The EU bans its companies from using the Russian payment system

As part of the 14th package of anti-Russian sanctions, the European Union banned its companies operating outside the Russian Federation from using the Bank of Russia's Financial Messaging System (SPFS).

SPFS, the Russian equivalent of SWIFT, provides the transmission of financial messages both inside and outside Russia. The use of SWIFT within the Russian Federation was banned by the Central Bank of the Russian Federation in October 2023.

In a statement, the EU Council said: «Today's package significantly strengthens our financial sanctions by banning EU banks operating outside Russia from using the SPFS.» This also allows the EU to compile a list of non-Russian banks of third countries connected to the SPFS – these banks will be prohibited from doing business with EU operators.

In addition, the EU has imposed a ban on transactions with banks and suppliers of crypto assets in Russia and third countries that facilitate transactions supporting the Russian military-industrial base.

Recall that the SPFS was created in response to the first wave of anti-Russian sanctions in 2014. By the end of 2023, 556 organizations had become users of the SPFS, of which more than a quarter (159) non-residents from 20 countries made up the list. The Central Bank previously published a list of SPFS participants on its website, but hid it in April 2022 after a new wave of sanctions affected the largest Russian banks.
More news on our website: https://bit.ly/4a81506

Bitcoin rises on the news of the assassination attempt on Trump

The bitcoin exchange rate is rising on Monday – market participants continue to evaluate the news about the assassination attempt on Donald Trump that occurred on Saturday.

According to CoinDesk, the current quote of the crypto asset is $62,603.50. Last Friday, the BTC/USD pair was trading near the level of $57 thousand. Overall, despite the 6.4% loss over the last month, bitcoin has grown by about 50% since the beginning of the year.

Donald Trump was injured at a campaign rally in Pennsylvania, but later said he felt fine. Analysts believe that the assassination attempt could increase Trump's chances of winning the election.

«Trump is considered a supporter of cryptocurrency, and there is an opinion that his position in the election race has strengthened. Traders are looking for assets that will benefit if Trump returns to power,» said Dan Coatsworth, an investment analyst at AJ Bell brokerage.
More news on our website: https://bit.ly/4a81506

The price of gold has approached $2,450

Gold prices rose in Asian trading on Monday, playing back some of the decline seen during most of July.

The price increase is due to expectations of a reduction in interest rates from the Federal Reserve System at the upcoming meeting. US inflation data released on Friday showed a slight slowdown, which strengthens the Fed's confidence in the possibility of lowering rates. The weakness of the dollar caused by these data also contributed to the rise in gold prices, making it more attractive to investors using other currencies.

Spot gold rose 0.4% to $2.395.31 per ounce, while futures for gold with a December maturity rose 0.5% to $2.449.2 per ounce. Traders are almost completely confident of a 25 basis point rate cut in September, which favours gold, as it reduces the opportunity costs of investing in it.

Other precious metals rose along with gold: platinum futures rose 0.8% to $953.35 per ounce, and silver futures rose 0.8% to $28,242 per ounce.

Copper also showed gains on Monday after heavy losses over the past month. The growth was triggered by expectations of new signals from China, the main importer of copper.
More news on our website: https://bit.ly/4a81506

World demand for gold decreased by 6%

In the second quarter of 2024, global demand for gold (excluding OTC transactions) decreased by 6% compared to the same period last year, reaching 929 tons, according to the World Gold Council (WGC).

The drop in demand for jewelry was the main reason for the decline: demand fell by 19% to 391 tons, and demand from the jewelry industry decreased by 17% to 411 tons.

However, the decline in the jewelry market was partially offset by an increase in demand in other sectors. In particular, the technology sector showed an impressive 11% increase in gold consumption, to 81 tons, due to the use of gold in electronics, especially in chips for the rapidly developing field of artificial intelligence.

Central banks, seeking to protect and diversify their reserves, increased gold purchases by 6%, to 183 tons.

The supply of gold on the market increased by 4%, to 1,258 tons. Production turned out to be a record for the second quarter — 929 tons.

The oversupply of 329 tons was absorbed by the OTC market, which played a significant role in maintaining gold prices. Together with the demand from central banks, the OTC market has become a key driver of gold price growth.
More news on our website: https://bit.ly/4a81506

Bitcoin and Ether collapsed amid global economic concerns

On Monday, there was a sharp drop in the value of bitcoin amid a large-scale sale of high-risk assets.

According to CoinDesk, by noon Moscow time, the Bitcoin exchange rate had decreased by 10.8%, reaching $52,827. Over the past week, the cryptocurrency has lost more than a fifth of its value, although it has still shown an increase of almost 26% since the beginning of the year.

Ethereum is also experiencing a significant drop, dropping 15.3% to $2,330, which is the biggest decline since 2021.

The Japanese stock market posted a record 12.4% drop, the highest since 1987. Futures for the US Nasdaq Composite index are also down 4.2%.

The reason for the massive sell-off of risky assets was growing concerns about a possible recession in the United States after the publication of disappointing economic data last week. Goldman Sachs analysts have increased the probability of an economic downturn in the United States in the coming year from 15% to 25%. Markets also expect that the Federal Reserve may hold an unscheduled meeting this week and cut the key rate by 0.25 percentage points with a 60% probability.
More news on our website: https://bit.ly/4a81506

Brent rose above $77 per barrel

Oil prices continued to rise on Wednesday, following a slight increase in the previous session.

On the London ICE Futures exchange, October futures for Brent crude oil rose in price to the level of $77.25 per barrel. September WTI crude futures rose to $73.71 per barrel.

Traders continue to monitor the situation in the Middle East, anticipating a possible Iranian attack on Israel after the recent assassination of Hamas leader Ismail Haniyeh in Tehran.

«If the situation in the Middle East worsens and this affects oil supplies from the region, prices will quickly go up,» said Commerzbank analyst Carsten Fritsch.

Traders are also concerned about the prospects for oil demand due to signals of slowing economic growth in China and the United States. Statistics released on Wednesday showed a slowdown in Chinese growth in July amid a larger-than-expected increase in imports.

Also today, the U.S. Department of Energy will present a weekly report on energy reserves. According to the American Petroleum Institute, published yesterday, oil reserves in the United States increased by 180 thousand barrels.
More news on our website: https://bit.ly/4a81506

The American labour market: optimism and anxiety

The number of Americans applying for unemployment benefits unexpectedly fell last week, suggesting that concerns about a worsening labour market situation were exaggerated. According to the Ministry of Labour, the number of initial applications for benefits decreased by 17 thousand to 233 thousand, which was the largest drop in the last 11 months. Experts had expected a more modest decline.

Despite the positive dynamics, the indicator remains above the average level of the current year. The average number of applications over the past four weeks has increased to 240.75 thousand, reaching an almost one-year high. The increase in the number of applications, which began in June, is partly due to temporary shutdowns of automobile plants and the effects of Hurricane Beryl in Texas.

Overall, the number of layoffs remains low, confirming data on a record low level of layoffs in June. However, the pace of growth in the labour market is slowing due to less aggressive hiring caused by the Fed's interest rate hike.
More news on our website: https://bit.ly/4a81506

German companies continue to invest in China

German companies continue to invest heavily in China, despite government calls to diversify risks. According to the Bundesbank, Germany's direct investments in China in the first half of 2023 reached 7.3 billion euros, which is almost one and a half times more than in the whole of 2022.

Experts note that a significant part of investments is directed to reinvest profits earned in China. Last year, German businesses reinvested more than half of the 19 billion euros of profits earned in China.

Localization of production in China is becoming an increasingly popular strategy for German companies seeking to reduce risks in their supply chains. However, this strategy could have a negative impact on the German economy by reducing exports and creating dependence on the Chinese labor market.

The German government recommends that companies diversify their investments and sales markets, but does not call for a complete cessation of cooperation with China.

Despite this, major automakers such as Volkswagen and BMW continue to invest heavily in China. In the last five years, Germany has been the leader in terms of EU investments in China, which indicates the continued attractiveness of the Chinese market for German businesses.
More news on our website: https://bit.ly/4a81506

The yuan is rising amid a weakening dollar

On Monday, the yuan showed the most significant growth in two weeks, reaching 7.1363 per dollar, which is 0.4% higher than the previous day. This increase, the largest since the beginning of August, is due to the weakening of the dollar and expectations of lower interest rates in the United States.

However, the yuan lost ground against the resurgent yen, falling 1% to 20.38 yen, which was the strongest drop since August 5. As a result, the yuan fell to 98.07 against a basket of trading partner currencies, the lowest level since January 15.

Traders are waiting for the announcement of the base rate on loans in China on Tuesday. The collapse of bank lending, falling housing prices and gloomy economic sentiment, according to analysts, will not allow the currency to grow significantly further.

The yield on 10-year Chinese government bonds fell by 1.8 basis points to 2.17%, while the yield on similar benchmark U.S. government debt was 3.9%.

The 7-day repo rate for the yuan in the domestic market was 1.74%, and in the futures market, the 3-month yuan was quoted at 7.0695, 722 points higher than the spot rate. Three-month forward contracts on CNH were trading at 7.0682 per dollar. The People's Bank of China has set the average rate around which the yuan can trade in the 2% range at 7.1415 per dollar.
More news on our website: https://bit.ly/4a81506

Chinese banks have increased assets by 7%

According to Xiao Yuanqi, Deputy head of the State Administration for Financial Supervision and Control of the People's Republic of China, the total assets of the Chinese banking sector at the end of July amounted to 423.8 trillion yuan ($59.4 billion), an increase of 7% compared to the same period last year.

Positive trends are also observed in the field of credit quality: the share of non-performing loans decreased by 8 basis points to 1.61%.

The equity capital adequacy ratio of banks in the first half of the year reached 15.53%, which indicates the high strength of the industry and its ability to withstand risks, Xinhua news agency reports.

Xiao Yuan qi stressed that the GUF will continue to support banks in optimizing the structure of assets and liabilities, as well as in finding new sources of profit growth to increase profitability.
More news on our website: https://bit.ly/4a81506

Research: 4 risks for the dollar dominance

Researchers from the Brookings Institution have identified several factors that can undermine the dominance of the dollar in global markets. Although the dollar remains the main reserve currency, its share in global reserves has decreased from 71% in 1999 to 59% in 2024.

At the same time, the share of reserves in alternative currencies such as the Australian dollar, Swiss franc and Chinese yuan is growing.

One of the main threats to the dollar is the US sanctions, which have prompted Russia and China to actively seek de-dollarization. Russia is switching to payments in yuan and developing alternative payment systems, while China is promoting its yuan as a substitute for the dollar.

The growing U.S. government debt is also a concern for investors. A rapid increase in government spending and a decrease in the US credit rating may weaken confidence in the dollar and make it less attractive to holders of foreign exchange reserves.

The improvement of payment technologies is another factor threatening the dollar. New systems allow countries such as China and India to exchange their currencies directly, bypassing the dollar. This may reduce the demand for the dollar, which has traditionally been used in international settlements.

In addition, the development of central bank digital currencies (CBDC) increases competition for the dollar. China is actively developing its digital currency and payment systems, while the United States is still lagging behind in this area, which puts the dollar in a less favorable position.

Despite these risks, experts believe that the dollar will remain the dominant currency in the near future, since its competitors cannot yet replace it. However, attempts at de-dollarization can lead to economic problems for those who abandon the American currency.
More news on our website: https://bit.ly/4a81506

China is changing the game: new challenges for the global economy

China, long considered the engine of the global economy, is now experiencing a decline in consumer confidence and spending cuts.

The problems of the real estate market, the weakness of the labor market and the fall in stock prices exacerbate the situation, reducing household well-being and leading to a decrease in confidence in the economy. As a result, the trend towards reducing consumer spending is strengthening, which is especially alarming, since China's economic growth is increasingly dependent on domestic consumption.

A weak labor market is a special factor that causes panic and encourages people to stick to conservative measures more. New savings are growing and spending is declining, creating a vicious circle of low confidence and an economically stagnant situation.

It is worth noting that the change in sentiment in China has negative consequences for the global economy. A decrease in import demand leads to a slowdown in global growth. An excess of goods creates deflationary risks, and the retail sales sector is experiencing serious difficulties.

Chinese consumers are becoming cautious, which negatively affects the financial results of the world's leading brands, especially those focused on the Chinese market. Instead of stimulating growth, the Chinese government pays great attention to regulation, preferring the sustainability of expansion.
More news on our website: https://bit.ly/4a81506