Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
COMPARTIR
There were no surprises in any of the central bank decisions last week, as the Federal Reserve, Bank of England and Bank of Japan all acted in line with expectations. Rates on the US dollar and the yen are now 25-bps higher than they were a week ago, while rates on the pound have remained steady. The major talking point that emerged from the trio of verdicts is just how hawkish the FOMC turned out to be, with all 12 members voting unanimously in favour of a hike. The collective reasoning behind the decision was equally unified; stubborn inflation, robust economic growth and geopolitical risk all played their part, leaving the committee with no other option than to bolster the interest rate on the greenback. Crucially, last Wednesday’s ‘dot plot’ revealed that the majority of Fed officials predict another rate hike before the end of the year, completely negating previous expectations. Foreign exchange markets were quick to adjust, immediately crushing the pound and the euro to multi-week lows against the dollar and sending the DXY north of 100 points. Two decisions to go in 2026, and interest rate traders are beginning to lean towards another 25-bps hike as early as October.
The hawkishness of the Fed was matched by the dovishness of the Bank of Japan, whose decision was split 7-2, with two members urging patience and electing to keep rates fixed at 1%. Governor Ueda also refused to outline a specific timeline for future rate hikes, leaving markets with less confidence that such will be forthcoming. The yen fell hard after the decision, with USDJPY briefly spiking back up to 158 before retreating somewhat by the daily close. The difference in approach suggests that the interest rate gap between the two currencies is here to stay and will continue to put pressure on the yen throughout this year and into the next.
The US Senate’s failure to move forward on the Clarity Act, coupled with the rate hike on the US dollar, turned into the perfect ‘sell the rumour, buy the news’ event for cryptocurrencies late last week. Bitcoin pumped straight back to $81,000 on Friday after strong institutional money flooded into ETFs during the lull in prices, squeezing short positions in the process. The bigger news is that the lack of progress in Congress has provoked the CFTC into advancing new rules of its own, in the form of two pre-rule packages entitled ‘Regulation Crypto Asset Transactions’ and ‘Regulation Crypto Asset Markets’. The two submissions are parallel to the SEC’s ‘Regulation Crypto Assets’ proposal, currently open to public comment. The sudden alignment between the two supposedly independent bodies is no coincidence. The synchronised nature of the actions undertaken by the SEC and CFTC suggests that there is some serious weight being thrown around behind the scenes. Influential forces clearly want something done, and they want it done fast.
Very little on the economic calendar in terms of tangible data publications this coming week. The Swiss National Bank is scheduled to deliver its verdict on the Swiss Franc on Thursday, with no change expected, while durable goods orders in the US may raise an eyebrow or two the following day. The big event of the week is the Trump-Xi summit in Washington D.C., set to begin on Wednesday. The meeting between the two presidents will feature a consortium of notable CEOs from the tech sector, including Elon Muck, Tim Cook, Jeff Bezos, Jensen Huang, Sam Altman and Michael Dell. As made obvious by the guest list, artificial intelligence and chip manufacturing will form the central pillar of deliberations, although the unending quagmire in the Middle East will certainly be discussed, as will the ongoing trade dispute between the US and China.
Worth noting that Japanese markets will remain closed until Thursday this week, while Chinese markets will close a day early on Friday in observance of Mid-Autumn Festival.
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