Market News by OnEquity

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Ripple obtains preliminary license to operate in Dubai

Ripple reported on October 1 that the blockchain company has achieved another regulatory milestone in the United Arab Emirates.

Specifically, the Dubai Financial Services Authority (DFSA) has granted Ripple preliminary approval, allowing the company to expand its services and strengthen its presence in the UAE and the Middle East in general.

The approval means Ripple can now provide its services elsewhere in the country, expanding its presence from the Dubai International Financial Centre (DIFC).

“This is a pivotal moment for Ripple’s operations in the Middle East. The DFSA is a world-renowned independent regulator with a rigorous regulatory process and we are delighted to have received its preliminary approval,” said Reece Merrick, Ripple’s managing director for the Middle East and Africa, in a statement.

According to Merrick, more than 20% of Ripple’s global user base is in the UAE, and the expansion will enable it to bring products and services to an increasing number of individuals and businesses. Among the key innovations will be Ripple’s cross-border payment solutions offering, including the Ripple Payments Direct, or RPD, service.

Ripple’s regulatory compliance

This achievement puts Ripple, the company behind the XRP cryptocurrency , on track to be the first blockchain-based payments provider to be licensed by the DFSA. The UAE is Ripple’s regional headquarters in the MENA region and South Asia, which the company founded in Dubai in 2020.

But in addition to regulatory compliance in the UAE, along with this new license in principle, Ripple has further traction in this pursuit.

The company has obtained more than 55 licenses in various jurisdictions around the world, including the New York Department of Financial Services (NYDFS), the Monetary Authority of Singapore (MAS) and the Central Bank of Ireland (CBI).

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Dollar Benefits from Safe-Haven Status Amid Middle East Tensions

The U.S. dollar rose on Wednesday, benefiting from its safe-haven status and building on the strong gains from the previous session. This came after a missile attack by Iran on Israel, which further escalated tensions in the region.

Dollar Rises Amid Middle East Escalation

The turmoil in the Middle East intensified overnight, with Iran launching ballistic missiles at Israel in retaliation for the recent assassination of Iranian-backed Hezbollah leader Hassan Nasrallah and Israel’s ground deployment in Lebanon. Iran has reported that its attack is complete unless further provocations occur. However, Israel has promised a response, raising concerns that the United States, one of Israel’s closest allies, could become involved in the regional tensions.

“The escalation in the Middle East has led markets to price in an increased risk of a full-blown conflict in the region, which could involve the U.S.,” analysts at ING said in a note.

The dollar was also supported on Tuesday by better-than-expected U.S. job openings data, especially as markets await the official monthly jobs report due on Friday.

“Although ISM manufacturing data was softer than expected and prices paid fell below 50.0, the Fed is focused on the labor market. The surprising rebound in job openings for August contributes to a near-term bullish case for the dollar,” ING added.

The ADP nonfarm employment report for September is due to be released on Wednesday.

Euro Shows Signs of Stability

In Europe, the EUR/USD traded flat at 1.1067 after experiencing its largest drop in nearly four months on Tuesday. This drop came on further signs of cooling inflation in the eurozone.

The region’s inflation rate fell below the European Central Bank’s (ECB) target of 2.0% in September, and traders will closely watch comments from ECB officials, including Vice President Luis de Guindos and Chief Economist Philip Lane, for more guidance on the central bank’s monetary policy outlook.

Citigroup, in a note published Tuesday, reported that it now expects the ECB to cut interest rates by 25 basis points at its October 17 meeting, with additional cuts expected in December and through early 2025, bringing the policy rate to 1.5% by September 2025.

Meanwhile, GBP/USD was up 0.1% at 1.3293, still well below the previous week’s high of 1.3430, a level not seen since February 2022.

Yen Retreats Amid Interest Rate Uncertainty

USD/JPY rose 0.3% to 144.06 after Japan’s newly appointed Finance Minister, Ryosei Akazawa, said on Wednesday that Prime Minister Shigeru Ishiba expects the Bank of Japan (BOJ) to carefully assess the timing of raising interest rates again.

Minutes from the BOJ’s July meeting, released earlier this week, indicated that policymakers were divided on how quickly the central bank should proceed with further interest rate hikes.

Meanwhile, USD/CNY climbed to 7.0185, with the yuan remaining quiet as Chinese markets are closed for Golden Week, which runs until next Tuesday.

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U.S. stocks fall on Middle East tensions; Nike, ADP payrolls in center stage

U.S. stocks were lower on Wednesday, with risk sentiment weighed down by escalating tensions in the Middle East, as well as disappointing news from sportswear giant Nike.

The major indexes scored a negative session on Wall Street on Tuesday, the first trading day of the new month and quarter, after Iran launched ballistic missiles at Israel in retaliation for Israel’s strikes against Hezbollah in Lebanon.

The Dow Jones index was down nearly 170 points (0.4%), the S&P 500 index was down nearly 0.9%, and the tech-heavy Nasdaq Composite plunged 1.5%.

Middle East hits risk sentiment

This negative sentiment continued on Wednesday, after Israel’s Prime Minister Benjamin Netanyahu promised retaliation to the airstrikes made by Tehran, stating through a statement that Iran “made a big mistake” and “will pay for it.”

The United States has also mentioned that there will be “serious consequences” for Tehran’s actions, and Defense Secretary Lloyd Austin added that Washington is “well prepared” to defend its interests in the Middle East.

Although the situation may escalate further, UBS expects that “it will not come to an all-out war between Israel and Iran, including their respective allies.”

Nike withdraws its forecasts

Equally weighing on risk appetite was disappointing news from Nike (NIKE), after the U.S.-based apparel maker withdrew its full-year forecast and posted a 10% drop in quarterly revenue.

As a result, its shares fell by more than 5% before the market opened.

The results come at a time when Nike is undergoing an executive-level shake-up in which chief Jhon Donahoe will be replaced by company veteran Elliott Hill. Donahoe had survived a period of weak results underpinned by stiff competition in the $150 billion-a-year global sneaker market.

ADP Payrolls

The monthly ADP private payrolls release will provide further insight into the state of the nation’s labor market.

The ADP private payrolls release will provide more information regarding the current state of the U.S. labor market ahead of Friday’s non-farm payrolls release, which will likely signal the direction of the market ahead of the Federal Reserve’s next interest rate meeting.

Oil prices soar on turmoil in the Middle East

Crude oil prices rose on Wednesday on escalating tensions in the Middle East. Meanwhile, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, will meet later in the session, although no changes in production are expected for the time being.

U.S. crude inventories fell by about 1.46 million barrels in the week ended September 27, contrary to expectations for a decline of about 2.1 million barrels, according to data from the American Petroleum Institute.

The official government inventories report is due later in the session.

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Cryptocurrency markets reeling from global uncertainty over Middle East conflict

Bitcoin plummets as the market reacts to the ongoing conflict between Israel and Iran. On a macroeconomic level, cryptoasset markets have been shaken due to the escalation of geopolitical tensions between Iran and Israel, which has challenged the notion of Uptober and raised doubts about the role of digital assets such as cryptocurrencies in times of global crisis.

As the conflict unfolds, the collateral effects are being felt in all financial markets, and some cryptocurrencies and ETFs are experiencing considerable volatility.

Market impact and consolidations

The immediate response to Iran’s missile strike against Israel sent the Bitcoin down to around $60,200, which seems to indicate a considerable 6% decline from recent highs around $64,000. This drop was not just Bitcoin’s, as Ethereum and other alcoins posted losses, with Ethereum falling more than 4% and Solana down 5%.

The market turmoil generated massive liquidations, with Coinglass reporting that $523.37 million was lost in just 24 hours. Long positions bore the brunt, with $451 million liquidated, compared to $71 million in short positions. This volatility generated the liquidation of 154,011 traders, demonstrating the huge impact of the ongoing crisis on the cryptocurrency market.

The rapid market decline has significantly changed investor sentiment. The cryptocurrency fear and greed index, a vital measure for analyzing market sentiment, dropped from a “greed” level of 61 to a “fear” level in a span of 42 days. This considerable shift highlights the market’s sensitivity to external geopolitical level events and their broad influence on investor behavior.

Additionally, U.S. spot Bitcoin ETFs recorded considerable outflows, with added withdrawals of $242.53 million on October 1 alone. This marked the largest outflow in nearly a month and the third largest in five months, signaling a broader pullback from cryptoassets amid heightened global uncertainty.

Macroeconomic implications and outlook for the future

The current crisis calls into question the concept that cryptocurrencies, and especially Bitcoin, are a safe haven during troubled times around the world. Although some of its advocates have long argued that Bitcoin’s decentralized nature makes it an ideal hedge against geopolitical risks and tensions, its most recent behavior seems to indicate the opposite.

However, not all analysts see this fall as a long-term setback. For example, André Dragosch, European head of research at Bitwise, points out that Bitcoin has historically shown resilience in recovering from geopolitical turbulence.