On Wednesday (October 2), the US dollar index remained weak at 101.24, gold surged to $2,660, Iran launched 200 missiles at Israel, the Israel Defense Forces said it was ready to fight back, and Biden emphasized that he would fully support Israel. As safe-haven funds flowed back to the traditional precious metals market, Bitcoin collapsed and approached the $60,000 mark.
Iran launches 200 missiles at Israel, Israeli military says ready to strike back
Iran's Islamic Revolutionary Guard Corps commander Salami said Iran launched 200 missiles at Israel in an operation on Tuesday evening local time.
Iran fired at least 180 missiles at Israel on Tuesday, the latest in an escalating string of attacks in a year-long conflict between Israel and Iran and its Arab allies that threaten to push the Middle East toward a regional war, AP News reported.
Air raid sirens rang out, residents fled to bomb shelters and the orange glow of missiles cut through the night sky in Israel. Israel has vowed to retaliate for the fierce Iranian attack, which it said caused only a few casualties.
The Iranian attack follows a series of devastating Israeli strikes against Hezbollah's leadership in Lebanon in recent weeks. Israel has subsequently stepped up pressure on the Iran-backed militant group, which has been firing rockets into Israel since the start of the Gaza war, when it launched what it called a limited ground incursion in southern Lebanon.
Israel has said it will continue to attack Hezbollah until displaced Lebanese border residents can safely return to their homes. Hezbollah has vowed to continue firing rockets into Israel until a ceasefire is reached in the Gaza Strip with Hamas, which is also backed by Iran.
Israeli military spokesman Rear Admiral Daniel Hagari said the country's air defense forces intercepted many incoming Iranian missiles, but some landed in central and southern Israel. Israel's national rescue service said two people were hit by shrapnel and slightly injured. In the West Bank, Palestinian officials said a Palestinian man was killed by a missile that landed near the town of Jericho, but it was not clear where the attack came from.
Israeli Prime Minister Benjamin Netanyahu vowed to retaliate against Iran on Tuesday night, saying the country "made a big mistake tonight and it will pay for it."
Israel and Iran have been waging a shadow war for years but have rarely come to direct conflict.
Israel considers Iran its biggest enemy, citing its repeated calls for Israel's destruction, support for Arab militant groups and its nuclear program. Iran denies Israeli accusations that it is developing nuclear weapons.
The Iranian missile launch came shortly after a shooting in Tel Aviv left at least six people dead, police said, adding that two suspects who opened fire on a boulevard in the Jaffa neighborhood were also shot dead.
In the United States, White House national security adviser Jake Sullivan called Iran's missile attacks a "significant escalation" but said they were ultimately "defeated and ineffective," in part because the U.S. military helped shoot down some of the incoming missiles.
U.S. President Joe Biden said his administration has the "full support" of Israel and that he is in "active discussions" with aides about how to respond appropriately to Tehran.
Powell's "hawkish" argument: The Fed is not in a hurry to cut interest rates quickly
Powell participated in a moderated discussion titled "The View from the Federal Reserve Board" at the National Association for Business Economics annual meeting in Nashville on Monday. Powell noted that while he still believes inflation will continue to move toward the Fed's target, the Fed chairman acknowledged that the Fed will take further action if the data shows it is necessary.
“The risks move in both directions, and decisions need to be made at each meeting. The U.S. economy is in good shape, and we intend to use our tools to keep it in good shape. We have made good progress in restoring price stability, and unemployment has not risen significantly.”
"The 50 basis point rate cut reflects growing confidence that appropriate policy adjustments can sustain a strong labor market and keep inflation on track. As long as new tenant rent growth remains low, housing services inflation will continue to decline. Deflation is widespread and recent data suggest that inflation is moving further towards a sustained return to 2%."
"My colleagues and I are more confident that inflation will reach 2% on a sustained basis. Labor conditions are solid and the labor market is roughly balanced. The annual GDP revisions are quite interesting. The labor market may be a better real-time indicator of economic conditions than GDP."
"There is nothing to suggest a recession is more likely. The Fed is in no rush to cut rates quickly and will be data-driven."
US JOLTS unexpectedly "explodes" and the labor market is resilient
The final value of the S&P Global Manufacturing Purchasing Managers' Index (PMI) in September remained stable at 47.3, while the initial value was 47.
The US ISM manufacturing data for September was released, and the overall PMI was the same as last month at 47.2. Among the main sub-indices, the price paid sub-index fell from 54 to 48.3, and the employment index also fell from 46 to 43.9.
The U.S. labor market continues to show resilience, with the number of U.S. job openings unexpectedly rising in August. The Labor Department reported on Tuesday that the number of job openings posted by employers (JOLTS) was 8 million in August, up from 7.7 million in July, while economists had expected the number of job openings to remain largely unchanged. Layoffs fell in August, but the number of Americans who quit their jobs, an indicator of labor market confidence, fell in August.
On Tuesday, several Fed speakers will take the stage, with Atlanta Fed President Rafael Bostic delivering a welcome speech at the Tech-Enabled Disruption Conference in Atlanta and moderating a conversation with Federal Reserve Board Governor Lisa Cook. Richmond Fed President Thomas Barkin will participate in a panel discussion with Bostic and Boston Fed President Susan Collins at the Tech-Enabled Disruption Conference in Atlanta.
Stock markets plunged, with all major U.S. indices falling more than 1%, and European stocks were also set to close in the red on Tuesday.
The CME Group’s Fed Watch tool shows a 63.0% chance of a 25 basis point rate cut at the Fed’s next meeting on Nov. 7, while a 37.0% probability points to another 50 basis point cut.
US Dollar Technical Analysis
FXStreet analyst Filip Lagaart said the dollar index has broken through the highs of the previous four trading days during Tuesday's Asian trading session, so this rebound seems to have strong momentum. If the dollar bulls can further turn the situation around, the upward resistance level will be at 101.90. Above this, the 55-day simple moving average (SMA) is at 102.22.
On the downside, if the US Dollar Index closes above 100.62 this Tuesday, the point will move from resistance to support. The new low in 2024 is 100.16, so it will be tested before further declines. Further declines, which means abandoning the 100.00 mark, the July 14, 2023 low of 99.58 comes into play.
Gold Technical Analysis
FXEmpire analyst Vladimir Zernov said gold prices recovered to all-time highs as traders reacted to Iran's attack on Israel.
If the gold price breaks through the resistance range of $2,675-2,685, it will push the gold price to the $2,700 level.
Bitcoin Technical Analysis
CoinTelegraph pointed out that Bitcoin’s current price is 7% lower than the local high of $66,508 reached on September 27, but some analysts are optimistic that this pullback may just be a reset of key indicators as Bitcoin is ready to achieve a sharp rise in the last quarter of 2024.
Jamie Coutts, chief crypto analyst at Real Vision, said in a post on Tuesday: "Bitcoin is close to its all-time high, but valuation indicators have fallen from extremely overbought levels in March to around 17-75% of the 4-year Z-score."
Coutts refers to an on-chain metric, the Market Value to Realized Value (MVRV) Z-score, which shows the relative position of market value to realized value, which is -116% over a three-month timeframe, -94% over a two-year period, and -107% over a four-year timeframe. This suggests that Bitcoin is significantly undervalued across multiple timeframes.
The analyst also explained that Bitcoin’s open interest (OI) is high, a key metric used by investors to gauge market sentiment and predict future price movements. The OI for perpetual futures has increased 800% over the past four years.
“Open interest is high in nominal and relative terms, but funding rates are low.”
Coutts also noted that “global liquidity is accelerating to the upside,” adding that the past six months’ pullback has removed excess bullishness from the market, positioning “for a significant move higher and creating the necessary reset.”
Independent analyst Lyn Alden reported that Bitcoin prices have historically been correlated with global liquidity. When liquidity expands, Bitcoin value generally rises, while when global liquidity shrinks, Bitcoin value falls back.
The chart below shows that the correlation between Bitcoin’s price and global liquidity is 0.94 between May 2013 and July 2024, indicating a very strong positive relationship.
This suggests that rising global liquidity may be a prerequisite for higher Bitcoin prices.
