RBA to investigate digital currency as markets continue to fluctuate in sad day for Australia

On what is one of the saddest days for Australia, Australians and many others around the world with the passing of Olivia Newton John (and one of the saddest weeks with the passing of Judith Durham ), it would be good to reflect on the legacy of the two artists. left.

Yet, as Oliver Stone reminded us 10 years ago, money never sleeps and there is always an open market somewhere.

While many Australians will watch the cover and remember the ONJ in their own way, investors will be glued to large-cap earnings reports, iron ore futures, the rise of copper, oil and gas. gold and oil and the movements of speculative small capitalization companies.

All of this in the context of what Wall St did overnight.

Despite early gains, Wall St was unable to hold them as investors anticipated Wednesday’s inflation data.

While the Dow Jones Industrial Average ended up 29 points, or 0.1%, the S&P 500 fell 0.1% and the Nasdaq Composite fell 0.1%. All three indices were solidly in the green earlier in the day and all three had been rallying since mid-June.

Through yesterday, the S&P 500 has gained 14% since hitting an intraday low for the year.

The bullish signs were due to slowing inflation, expectations that the Federal Reserve would slow the pace of its interest rate hikes and better-than-expected earnings.

Yet volatility remains and markets will continue to fluctuate.

So we continue to report on the numbers, which tell us that ASX futures (SPI 200) imply that the ASX 200 will open 8 points lower, down -0.12%.

Here is what we saw (source Commsec)

  • The euro rose from a low near US$1.0173 to around US$1.0220 and was around US$1.0190 at the close in the United States.
  • The Australian dollar fell from near 69.30 US cents to 70.05 US cents and was close to 69.80 US cents at the close in the United States.
  • The Japanese yen strengthened from around 135.45 yen per US dollar to 134.40 JPY and was near 135 JPY at the US close.
  • World oil prices rose about 2% on Monday. Craig James of Commsec said: “Traders cited strong economic data boosting prices, including stronger export growth in China and Friday’s US jobs report. Despite recession fears, the data suggests oil demand may not decline as much as expected. Reuters cited a Goldman Sachs (NYSE:GS) research report in which the broker said the case for higher oil prices remains strong, with the market posting a bigger-than-expected deficit in recent months.
  • The price of Brent rose US$1.73 or 1.8% to US$96.65 per barrel.
  • The price of US Nymex crude rose US$1.75 or 2.0% to US$90.76 per barrel.
  • Base metal prices were mixed on Monday. Nickel, zinc and tin fell 2.4%. Other metals rose as much as 4.4%, with lead rising the most.
  • The gold futures price rose US$14.00 per ounce or 0.8% to US$1,805.20 per ounce. Spot gold was trading near US$1,789 an ounce at the close in the United States.
  • Iron ore futures rose US$1.84 or 1.7% to US$110.95 per tonne.

Australian market

Is a digital currency on its way to the RBA?

The Reserve Bank of Australia (RBA) is exploring use cases for a Central Bank of Australia (CBDC) digital currency.

The RBA is working closely with the Digital Finance Cooperative Research Center on a research project to investigate the currency, which is expected to take around a year.

A limited-scale CBDC pilot will operate in a “fenced” environment for an indefinite period of time.

Industry was invited to participate and develop use cases demonstrating how a CBDC could be used to provide innovative and value-added payment and settlement services to households and businesses.

The RBA and DFCRC will then choose a range of different cases for the pilot.

“Considerable research has been undertaken by central banks, including the Reserve Bank, into the feasibility and possible technical design of CBDC, in particular exploring the potential use of new technologies such as distributed ledger technology” , the RBA said.

“An issue that has received less attention to date, particularly in countries like Australia that already have relatively modern and well-functioning payment and settlement systems, is the use cases for a CBDC. and the potential economic benefits of its introduction.

“The project with the DFCRC will help fill this gap by focusing on innovative use cases and business models that could be supported by issuing a CBDC.

“The project will also be an opportunity to better understand some of the technological, legal and regulatory considerations associated with a CBDC.”

US markets

The news that the US$430 billion Inflation Cut Act had passed the Senate gave investors pause. Automakers rose 3-4% in response to the news, with shares of Ford up 3.1% and General Motors up 4.2%.

The US Senate has passed a $430 billion ($622.75) bill to tackle climate change, lower drug prices and raise corporate taxes.

The Senate approved the legislation by a vote of 51 to 50 along party lines. Vice President Kamala Harris broke the tie.

Democrats called the legislation “the boldest clean energy package in American history.”

“The Senate is making history,” said Senate Majority Leader Chuck Schumer.

“To those Americans who have lost faith that Congress can do great things, this bill is for you,” he said. “This bill will change America for decades.”

The information technology sector has lagged.

Chipmaker Nvidia Corp fell 6.3% as the company said it expects second-quarter revenue to fall 19% from the previous quarter due to weak gaming.

European markets

Were higher on Monday.

The pan-European STOXX 600 index rose 0.7%. Financial services (+1.7%) and autos (+2.1%) led the gains, but health care was flat.

Danish brewer Carlsberg rose 1.5% after raising its outlook for 2022 profit growth, citing strong performance in Europe and Asia.

Germany’s Dax index gained 0.8% and Britain’s FTSE index rose 0.6%. In London trading, shares of Rio Tinto rose 0.6% but shares of BHP fell 0.2%.

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