Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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In a strongly telegraphed move, the Federal Reserve finally lowered rates on the dollar on Wednesday by a quarter of a percentage point. The decision was almost unanimous, with only one of the twelve FOMC members opting for a bigger, 0.5% cut. The board spoke of the US economy being in broadly sound shape and that weakness in the labour market was something that lower interest rates would help to alleviate. Critics of Fed Chairman Jerome Powell have been calling for a rate cut since the start of the year, and although Wednesday’s decision was a welcome one, for many it came too late. Two more 25-bps rate cuts are expected before the end of the year: the first on the 29th of October, the second on the 10th of December.
The dollar reacted positively to the announcement, gaining against other major currencies over the last two sessions, although the DXY remains near yearly lows. Gold and silver experienced some degree of profit taking on Wednesday, suggesting that some market participants were expecting a larger cut. Silver opened with renewed vigour this morning however, as prices pushed back over $42 an ounce with absolutely no resistance in the early Asian session.
The Bank of Japan elected to maintain a 0.5% interest rate on the yen this morning, surprising no one. As the only newsworthy event of the day, traders are looking at an empty economic calendar to finish off the week.
A huge announcement from Nvidia (NVDA) sent shockwaves around financial circles on Thursday. A surprising alliance has emerged after the largest company in the world pledged a $5 billion investment in fellow chipmaker Intel (INTC). The deal secures Nvidia an approximately 4% stake in Intel and follows a similar move by the U.S. government, which took a 10% stake last month.
Technologically, Intel will produce custom chips for Nvidia to use in its AI infrastructure platforms, while Nvidia technology will be implemented in Intel chips designed for personal computers. Intel shares surged by 22% by yesterday’s close following the announcement.
Intel has been struggling financially for some time but remains of high strategic importance because it is the only high-end chipmaker still manufacturing in the US and has contracts to produce chips for the Department of Defense. Interestingly, the partnership between Nvidia and Intel was achieved independently of the U.S. government’s stake, which constitutes a separate agreement.
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