Dollar slides & Gold jumps after Fed

“Forget past mistakes. Forget failures. Forget everything except what you’re going to do now and do it.” – William Durant

 

 

HEADLINES

 

 

• GBP/USD reclaims 1.3900 mark post-Powell comments, softer USD
• Gold hits one-week high after Fed fails to signal taper timeline
• Chinese stocks in tentative bounce
• Tencent Is World’s Worst Stock Bet With $170 Billion Wipeout
• New Infrastructure Bill Looks to Raise $30B Through Crypto Taxes
• Fed: “Progress” made, still not enough to warrant a near-term tapering – Wells Fargo

 

 

FOREX

 

 

GBP/USD reclaims 1.3900 mark post-Powell comments, softer USD

 

GBP/USD refreshes daily high in the Asian trading session Thursday. The pair extends the previous two day’s gains and recoups the 1.3900 mark.

US Fed Chair Jerome Powell said that the US economy remained far from the dual mandates of stable prices and maximum employment, despite substantial further progress. The comments weighed on the prospects of the US dollar

On the other hand, sterling gained ground after the reports surfaced that cases of COVID-19 in Britain have dropped for the sixth straight day. In the meantime, the EU pauses legal action against the UK over the Northern Ireland (NI) protocol.

 

 

COMMODITIES

 

 

Gold hits one-week high after Fed fails to signal taper timeline

 

Gold prices rose to its highest level in over a week on Thursday after the U.S. Federal Reserve failed to give a timeline for its tapering plans and said it was “ways away” from considering raising interest rates. Spot gold rose 0.5% to $1,815.56 per ounce by 0129 GMT, having earlier hit a peak since July 20 at $1,817.35.

 

 

STOCKS

 

 

Chinese stocks in tentative bounce

 

Asian shares managed a semblance of calm on Thursday as the U.S. Federal Reserve signalled it was in no rush to taper stimulus, though the mood was fragile as investors waited to see if Beijing could stem the recent bloodletting in Chinese shares.

There was also some promising news on the long-awaited U.S. infrastructure bill as the Senate voted to move ahead on the $1.2 trillion deal. Yet much depended on how China's markets fared amid reports regulators had called banks overnight to ease market fears about tighter rules on the education sector.

 

Tencent Is World’s Worst Stock Bet With $170 Billion Wipeout

 

China’s unprecedented crackdown on its technology industry has turned Tencent Holdings Ltd. from a market darling into the world’s biggest stock loser this month.

The Chinese Internet giant had tumbled 23% in July as of Wednesday, set for its worst month ever after erasing about $170 billion of market value. That marks the fastest evaporation of shareholder wealth worldwide during this period, Bloomberg data shows. Tencent Is World’s Worst Stock Bet With $170 Billion Wipeout.

 

 

CRYPTO

 

 

New Infrastructure Bill Looks to Raise $30B Through Crypto Taxes

 

A bipartisan infrastructure bill in Congress proposes to raise $28 billion from crypto investors by applying new information reporting requirements to exchanges and other parties.

According to a draft copy of the bill shared with CoinDesk, any broker that transfers any digital assets would need to file a return under a modified information reporting regime. The draft defined digital assets as “any digital representation of value … recorded on a cryptographically secured distributed ledger” or related technology. It also includes decentralized exchanges and peer-to-peer marketplaces in its definition of brokers.

 

 

ANALYSIS

 

 

Fed: “Progress” made, still not enough to warrant a near-term tapering – Wells Fargo

 

“It does not seem that the FOMC is in any hurry to taper, although the Committee does seem to acknowledge that the time is drawing nearer.”

“We look for the FOMC to make a formal announcement regarding the tapering of its asset purchases at the December 14-15 meeting, and we expect that the Fed will begin the process of winding down its purchases early next year. But before that formal announcement is made, we expect that Fed officials will hint that tapering will be forthcoming.”

“We continue to forecast that the FOMC will keep its target range for the fed funds rate unchanged through at least the end of next year.”

 

 

CHART

 

 

Gold – 4 hour Candlesticks

Source: GKFX Prime Metatrader 4

XAU/USD has broken a short-term declining trendline after holding onto long term support at 1795, while also breaking out on RSI, suggesting new bullish momentum. - Prepared by Trading Writers*

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

SOURCE

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/fed-progress-made-still-not-enough-to-warrant-a-near-term-tapering-wells-fargo-202107281928
https://www.cnbc.com/2021/07/29/gold-markets-federal-reserve-jerome-powell.html
https://www.fxstreet.com/news/gbp-usd-reclaims-13900-mark-post-powell-comments-softer-usd-202107282320
https://finance.yahoo.com/news/tencent-world-worst-stock-bet-010625742.html
https://finance.yahoo.com/news/global-markets-chinese-stocks-tentative-022343177.html