Decisions of the Federal Reserve, the Bank of England, the National Bank of Poland, and in the background still high prices of crude oil, rising agricultural commodities and problems with inflation or stagflation in the global economy - this is what we will be watching in the coming days.
In anticipation of the U.S. Federal Reserve's decision, the U.S. dollar index remained on Tuesday near 94 points, half a percent below the annual maximum reached in early October.
USD quotations may be strengthened by growing expectations for an earlier than expected US interest rate increase. The latest data could encourage such a move. US inflation rose by 4.4 percent year-on-year in September, while the Fed's preferred core inflation rate rose by 3.6 percent year-on-year, undermining the Federal Reserve's "transitory" narrative.
Analysts have strengthened their forecasts for a US interest rate hike. Goldman Sachs predicts the first hike in July next year and another in November 2022. Currently, markets are waiting for clues on the outlook for monetary policy after the FOMC meeting on November 2-3.
Oil price still high
Brent crude oil futures rose to $85 a barrel on Tuesday as it became clear that OPEC missed production targets last month. OPEC oil production rose by 190,000 barrels per day in October, falling short of the 254,000 barrels allowed by the supply agreement. This was because higher production from Saudi Arabia and Iraq failed to offset unintended shutdowns by African producers: Nigeria, Libya, Congo, Equatorial Guinea and Gabon, according to a Reuters poll.
Ahead of a scheduled Nov. 4 meeting of oil producers, OPEC+ is expected to maintain its planned 400,000 barrels a day production increase in December, despite calls from major consumers including the U.S. to increase output.
API and EIA reports on U.S. crude inventories are due on Tuesday and Wednesday, respectively.
Bitcoin and stablecoins
Bitcoin is trading near $60,000 in early November. A little earlier, President Joe Biden's administration issued statements on the regulation of stablecoins, digital assets linked to traditional currencies widely used to trade cryptocurrency assets. The U.S. president's Financial Markets Task Force on Monday urged Congress to regulate stablecoin issuers and financial agencies to assess whether the growing use of such digital assets in the nation's payment system poses a systemic risk.
Regulators acknowledged, however, that stablecoins can support faster and more efficient payment options.
In October, bitcoin's stock price rose about 40 percent, which analysts attribute to inflation concerns, increasing regulatory clarity and the launch of the first U.S. exchange-traded fund based on bitcoin futures.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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