USD: The demand for safe haven may take a break as DXY remains limited – DBS
US Dollar’s Safe-Haven Appeal Hinges on Equity Performance
According to DBS strategist Philip Wee, the US Dollar's short-term status as a safe haven may stall unless American stocks drop to new lows for the year. He observes that investors have pulled back from pushing the DXY Index past 100.5, following comments from Federal Reserve Chair Jerome Powell. Powell tempered expectations for aggressive rate increases, emphasizing stable inflation forecasts and easing worries about a wage-price spiral reminiscent of the 1970s.
Market Caution Ahead of Holiday Weekend
As the Good Friday holiday approaches, US financial markets are expected to adopt a more cautious stance. Wee cautions that the recent recovery in US equities could simply be a temporary uptick, rather than a sustained rebound.
Dollar Strength Dependent on S&P 500 Movement
Wee notes that the US Dollar's safe-haven status may be on hold unless the S&P 500 experiences a significant decline to new yearly lows.
He adds that traders have stopped pushing the DXY Index above the key 100.5 mark after Powell resisted calls for more aggressive Fed rate hikes in response to rising energy prices. Powell signaled that inflation expectations remain steady and the Fed is not alarmed by the prospect of a wage-price spiral similar to that seen in the 1970s.
Fed’s Response to Geopolitical Tensions
Fed officials have followed Powell’s cautious approach regarding the Iranian conflict, echoing the wait-and-see stance taken after the Liberation Day tariffs. Fed Governor Michael Barr highlighted that ongoing tensions with Iran could impact both inflation and economic growth, with risks increasing the longer the conflict continues.
Economic Data Weakens Dollar’s Exceptionalism
The Atlanta Fed GDPNow model has challenged the narrative of US Dollar strength by forecasting economic growth at 1.95%, down from 3% at the start of Operation Epic Fury a month ago. Upcoming US jobs data on Friday is expected to reinforce factors that have recently pushed the US Treasury 10-year yield down from its 7-8 month high near 4.50%.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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VIPEarnings Under Scrutiny Amid High Interest Rates and Platform Recovery
1. U.S. equities gained over the week, while crypto assets declined, reflecting a divergence in risk appetite. From October 3 to 9, the S&P 500 rose 1.15% and the Nasdaq 100 gained 0.24%, while BTC, ETH, and SOL fell 2.31%, 6.84%, and 7.99%, respectively. The U.S. Dollar Index advanced 0.27%, and although the 10-year U.S. Treasury yield declined 3.3 basis points, it remained elevated at 5.244%. High funding costs therefore continued to weigh on risk asset valuations. 2. Weak employment data have not eliminated inflation concerns, while AI and on-chain finance face growing scrutiny over commercial viability. September nonfarm payrolls increased by just 29,000, yet the minutes of the Federal Reserve's September meeting still pointed to the possibility of further rate hikes before year-end. This week's CPI release and major bank earnings will provide important tests of growth and inflation pressures. Revenue recognition and reporting practices in AI, underlying asset rights in RWA, and operating costs for Layer 2 networks are also becoming increasingly important measures of commercial viability. 3. Bitget has completed its phased service restoration, while the Bitget Alliance Program continues to support clients' trading and capital management needs. We completed the planned restoration on October 2 and replenished the Protection Fund to more than $300 million on September 30. According to DefiLlama, assets tracked on the platform rebounded from approximately $5.647 billion on October 1 to $6.223 billion on October 11. This report also outlines VIP level protection, user rewards, and institutional fee incentives to help high-value clients plan their trading activities according to their account type. Assets to watch: BTC, ETH, SOL, SUI, PUMP, gold, JPM, BAC, and ASML. Key areas of focus this week: The October 14 U.S. CPI release; bank net interest income and credit costs; AI cash flow generation; and post-recovery trends in assets held on Bitget, settlement efficiency, and trading conditions. Market data are current through October 9 or the latest local trading day. Official announcements and promotion terms were reviewed through October 12.
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