The most talked-about episode during the past two days has been the dollar index, which, while not directly linked to changes in the currency's value, has not yet peaked - and thus does not need to be - the story of the flight from risk. The dollar index has risen largely because of public expectations of a US downturn, and even today most economic analysts expect a recession by mid-2023.
And there is little chance of a hard landing if the Fed maintains its 2% inflation target. The other side is that the value of the dollar has been pushed up by the depreciation of the euro exchange rate. In fact, not only the euro, but almost all non-dollar currencies around the world are depreciating. A recession, even not only the United States, is likely. A global recession is likely. And the economic problems that could engulf the world could actually ease inflation in the United States.
From the current oil prices, which the US government is concerned about, after yesterday's US dollar index broke 108.5, the two oil prices showed a downward trend. That is to say, the expected economic recession will lead to a decrease in purchasing power. In addition, an increase in the value of the US dollar is almost also pushing up the actual prices of the two oil prices. This is good because after all, the main cause of the decline in CPI in July was oil prices. August was basically over, but the extent of the drop in oil prices was similar to the last month. So, while there is room for further declines in August, the extent of the decline is far from guaranteed, especially given that used-car prices have fallen, but that the upsurge in home and service-sector prices has not yet definitively declined. The Fed's recent, more cryptic comments have made the market even more difficult to speculate on, and, with the annual central bank meeting in Jackson Hole looming, Powell is set to speak about the Fed's next move. Most institutions and commentators consider the statement somewhat hawkish, considering that the Fed needs to slow down if it is to contain inflation, but since the July release of the CPI data contradicted market and Fed expectations, risk markets represented by U.S. stocks have continued to rise, and previous Fed officials have repeatedly said in their statements that market expected inflation to peak, and the Fed has turned to denial.
Although the Federal Reserve has abandoned forward guidance, the August CPI data will focus on combating inflation. Judging from current projections, although the inflation data are downward, the downward trend is still not large enough for the Fed to moderate or move to higher interest rates. In particular, the expectation that inflation will fall to 4% by the end of the year is virtually impossible based on current data. And it is the US mid-term election that has to be considered. November's US mid-term elections are so important for the Democrats that they are sacrificing high net-worth individuals and businesses to win over more low- and middle-income people with new anti-inflation legislation. The Fed has almost no choice in the remaining three rate-hike opportunities. September, November, and December are all but the last time the US Federal Reserve had a serious incentive to raise rates, so the 75-basis-point increase in September seems highly likely. On a personal note, while most commentators assume that Powell will inevitably be somewhat more hawkish in his speech on the 26th, I think that even Powell and the Fed did not have a unified view on the September rate hike, and the final outcome will have to be decided by combining the September non-farm data with the August CPI data, and that Powell's "absolutely no consideration of a 75 basis-point hike" had already been stung in the face. So this time I trust that Powell will not be too hawkish in his speech, even if he gives similar arguments about stopping or slowing rate hikes, while a September hike of up to 50 basis points and 75 basis points are possible, the more ambiguous scenario, and the year-end federal funds rate is still not above 3.4% (3.5%) as Powell's main option. And there is probably not too much of a view on the scale. But Powell would have to say, "If inflation remains too high, the Fed will have to be more aggressive." So, to my mind, the meeting could even have pulled the potential for a 50-basis-point increase in September back to around 50%.
Since the opening of U.S. stocks yesterday, the yield on U.S. Treasuries has risen across the board, with the U.S. dollar index rising. Even the yield on 10-year U.S. Treasuries have risen above 3%. Only a small amount of buying occurred this morning as the DXY fell. This also represents a large amount of money in the market that has left the U.S. debt market at the moment, and this money may have little access to risk markets, even currency markets, until the Federal Reserve makes a clear statement.
As of 8:00 this morning, the market value of the stablecoin shows no sign of external capital injection as the USDT continues to move horizontally, and we are well aware that the major users of the USDT are Europeans. The economic situation in Europe is more serious than that in the United States, and the momentum of the economy has been on a hiatus after a month of upward movement, pending further comments from the Federal Reserve, so the reduction of external capital is also normal. Although USDC still does not shed the negative image of Torndao, but the exchange rate is an important means of guiding the market, in the face of arbitrage gains, the short interest is totally insignificant, so USDC's market value in the exchange rate rose under the circumstances of the end of the sell-off, the same as at 8:00 this morning, the usual $200 million cut, today's position is only 50 million, while USDC's market value has not decreased, which means that BUSD's market value cannot increase. And, in terms of DAI's market value, as the price of ETH falls, more ETHs choose to end the circular arbitrage (spot leverage) that reduces the ETH's purchasing power while mitigating risk. So looking at today's overall stabilization of the currency, the market's broad trend toward digital currencies remains on the sidelines, much as has happened to U.S. stocks.
And, in terms of real purchasing power, it is not inconsistent with expectations. As of 8:00 this morning, USDT's transfer to the Exchange was only the recent median, again due to some interest in bargain hunting as a result of the drop in the price of the currency. But, on the whole, it seems fair to assume that USDT, with no indication of a flare-up, will be able to keep prices within their current range. And while USDC has certainly increased its funding, it has more to do with currency spreads.
The falling purchasing power is the time to test selling pressure. If selling pressure remains high, then prices must fall. And if selling pressure can be eased, it does not mean that reduced funds cannot pull up the market. From the BTC and ETH throwing pressure situation, the data up to 8:00 this morning show that throwing pressure is in a relatively low trend, which represents two meanings. First, the price of the BTC, which has been talked about lately, has dropped back to around $20,000, leaving the relative gain of the exit pool, which is now mostly for the long term, and for the short-term loss pool, which is September, or even the US mid-term election (if interest rates go up in September, November will come down), while the panic pool is all but closing, so the sell-off is easing. Although the price of ETH is relatively still some profits, but from the current publication of the proportion of profit on positions, ETH is still less than BTC1% of the profits, so ETH users do not have as much as imagined, and the reduction of profits is the main reason for the drop in selling pressure, from the data can be seen when the price of ETH exceeds 2,000 US dollars, the user has been more than 63%, and now only 56%, can be imagined. With fewer winners, both BTCs and ETHs, and facing lower capital volumes, buying sentiment is almost the main driver of price movements. From the current data, BTC's buying sentiment is still good, although the purchasing power is not high, but still able to maintain the volume of transfer from the exchange can cover the overall selling pressure, but also will inevitably reduce stock exchange inventory. ETH from the exchange's withdrawal data, purchasing power and buying sentiment are in a downward trend, not only can not cover the selling pressure over the same period, but also a large gap, which causes a lot of chips or active or passive stay in the exchange, from the data can be seen in the stock exchange has been rising, for ETH price is extremely unfriendly, if prices continue to fall, it is likely to trigger greater selling pressure. From the current BTC and ETH sentiment, although the price changes are not large, but from the perspective of the perpetuity contract rate, investors have passed the stage of large-scale bearish. Even BTC has appeared a period of bullish, and even if it continues to be bearish, the proportion occupied is not very large. It can be seen that the user's sentiment has gradually deviated from the large-scale bearish trend. So based on the current headline macro sentiment and the totality of the data down the chain, BTC is relatively more stable. While lower purchasing power limits price growth, relatively bottom prices and good buying sentiment remain the guarantees that it will be difficult for BTC to fall significantly. For ETH, the benefits of the merger have been worn off for far too long, especially as the turmoil in U.S. stocks has led to a downturn in the overall risk market. So the selling pressure on ETH far exceeds the buying mood, with plenty of chips starting to stay on the exchanges for further price changes. But overall, earnings are already below BTC, and there is limited room for declines. That may be a broad swing, but there is no possibility of a large-scale free-fall under the current situation.
From the current BTC miners' data, although the miners' holding is in a downward trend, in fact the total reduction is about 10,000 BTC, which is not a variable that can influence the market. But the miners' sell-off also points to rising pressure on the real economy. 13
