US Dollar stabilizes as China shakes markets with potential 6 trillion Yuan bond issuance
The US Dollar (USD) is gaining momentum at the start of the week, despite many US markets being closed for Columbus Day. Even with the bank holiday, three Federal Reserve (Fed) members are scheduled to speak. In parallel, China made a surprising move by suggesting it may issue up to 6 trillion Yuan (CNH) in bonds over three years to stimulate its economy, as reported by Caixin.
The economic calendar is quiet due to the Columbus Day holiday in the US. However, traders will be closely monitoring remarks from Federal Reserve Governor Christopher Waller, known for making market-moving comments.
**Daily Market Digest: China to Flood Markets with Cheap Debt**
China may issue up to 6 trillion Yuan in bonds over the next three years, according to Caixin. Meanwhile, in the US, bond markets are closed for Columbus Day, though equity futures are open and trading.
At 13:00 GMT, Minneapolis Fed President Neel Kashkari suggested that modest reductions in the Fed’s benchmark interest rate might be necessary in the coming quarters, as per Bloomberg. Kashkari is scheduled to speak again at 21:00 GMT on the state of the US economy at Torcuato di Tella University. Around 19:00 GMT, Fed Governor Christopher Waller will discuss the US economic outlook at a Stanford University conference titled "A 50-Year Retrospective on the Shadow Open Market Committee and Its Role in Monetary Policy."
US equity futures have turned positive, with markets showing upward momentum. The CME FedWatch tool shows an 88.2% probability of a 25 basis point rate cut at the November 7 meeting, with an 11.8% chance of no rate change. Expectations for a 50 bps rate cut have been fully discounted. The US 10-year Treasury yield, which closed at 4.10% on Friday, is not trading today due to the holiday.
**US Dollar Index (DXY) Technical Analysis: Greenback on the Rise**
The US Dollar Index (DXY) is hovering around 103.00, poised to move higher. With a light US economic calendar this week, the key question is whether there will be a sufficient catalyst to push the DXY to new heights. If Fed speakers don't provide this on Monday, the dollar’s upward movement may stall.
The psychological level of 103.00 is the first resistance to watch, with 103.18 being the upper target for this week. Above that, the 100-day Simple Moving Average (SMA) at 103.24 and the 200-day SMA at 103.77 serve as key technical barriers, followed by the 103.99-104.00 resistance zone. On the downside, the 55-day SMA at 101.88 and the 102.00 support level should protect against bearish pressure, with 100.62 providing further support. A break below 100.00 would bring the July 14, 2023, low of 99.58 into focus.
**FAQs: What Does a Central Bank Do?**
Central banks are responsible for maintaining price stability within a country or region. This involves managing inflation (rising prices) and deflation (falling prices) by adjusting policy rates. Major central banks like the US Federal Reserve, European Central Bank (ECB), and Bank of England (BoE) aim to keep inflation near a 2% target.
The economic calendar is quiet due to the Columbus Day holiday in the US. However, traders will be closely monitoring remarks from Federal Reserve Governor Christopher Waller, known for making market-moving comments.
**Daily Market Digest: China to Flood Markets with Cheap Debt**
China may issue up to 6 trillion Yuan in bonds over the next three years, according to Caixin. Meanwhile, in the US, bond markets are closed for Columbus Day, though equity futures are open and trading.
At 13:00 GMT, Minneapolis Fed President Neel Kashkari suggested that modest reductions in the Fed’s benchmark interest rate might be necessary in the coming quarters, as per Bloomberg. Kashkari is scheduled to speak again at 21:00 GMT on the state of the US economy at Torcuato di Tella University. Around 19:00 GMT, Fed Governor Christopher Waller will discuss the US economic outlook at a Stanford University conference titled "A 50-Year Retrospective on the Shadow Open Market Committee and Its Role in Monetary Policy."
US equity futures have turned positive, with markets showing upward momentum. The CME FedWatch tool shows an 88.2% probability of a 25 basis point rate cut at the November 7 meeting, with an 11.8% chance of no rate change. Expectations for a 50 bps rate cut have been fully discounted. The US 10-year Treasury yield, which closed at 4.10% on Friday, is not trading today due to the holiday.
**US Dollar Index (DXY) Technical Analysis: Greenback on the Rise**
The US Dollar Index (DXY) is hovering around 103.00, poised to move higher. With a light US economic calendar this week, the key question is whether there will be a sufficient catalyst to push the DXY to new heights. If Fed speakers don't provide this on Monday, the dollar’s upward movement may stall.
The psychological level of 103.00 is the first resistance to watch, with 103.18 being the upper target for this week. Above that, the 100-day Simple Moving Average (SMA) at 103.24 and the 200-day SMA at 103.77 serve as key technical barriers, followed by the 103.99-104.00 resistance zone. On the downside, the 55-day SMA at 101.88 and the 102.00 support level should protect against bearish pressure, with 100.62 providing further support. A break below 100.00 would bring the July 14, 2023, low of 99.58 into focus.
**FAQs: What Does a Central Bank Do?**
Central banks are responsible for maintaining price stability within a country or region. This involves managing inflation (rising prices) and deflation (falling prices) by adjusting policy rates. Major central banks like the US Federal Reserve, European Central Bank (ECB), and Bank of England (BoE) aim to keep inflation near a 2% target.