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While the U.S. dollar traded overall stronger against other major currencies as the USDX basket continued rising, among emerging markets the movements were quite mixed. Pairs like the USD/MXN and USD/ZAR came down from their recent high with the latter falling below the 15.0-threshold. Meanwhile the USD/TRY pair moved moderately higher towards yet another all-time high and remained mostly above the 9.0-mark.
Cryptos moved overall lower, with the total market cap now clearly below $2.4 trillion. Bitcoin fell also from the recent high but remained for the most part above $54k. Some altcoins like Polkadot and especially Binance Coin however managed to end the day noticeably higher. Interest about Binance and Binance Coin might have picked up over the announcement to introduce a one billion dollar Binance Smart Chain fund involved many spheres including gaming and artificial intelligence.
On Wednesday in the United States the consumer price index (CPI) for September will be published. Later on also the Treasury budget level will be announced. Later in the Asian-Pacific trading session unemployment rate statistics from Australia and the CPI from China will be released.
The strong dollar coupled with relatively weak performance of the euro allowed the EUR/USD pair to fall to a new 14-months low as the common European currency also performed rather weak in some major pairs like the EUR/GBP or EUR/AUD over the past days.
The German ZEW survey indicated worsening sentiment with the current conditions index falling faster than anticipated from 31.9 to 21.6. The German consumer price index (CPI) was showing in September consistent annualised inflation rates of 4.1% as expected. Some of the drivers of the higher inflation rate have been the cost of energy (up by 14.3%) and food (up by 4.9%). Core inflation rate without those two items was estimated at just 2.9%. Possibly more concerning were the increases in producer prices, which rose by 13.2%, which is the biggest increase since the oil crisis in 1974.
On Wednesday industrial production data for the EU can be expected.
Gold traded at the end of the day only moderately higher on Tuesday, while silver prices ended up almost unchanged. More volatility could have been once again observed in the palladium market with prices now retracing after the recent high, falling by more than three per cent over the course of the trading day.
Long-term gold investors might have a hard time deciding on how to read the newest warning by the IMF about rising inflation risks. As IMF sees it to be highly uncertain whether the inflation trends will turn around quickly as expected by many central banks, it has been warning that central banks like the Federal Reserve should also consider tightening their interest rates. High inflation rates could be on one hand positive for gold investors seeing the precious metal as a hedge against currency devaluation and money preservation if negative real rates persist. However, on the other hand if central bank rates and then also yields on fixed income securities would rise, the opportunity costs of holding gold as non-yielding asset could also increase, which might in some scenarios be seen as negative for bullish investors.
Oil prices were at the end of the day almost unchanged compared to the previous day, while intraday volatility persisted with the movement between the daily low and high amounting to more than 2.6 %.
Natural gas prices stabilised after the recent decline and ended the day for the first time in almost a week moderately higher.
The weekly statistical bulletin by the American Petroleum Institute (API) will be published this week on Wednesday, followed by data from the Energy Information Administration (EIA) on crude oil, gasoline and distillate stockpiles on Thursday.
Major indices like the US 500 once again ended the trading day in the red, while at the same time the Volatility Index VIX moved on a daily basis moderately lower, which might seem a bit unusual.
Sector-wise the performance in the market was quite mixed with real estate stocks (US Real Estate ETF +1.39%) performing rather well, while chip stocks (US Semiconductors ETF -1.06%) once again closed clearly lower. Memory chip manufacturer Micron (-3.62%) was one of the worst performers during the trading session on Tuesday after a report by research company TrendForce indicated that demand for memory chips could decline in the coming year.
One of the best performing stocks on Tuesday was Lithium Americas (+12.46%). The high prices for lithium given the strong demand for applications like EVs and other uses are said to have been potential factors influencing the stock prices of companies involved in that market.
This week companies that are known for releasing their quarterly results among the first each earning season are expected also to start reporting, including JPMorgan Chase and Delta Air Lines on Wednesday, Bank of America, Citigroup and Wells Fargo on Thursday, followed by Prologis on Friday.
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