Stocks rebound as yields drop, dollar domination trade, BOC downshifts hikes, crypto insolvencies

US stocks are rebounding as the global bond market selloff takes a break. ​ Economic momentum remains for the US economy and that could only improve if inflation continues to soften. Investors seem poised to enter a holding pattern until the September 13^th inflation report.

FX

Dollar domination may have one last major rally in it before the market can start placing some long-term bets with some of the European currencies.  It has been one helluva ride for the dollar riding flows from the global energy crisis, a widening interest rate differential, and fears of a severe European recession are close to getting fully priced in.

The upcoming ECB rate decision will be a make-or-break moment in FX that will either trigger a bounce towards parity or provide a clear passage towards 0.9750.

BOC

The Bank of Canada policy decision went as expected with a downshift to a 75 basis point rate hike.  The benchmark interest rate stands at 3.25% and will probably peak at 4% with the December policy meeting.  Canada has been aggressive with the fight against inflation and that should easily suggest a couple more meetings of rate hikes, but the end of their tightening cycle is nearing.

Crypto

It was inevitable that the cryptoverse would see more insolvencies and it appears the next one could be a significant crypto mining pool that is responsible for roughly 10% of bitcoin’s computing power. Poolin announced that ,”We are here to let you know the withdrawal options of Pool Account and Poolin Wallet are deactivated while setting payout wallet addresses.”  ​

Poolin does not appear to be casualty from the Terra/Luna stablecoin collapse, but this obviously means they are having liquidity problems.  Poolin isn’t a lender, so this is troubling for the crypto space that is trying to stabilize.

Bitcoin is now below the $19,000 level and if the mood remains that it will be a bad September swoon on Wall Street, a retest of the summer lows seems inevitable.