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In the last week of trading, the buyer side once again made efforts to stabilize the market. However, neither the global stock markets nor the crypto market were able to sustainably break away from their lows of the previous week. Only in the middle of the week did stronger-than-expected house sales in the USA and increasing consumer confidence on the part of US consumers ensure a temporary recovery towards the north.
At the same time, an emergency intervention by the English central bank (BOE) on the foreign exchange and bond markets led to a bullish reversal in the British pound (GBP), which had previously slipped to a new all-time low. As a result, the British national currency appreciated by 8 percentage points against the US dollar. However, given the lurching course of the BOE, it is questionable whether this trend will continue. At the end of the week, the US dollar index DXY was a good 2 percentage points lower in a weekly comparison. Despite the short-term weakness of the US dollar, the stock market corrected undeterred to new lows for the year in the second half of the week, also due to rising consumer prices in Europe and the USA.
BTC price shows relative strength
On the crypto market, however, the breather of the US dollar caused a slight stabilization of the price of cryptocurrencies. The key crypto currency thus decoupled itself at least somewhat from the US stock markets, which formed new lows at the end of the week. At the close of trading on Friday, the last trading day of the third quarter, the BTC price also began to undergo a slight price correction. However, the lower edge of the trading range at 18,200 US dollars was not started again – a positive indication. In particular, the falling interest rates on British government bonds prevented an immediate collapse of British bond funds in the previous week. Experts spoke of an intervention in the open heart of the bond and foreign exchange market in order to avert turmoil similar to the so-called “Lehman crash” of the US bank in 2008 at the last second. The relative weakness of the US dollar index in the last week of trading could continue at the start of the week and cause prices on the crypto market to rise.
The relatively small drop in the price of the key crypto currency BTC compared to the significant price corrections in the US stock indices in recent weeks underpins the trend towards relative outperformance. Whether the crypto prices will be able to build on the strength of the previous week this week, despite massive currency fluctuations and possible new annual lows in the US indices, depends in the short term on the following economic data and dates.
News from the ECB
The current JOLTS Job Report will be published by the Bureau of Labor Statistics today, October 4th, at 4:00 p.m. (CET). The forecast of the experts is 10.65 million vacancies. In the previous calculation period, the number of vacancies was 11.23 million. If the number of vacancies falls more than expected, this indicates a sustained economic slowdown. The deterioration in the jobs market further increases the likelihood of a deepening downturn in the US. A continuing negative development on the job market in the coming months will be taken into account by the US Federal Reserve when it makes its last interest rate decisions this calendar year.
From 5:00 p.m. (CET), investors then hope for new information on the monetary policy of the ECB from ECB boss Ms. Lagarde. Europe’s top monetary guardian is likely to give her latest assessments of the current interventions by various central banks on the foreign exchange and bond markets. The central bankers must address the systemic risks of increasing distortions and articulate countermeasures. In view of rising government debt and the associated medium-term dangers such as national bankruptcies, prudent central bank policy is more important than ever. Further distortions on the bond market and drastic currency devaluations must be averted.
New figures on the state of the service sector in the USA
On Wednesday, October 5th, investors will be watching the release of the ISM Services Purchasing Managers’ Index (PMI) for the US. At 4:00 p.m. (CET), the Institute for Supply Management presents the latest figures for the non-manufacturing sector in September. The current forecast of the experts is 56.0. In the previous month, the index was still at 56.9. Falling PMI numbers are usually negative for the US dollar. A declining purchasing managers’ index could therefore have a supportive effect on BTC and Co.
ECB meeting minutes on Thursday
In the second half of the week, the European Central Bank will publish the minutes of the last interest rate decision on Thursday, October 6, at 1:30 p.m. (CET). Investors are hoping for further relevant information on the economic situation and the future monetary policy of the ECB in order to be able to better assess the next interest rate adjustment at the end of October. Increased volatility in the euro-dollar currency pair is to be expected, which should also affect the BTC price.
Employment report at the end of the week
On the last day of the first week of trading, October 7, at 2:30 p.m. (CET), the latest non-farm payrolls figures for the US for the month of September will be presented. The data on the so-called Nonfarm Payrolls describe the monthly change in the number of employees minus the number of employees in agriculture. The monthly labor market report is one of the most important and meaningful US economic indicators. Increasing job growth is considered an indication of an improvement in the labor market and the associated increase in consumer spending. If, on the other hand, job growth corrects, this is an important indication of increasing problems on the labor market.
On the other hand, declining job growth has a negative impact on future consumer spending and further exacerbates the economic downturn. The forecast for September is 275,000 employees. Compared to the previous month (308,000), the forecasts are still declining, as was the case recently. Weak NFP numbers could amplify the US dollar correction, which should have a stabilizing effect on the BTC price. Also at 2:30 p.m. (CET) the unemployment rate in the USA will be published. Adjusted for the unemployment figures, which recently rose by 0.2 percent, the forecast is now at 3.7 percent. If the unemployment rate continues to rise, as it did in the previous month, the deterioration in the labor market forecast by Fed Chair Powell as a consequence of the significant hike in key interest rates to 3.25 percentage points will be confirmed.