Reports of American banks turned out to be positive against the background of rate hikes - 17.10.2022

On Friday, the US dollar index rose. Economic data was neutral. United States Retail Sales (retail sales) were worse than expected, and the University of Michigan Consumer Sentiment (an indicator of consumer activity) was better. In many ways, the growth of the dollar index was facilitated by the weakening of other currencies and, especially, the yen. Bank of Japan Deputy Governor Masazumi Wakatabe said his department will continue its ultra-loose monetary policy. After that, USDJPY hit a new high since August 1990. Recall that inflation in Japan in August reached its maximum since September 2014 and amounted to 3% y/y. Despite this, Bank of Japan maintains a negative rate (-0.1%). Its next meeting will be on 28 October. On Friday, other major currencies also weakened against the US dollar, but apart from the yen, no one made new highs or lows. No significant statistics are expected to be released in the United States today. The British pound is now noticeably stronger thanks to the new economic plans of the government of Prime Minister Liz Truss.

Bitcoin continues to trade in a tight range below $20,000. Players are waiting for the official approval of the new rules for regulating the crypto market in the United States. This may happen next year. A large American bank BNY Mellon announced the development of a digital platform for storing cryptocurrencies.

On Friday, US stock indexes fell, but did not update new lows. Investors fear further rate hikes amid high inflation. The University of Michigan raised its inflation forecast for next year from 4.7% y/y to 5.1%. Tesla shares plunged 7.6% after Wells Fargo downgraded its quarterly performance forecast. Recall that the Tesla report will be released on October 19. This negative was partially offset by good quarterly reports from JPMorgan Chase & Co (shares rose +1.7%), Citigroup (+0.7%) and Wells Fargo (+1.9%). Today in the US, the publication of financial indicators of banks and financial companies will continue: Bank of America, Charles Schwab, Bank of New York Mellon, Equity LifeStyle Properties and others. Futures for US stock indices are now rising.

At the end of last week, oil quotes fell. Now Brent is still above the psychological level of $90 per barrel, and WTI is already below $85 per barrel. The main reason for this was the risks of a reduction in global demand due to a slowdown in global GDP growth, as well as a possible resumption of the coronavirus epidemic in China. Chinese President Xi Jinping announced that he would maintain a policy of strict restrictions (zero-COVID policy).

The price of natural gas in Europe on the ICE Dutch TTF continued to decline and is now trading around $1,330 per 1,000 cubic meters. The EU Commission is going to implement its "dynamic price cap" natural gas price cap plan.