Growth concerns + virus jitters + Fed tapering = chaos, King dollar, bitcoin bounce

US stocks are all over the place as investors grapple with growth concerns, an impending Jackson Hole setup to Fed tapering, China’s largest ‘bad bank’ gets a bailout, and lingering virus jitters.  Regardless of Fed tapering timing, growth is only getting pushed further out, but given the excessive froth in the market, a pullback seems warranted.  Even if the Fed signals next week that a formal taper announcement will be done in September, the economy will still be supported by low interest rates, at least 8 months of a gradual tapering, and more fiscal support from the Biden administration.  Investors should not expect a similar 2013 taper tantrum, but a modest stock market pullback that will likely be bought into.

The S&P 500 index saw buyers emerge early but that did not last long.  Wall Street just can’t get beyond COVID jitters.  Today, two fully vaccinated senators tested positive for COVID and Apple closed a store after more than 20 employees were exposed to COVID.   The Nasdaq attempted to hold onto small gains as investors turned defensive and bought technology and consumer staple stocks.

US dollar rally continues

And just like that, with a splash of growth concerns, the dollar is king again.  It took a massive downgrade with Goldman Sachs’s third-quarter forecast for the US economy to remind investors that everyone on Wall Street was too optimistic about the second half of the year.  Goldman slashed its US Q3 GDP forecast from 9% to 5.5% and bumped up Q4 from 5.5% to 6.5%.

EUR/USD is now below the 1.17 level and is quickly approaching massive support around the 1.16 level.  If financial markets enter panic mode, 1.16 could break and then it could get ugly fast.  For now, currency traders may see a modest consolidation ahead of the Jackson Hole Symposium.


Bitcoin is holding up nicely despite a broad selloff with risky assets as fear grows the Fed will soon be removing stimulus.   It seems a mini-taper tantrum from the Fed will not trigger widespread panic selling of cryptocurrencies, but perhaps this will prevent Bitcoin from rallying above the USD 50,000 level.

Crypto crackdowns continue and are no longer damaging sentiment but rather helping the argument that the space is getting cleaned up.  Earlier in Asia, the PBOC unveiled a fresh crackdown in Shenzhen that targeted several crypto-linked firms.  Bitcoin ‘mixer’ Larry Harmon also pleaded guilty to one count of conspiracy to launder monetary instruments.

Bitcoin seems poised to continue consolidating between the USD 45,000 and USD 48,000 in the short-term, with the USD 50,000 level remaining a key price barrier.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.