USD: Global risk-off helping the dollar – ING
Source Fxstreet
The risk-off environment at the start of the week is prompting a return of safe-haven demand for the dollar, ING's FX analyst Francesco Pesole notes.
Risks are tilted to the downside for the USD
"While valuation concerns ahead of tomorrow’s Nvidia earnings release appear to be a key driver of the equity sell-off, the move has been global – not confined to US markets. That’s what matters most for FX: as long as the sell-off is broad-based, the dollar can benefit from safe-haven flows."
"Also supporting the dollar is a modest hawkish repricing at the very short end of the USD OIS curve. Pricing for a December Fed cut has been trimmed to 11bp from 15-16bp a week ago, bringing the implied probability just below 50%. This shift is, in our view, largely driven by recent Fedspeak, which has set a cautious, hawkish-leaning tone ahead of key data releases."
"The BLS has announced that September’s payrolls will be released on Thursday at 08:30 AM Washington time. That should limit the FX impact of tomorrow’s FOMC minutes and could prove as pivotal for macro as Nvidia’s earnings are for equities. Our base case remains that risks are tilted to the downside for the dollar once the US data cycle kicks in, and we expect a December Fed cut to become the market’s base case again. But for today, the dollar may stay broadly supported unless equities show signs of stabilising."
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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Market dynamics are also being influenced by Bitcoin whales—investors holding large amounts of Bitcoin—who have been offloading portions of their assets, consequently stalling price rallies even as positive regulatory developments emerge. Despite these sell-offs, analysts from Glassnode argue that this behavior aligns with typical patterns seen among long-term investors during the concluding stages of bull markets, suggesting it is not indicative of a mass exodus.
Notably, Bitcoin is not alone in its struggles, as Ethereum and Solana have also recorded declines of 7.95% and 28.3%, respectively, since the start of the year, while numerous altcoins have faced even steeper losses.
Looking ahead, questions linger regarding the viability of the four-year cycle thesis, particularly given the increasing institutional support and regulatory frameworks now in place in the crypto landscape. Matt Hougan, chief investment officer at Bitwise, remains optimistic, suggesting a potential Bitcoin resurgence in 2026 driven by the “debasement trade” thesis and a broader trend toward increased adoption of stablecoins, tokenization, and decentralized finance. Hougan emphasized the soundness of the underlying fundamentals, pointing to a positive outlook for the sector in the longer term.
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The downturn occurred despite the reopening of the U.S. government on Thursday, which many had hoped would provide essential support for crypto markets. This year initially appeared promising for cryptocurrencies, particularly after the inauguration of President Donald Trump, who has established the most pro-crypto administration thus far. However, ongoing political tensions—including Trump's tariff strategies and the recent government shutdown, lasting a historic 43 days—have contributed to several rapid price pullbacks for Bitcoin throughout the year.
Market dynamics are also being influenced by Bitcoin whales—investors holding large amounts of Bitcoin—who have been offloading portions of their assets, consequently stalling price rallies even as positive regulatory developments emerge. Despite these sell-offs, analysts from Glassnode argue that this behavior aligns with typical patterns seen among long-term investors during the concluding stages of bull markets, suggesting it is not indicative of a mass exodus.
Notably, Bitcoin is not alone in its struggles, as Ethereum and Solana have also recorded declines of 7.95% and 28.3%, respectively, since the start of the year, while numerous altcoins have faced even steeper losses.
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