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Resilience Gives Way

JPY

Market Sentiment Provides Key Driver

JAPAN DATA

Japan Oct Household Spending Down 0.6% y/y

US TSYS

Incrementally Firmer Early On

NZD

Kiwi Kept In Check Despite Risk-On Impulse

JGB TECHS

(Z1) Strong Weekly Close

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  • We have recently seen that the surge in Covid cases in some of the 'low' vaccinated countries have pushed governments to reintroduce new restrictions to limit the downside risks (i.e. Latvia, Czech Republic).
  • Leaders of the CEE region for instance have repeated several times that governments may have to take 'drastic' steps in case the situation continues to deteriorate.
  • As governments have been constantly criticized over the poor management of the Coronavirus pandemic (last winter / spring) in that region, leaders will be more 'risk averse' this time to avoid losing popularity.
  • Hence, uncertainty over the economic outlook has been surging as we approach the winter season, and therefore central banks may need to flood the market with another round of liquidity to support the economies.
  • It is interesting to see that Bitcoin has experienced a significant appreciation this month, up nearly $25,000, breaking above its April all-time high of $64,869.80 this week following listing of first ETF.
  • Despite the strong criticism by governments and major institutions on the fundamental value of cryptocurrencies, Bitcoin keeps resurging to new all-time highs after periods of sharp consolidation.
  • Is the Bitcoin market already pricing in more liquidity injected by central banks for this winter?

Source: Bloomberg/MNI