Monday's Markets Update (August 21, 2023)

24 Aug 2023 by rate3

On Monday, The Nasdaq rebounded from its strong resistance level of 13,200. Technicals outweighed traders' concerns over higher Treasury yields. On the crypto side, the negative sentiment fallout after Thursday's BTC crash totally defined players' strategies, which were basically to "wait and see."

Currencies

The dollar index held firm on Monday as investors grew confident that the Fed will continue to raise interest rates. China's central bank lowered its one-year loan prime rate, while the euro and pound rose.

Comment

Other developments on the Forex market:

The euro rose to $1.055 on Monday, its highest level since June 20th.
The pound sterling rose to $1.233 on Monday, its highest level since June 15th.
The Australian dollar fell to $0.697 on Monday, its lowest level since November 2022.
The New Zealand dollar fell to $0.635 on Monday, its lowest level since November 2022.
The Japanese yen fell to 138.15 on Monday, its lowest level since February 2022.
These moves in currency markets reflect investors' expectations about the future direction of interest rates. Investors are betting that the Fed will continue to raise interest rates in an effort to combat inflation. This is making the dollar more attractive to investors, who are seeking higher yields.

China's central bank, on the other hand, is taking a more dovish approach to monetary policy. The People's Bank of China (PBoC) lowered its one-year loan prime rate by 10 basis points on Monday. This is the first time the PBoC has lowered interest rates since April 2022. The PBoC is hoping to stimulate economic growth by making it cheaper for businesses to borrow money.

The moves in currency markets are likely to continue to be volatile in the near term. Investors will be closely watching the Fed's next policy meeting, which is scheduled for September 20-21st. If the Fed signals that it is planning to raise interest rates at a faster pace, the dollar could continue to appreciate. However, if the Fed takes a more cautious approach, the dollar could come under pressure.