tell other struggling Chinese developers to make clear just how much foreign debt they actually hold, and to “optimize their foreign debt structure”, this suggestion will also be made to other CEOs. Again, China seems to understand the essence of how capitalism really should work better than how Western capitalism really does work.

Taleb also has a great line on inflation, defined as: “when what you own goes down and what you don’t own goes up,” which applies to the asset-rich-income-poor framework central banks are still relying on, except in China. After all, US house prices yesterday jumped 1.2% m/m and 20% y/y, with a surge in new home sales to investors. Who needs a property-owning middle class? It’s only the long-recognized central pillar of a stable liberal democracy.

Taleb’s comment also segues to supply chains, if you rely on imports, i.e., goods that you don’t own; and to another key idea of his, antifragility that some things get stronger when tested, in a Nietzschean sense. On that note, an article from March 2020 asked, ‘Why Didn’t We Test Our Trade’s ‘Antifragility’ Before COVID-19?’, noting Netflix uses software to regularly and randomly bring down its servers, allowing its system to adapt rapidly. They extend this metaphor that: To be resilient, a social entity, whether a nation, region, city, or family, will have a diverse mix of internal and external resources it can draw upon for sustenance.” To do so, the authors suggest: 1) practice disconnecting, and; 2) do it randomly.

For individuals/families:

“…simply declare, ‘Let’s pretend all of the grocery stores are empty, and try getting by only on what we can produce in the yard or have stockpiled in our house!’ On another occasion, perhaps, see if you can keep your house warm for a few days without input from utility companies.” Now we don’t have to pretend.

For companies:

“…simply say, ‘We are awfully dependent on supplier X: this week, we are not going to order from them, and let’s see what we can do instead!’” Again, we are now seeing this for real.

For states:

banning imports means trade war, but “a possible solution…is that a national government could periodically, at random times, buy all of the imports of some good from some other country, and stockpile them. Then the foreign supplier would have no cause for complaint: its goods are still being purchased! But domestic manufacturers would have to learn to adjust to a disappearance of the supply of palm oil from Indonesia, or tin from China, or oil from Norway.” We see stockpiling today, and swings in purchases of key goods. But don’t be fooled: they aren’t random. As the authors recognise, “Critics will complain that such government management of trade flows, even with the noble aim of rendering an economy antifragile, will inevitably be turned to less pure purposes, like protecting politically powerful industrialists. But so what? It is not as though the pursuit of free trade hasn’t itself yielded perverse outcomes.” They make a good point.

So what does this imply?

For individuals and businesses, shortages can pop up anywhere. US inventories of both coal and gas (export-demand adjusted) are worryingly low if we see a cold winter, and Blackstone’s Schwarzman and BlackRock’s Fink have both just admitted green policies are also going to push up energy and food prices – “And when that happens you’re going to get very unhappy people around the world, in the emerging markets in particular.”

On trade, resilience *is* geopolitically zero-sum, sadly. Russia has just told Moldova it can get a better gas deal this winter…if it weakens its free-trade ties with the EU: “Autonomie strategică,” as they say in Moldovan. What now, Brussels? China’s de facto ban on exports of fertilizer and magnesium could potentially also have huge knock-on effects for agricultural producers and EU auto makers, who are 95% reliant on the latter. More generally, China has stated, rationally, that it intends to remain at the center of global supply chains, except where it on-shores production itself. If others want to become more resilient on trade, it is hardly likely to lower the transition costs of doing so: quite the opposite, in fact. No country and no firm in similar circumstances would act any differently: watch the EU-UK dynamic over time. China has meanwhile also just told France it supports its aim of strategic autonomy – but that means an EU moving away from the US, not an EU getting magnesium, and other goods, from sources other than China.

In short, there is a lot more real-world volatility to come ahead from this backdrop, even if those with no skin in the game, and who adore fragile systems, cannot see it coming.

In a country that now knows all about eggs-in-one-basket trade resiliency –and whose lobster exports are a national security issue for others– Australia’s headline CPI came in 0.8% q/q as expected, and 3.0% y/y, a tick lower than the market expectation. However, trimmed mean CPI was 0.7% q/q vs. 0.5%, and 2.1% y/y vs. 1.8% consensus, and the weighted median was also 0.7% q/q vs. 0.5%, and 2.1% vs. 1.9% consensus. Forget about house prices soaring to the point where they will get to Jeff Bezos’s orbital business park before he does, we suddenly have a slightly above-target core CPI print!

The Aussie yield curve is reacting like yields also want to go into space: 10 year yields are up around 10bp, and 3-year yields up around 23bp at time of writing. Is the RBA really going to look at this and suddenly change its mind about not raising rates until 2024 – even after the US has seen core CPI far higher for months, and is still on go-slow? First, let’s see if the RBA steps in to defend its imaginary line of yield curve control: but it would be wryly amusing if the Reserve Bank were to suddenly pivot just because one core CPI print came in 0.2 percentage points above a market consensus set by people with as poor a track record of forecasting as the Bank itself.  

What a sensible system we have built: now back to the usual Twitter trivia and vitriol.

Tyler Durden
Wed, 10/27/2021 – 10:25



Author: Tyler Durden

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