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On November 16, it was reported that Li Baian, former member of the Party Committee and Vice President of China Merchants Group Limited, is suspected of serious violations of discipline and law and is currently under disciplinary review and supervisory investigation by the Central Commission for Discipline Inspection and the National Supervisory Commission.On November 16th, according to the Finnish newspaper Helsingin Sanomat, European Central Bank (ECB) Governing Council member Rehn stated that the risk of slowing inflation should not be ignored. Low energy prices, a stronger euro, and declining wage and service sector inflation all suggest that overall inflation may be excessively below the ECBs 2% target. When asked if the ECB might cut interest rates again in December, Rehn said, "This risk cannot be underestimated." However, he also cautioned against the potential for rising inflation. Rehn stated that despite the Trump administrations tariff policies disrupting global trade, the Eurozone economy has shown resilience. Rehn also warned that the stock market "clearly faces the risk of a correction," emphasizing the importance of bank capital buffers. Driven by the US artificial intelligence boom, current stock prices appear high relative to the performance of the real economy and corporate profits. This requires caution.On November 16th, it was reported that the United States and Trinidad and Tobago are about to conduct military exercises in waters near the coast of Venezuelas Sucre state. On November 15th, Venezuelan President Maduro strongly condemned the exercises, calling the action "irresponsible" and a "threat" to peace in the Caribbean. Maduro stated that such actions are intended to put pressure on Venezuela, but Venezuela "will not be threatened by anyone." Recently, Trinidad and Tobagos Attorney General John Jeremy stated that the 22nd Marine Expeditionary Unit will be "intensifying exercises" in the country "in the coming days."1. Hungarian Prime Minister: Europe is on the brink of war. 2. Ukraine claims 1,200 Ukrainian prisoners will be released; Russia has not yet responded. 3. Russian Ministry of Defense: Russian troops have taken control of the Yablokovo settlement in Zaporizhia. 4. Ukrainian President Zelenskyy has ordered a comprehensive reform of state-owned energy companies. 5. According to RIA Novosti: The situation remains stable after an external power line to the Zaporizhia nuclear power plant was shut down. 6. Southern Ukrainian Defense Forces: Ukrainian troops have conducted a tactical withdrawal from the town of Novovasilivsk in the Zaporizhia region. 7. General Staff of the Armed Forces of Ukraine: A Russian oil refinery in Ryazan Oblast was attacked by Ukrainian forces; the refinery produces 840,000 tons of aviation fuel and other military fuels annually. 8. Russian Ministry of Defense: 247 Ukrainian drones were shot down in the past 24 hours. A Ukrainian military airport and energy facility related to the defense industry were attacked. 9. General Staff of the Armed Forces of Ukraine: Ukrainian forces struck the Sky-U radar station in Crimea, a military train in the Tokmok region of Zaporizhzhia, and a Russian troop assembly point in Volchansk, Kharkiv region.On November 16, the Kremlin announced that Russian President Vladimir Putin and Israeli Prime Minister Benjamin Netanyahu held a phone conversation on November 15, during which they had in-depth exchanges on the situation in the Middle East, including developments in the Gaza Strip, Irans nuclear program, and the situation in Syria.

Investor attention is on the Fed's minutes as recession fears drive the US Dollar Index towards 107.00

Daniel Rogers

Aug 16, 2022 11:47

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The US Dollar Index (DXY) rises for a third day in a row during Tuesday's Asian session, gaining bids to 106.58. Thus, the greenback's signal captures the market's rush for risk-free assets in response to worries about the US and China's economies as well as worries about geopolitics in the Middle East, China, and Russia. It is noteworthy that aggressive Fed remarks and weaker US data enhance market trepidation and help DXY bulls.

 

Despite this, the DXY bulls closely monitor the gloomy statistics coming out of China and the US, particularly in light of the recession fears.

 

In August, the US NY Empire State Manufacturing Index fell from 11.1 in July to 31.3, below market estimates of 8.5. The August NAHB homebuilder confidence index in the US fell from 55 to 49, the lowest level since the start of 2020.

 

In other news, China's retail sales slowed in July to 2.7% YoY from 3.1% earlier and 5.0% forecast, while industrial production (IP) fell to 3.8% from 3.8% previously and 4.0% market estimates. Additionally, in an effort to counter bearishness, the People's Bank of China (PBOC) shocked the markets on Monday by reducing the rates on its medium-term lending facility (MLF) by 10 basis points (bps).

 

It should be emphasized that news stories about deteriorating coronavirus conditions in Shanghai, China's financial center, and the restart of Russian bond trading on Wall Street did not spur investors' desire to take risks. The Wall Street Journal's (WSJ) rumors of a potential meeting between US Vice President Joe Biden and his Chinese counterpart Xi Jinping may also encourage investors to take more risks. In a similar vein, Chinese President Xi proposed new efforts to revive the second-largest economy in the world.

 

The Pentagon said on Monday that the US, South Korea, and Japan took part in a missile warning and ballistic missile search and tracking exercise last week off the coast of Hawaii. Between August 22 and September 1, the US and South Korea will collaborate on military drills. The DXY rises as a result of the additional stress that geopolitical worries place on market sentiment.

 

The three-day downtrend in US 10-year Treasury yields is around 2.775%, while S&P 500 Futures are down at least 0.13 percent day-to-day.

 

Moving on, the secondary US housing and activity data released today should be of interest to DXY traders ahead of the release of the FOMC Minutes on Wednesday. The dollar's gauge might remain on the bear's radar if US data keep getting worse.

 

The three-week-old resistance line, which is now support at 106.35, would need to be broken for an extended period of time for DXY bulls to hit the monthly high above 107.00. However, in order to approach July's yearly high close to 109, the bulls need confirmation from late July's peak at 107.45.


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