Market recap: Week of 16-20 Oct 2023

Yen currency drops

Reuters: A senior IMF official sees the yen currency's recent drops as fundamentally driven and not warranting currency market intervention.

While there are upside inflation risks due to strong demand, the BOJ remains cautious about raising rates amid global demand uncertainties.

Civil unrest

Mining.com: Gold prices surged this week amid escalating geopolitical tensions. Investors who had shorted gold were forced to cover their positions as prices climbed higher. The tragic events in Palestine propelled gold even further upwards, with the precious metal seen as a safe haven in times of uncertainty.

Periods of global turmoil often spur demand for gold as anxious investors seek to shield their capital. Thus, gold prices rallied in response to the recent turmoil, buoyed by its reputation as a store of value during volatile times.

Yen currency intervention

Reuters: Japan's Ministry of Finance and IMF differ on Yen decline response. MOF's Kanda suggests a readiness to act and intervene, considering various factors, including interest rates. IMF official underscores fundamental-driven yen declines, negating intervention need.

Oil market prices

Reuters & Yahoo Finance: Chief Economist Lane stated that the European Central Bank needs more time to confirm inflation's return to the 2% target. And keeping a high rate until at least Spring next year. President Lagarde monitors the Israel-Hamas conflict's potential impact on oil prices. 

US retail sales

Reuters: U.S. 九月零售銷售激增 0.7%，超出預期，顯示經濟增長取得提振。 Goldman Sachs raised Q3 GDP growth estimate to 4%.

Yet, American credit card balances hit a record high of $1.03 trillion, with growing payment delinquencies, revealing the strain on consumers amid rising costs and interest rates.

High mortgage rates

ABC.net: Reserve Bank Governor warns of prolonged inflation risks amid global shocks. Higher mortgage rates already impacting the economy, says Ms. Michele Bullock.

Further interest rate hikes may be necessary if inflation expectations persist at elevated levels.

US government shutdown

FX Street 和 BBC：吉姆喬丹成為美國眾議院主席的第二次嘗試失敗。  沒有議員，國會無法透過立法或提供緊急援助，這可能會影響關鍵的截止日期。 其中一個截止日期是 11 月 17 日即將透過支出條例草案並避免政府關閉的要求。 There have been six partial or full government shutdowns since 1990.

History suggested a potential 1%-1.5% dip in the US dollar index following a shutdown, with subsequent recovery suggesting a limited long-term impact on the currency.

英國通貨膨脹

Express: Treasury minister Andrew Griffith asserts the Government's commitment to halving inflation by year-end, remaining on course.

Despite higher inflation data for September, Bank of England Governor Andrew Bailey is cautioned against hasty interest rate hikes. UK's September inflation remains at 6.7%

Energy security

Energy.GOV: The U.S. DOE's Office of Petroleum Reserve will regularly seek to buy oil for the Strategic Petroleum Reserve (SPR) through May 2024.

該計劃將開始徵集最多6百萬桶石油的要求，交貨時間設於2023年12月到2024年1月之間。

他們的目標是以每桶79美元或更低的價格取得石油，這一成本遠低於2022年應急SPR銷售的每桶平均95美元。

Federal reserve

NYTimes: Fed Chairman Powell addressed the challenges faced by the Fed. Balancing inflation control and economic well-being is the aim.

Interest rates have climbed to 5.25-5.5%, curbing economic activity, but growth remains robust.

While no rate hike is expected at the Nov. 1 meeting, Powell's remarks hint at future potential increases, keeping the December 13 meeting in focus