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Forexlive Americas FX news wrap: FTX unloads company to Binance in a fire sale | Forexlive

Markets:

  • Bitcoin down 12%, ethereum -17% and FTX Token -80%
  • Gold up $37 to $1711
  • US 10-year yields down 7 bps to 4.14%
  • WTI crude oil down $2.59 to $89.20
  • S&P 500 up 33 points to 3840
  • JPY leads, USD lags

I settled in today expecting a quiet countdown to the US midterms but it was anything but. The FX market was hit with a wave of US dollar selling and it wasn’t clear what the catalyst was. Yield were lower so there was some backing but the dollar move was outsized compared to bonds or equities. One catalyst might have been a stronger lending impulse in China and what could be more stimulus to come.

In any case, it turned into a large move in the dollar with USD/JPY down a full cent and the euro up a half cent. Commodity currencies made the move initially as well but pared it later in the day with the loonie tracking oil lower.

The big drama was in the crypto space though. For a few days there has been a brewing fight between FTX and Binance — the two largest exchanges. Some real red flags went up when FTX appeared to stop processing withdrawals but the real bolt of lightning coming out of the blue came when Binance acquired FTX in a deal that appears to have been consummated in mere hours.

The hastiness of it and Binance’s warnings that it may walk away suggests some deep problems. FTX says it’s liquidity but everyone fears the worst and the selling in crypto has underscored that.

Initially, bitcoin rallied which was an unwise reaction to something akin to insolvency in the largest name in the space. Eventually, the market got the memo and it was a bloodbath. Even worse was FTX’s token falling 80%.

As for the midterms, there’s a strong consensus that stocks will rally with Republicans taking either the House or Senate but it’s a point that’s been beaten to death by so many analysts that you have to assume it’s a crowded trade. Politics has a funny effect on markets though so we’ll have to wait and see what unfolds.