The US dollar is rising, while the New Zealand dollar is weakening following a smaller-than-expected rate hike by the RBNZ.

Economic World News :

The dollar rose in Asia on Wednesday morning, resuming its rise after Jerome Powell’s re-appointment as Chairman of the United States Federal Reserve. The New Zealand dollar fell when the Reserve Bank of New Zealand raised interest rates by a smaller-than-expected amount (RBNZ).

The US Dollar Index, which measures the dollar against a bundle of other currencies, rose 0.08 % to 96.573.

The USD/CNY pair rose 0.02 % to 6.3920, while the GBP/USD pair fell 0.01 % to 1.3373.

The USD/JPY pair fell 0.11 % to 115. On Tuesday, the dollar touched a more-than-four-year high versus the yen as two-year Treasury rates rose to their highest levels since March 2020, and Fed funds futures priced in three rate hikes in 2022.

The AUD/USD pair declined 0.32 % to 0.7204, while the NZD/USD pair dropped 0.63 percent to 0.6904.

As part of its policy announcement earlier in the day, the RBNZ boosted its interest rate to 0.75 percent and increased its long-term cash rate prediction by 50 basis points, causing the New Zealand dollar to fall as much as 0.5 % to $0.6915.

Investors had anticipated a larger boost and a longer-term cash rate estimate from the central bank, and interest rate swaps immediately reversed significantly.

The dollar reached its peak in 2021, as expectations grew that the Fed would raise interest rates sooner than expected in response to persistent inflationary pressures. Powell is also believed to react to inflation faster and more forcefully than Lael Brainard, who was once a candidate to lead the US Federal Reserve.

The United States will disclose data on Wednesday, including the minutes from the Fed’s most recent meeting, GDP, and first unemployment claims, ahead of a holiday on Thursday.

The Turkish lira dropped more than 11% in a single session overnight. The lira’s depreciation could result in additional capital outflows, putting pressure on emerging market currencies around the world.

Cryptocurrency News :

While the state is anxious to become a global hub for Bitcoin mining operations, people are apprehensive that the electricity grid will be overwhelmed.

Texas’ electrical infrastructure will have to sustain the industry’s estimated 5,000 megawatts (MW) of increased power demands by 2023, as the state anticipates a rapid influx of Bitcoin mining facilities.

The Texas Bitcoin mining sector presently consumes 500 to 1,000 MW of power. According to sources, the Electric Reliability Council of Texas (ERCOT) forecasts a fivefold rise in demand by 2023 and has planned an extra 3,000 to 5,000 MW.

This growth comes as the Lone Star state prepares to host 20% of the world’s Bitcoin mining operations. Since the Chinese government formally outlawed Bitcoin mining earlier this year, Texas has emerged as the go-to destination for Bitcoin miners.

The state government has taken advantage of China’s crackdown by making Texas a shelter for cryptocurrency miners, who may now take advantage of a 10-year tax break, sales tax credits, and state-sponsored labor training.

Some Texas residents, on the other hand, are afraid that the current electricity grid cannot be improved. The administration of the state’s electrical infrastructure by ERCOT came under intense scrutiny in February 2021, when blackouts struck the region during an unusual cold spell that left about 5 million citizens without power for days.

ERCOT’s assessment on Friday did not instill confidence that the grid faults had been resolved. Amal Ahmed, a reporter with the Texas Observer, tweeted on Monday,

“The new seasonal assessment report (basically, a forecast) from ERCOT seems to indicate that, unsurprisingly, the agency hasn’t changed it’s approach at all to really prepare for extremes.”

Some miners have attempted to assuage neighbors’ concerns about the potential resource drain. The Texas Standard reported on October 21 that some Bitcoin miners have been collaborating with local power companies to maintain the grid’s stability.

Meanwhile, as BTC mining operations grow more environmentally friendly, some others want to use entirely renewable and viable alternative energy sources, such as natural gas flares.

There are presently no recommendations from the Texas state government to address possible difficulties that may occur as a result of an increase in power demand from cryptocurrency miners. According to the Texas Standard, miners might be flexible in shutting down their hardware during high demand hours, or they could be charged a premium per kilowatt-hour if they stay on during peak demand periods.

Important news that could affect the Economic Markets Today :

  • German Ifo Business Climate Index (Nov)
  • Core Durable Goods Orders (MoM) (USA)GDP (QoQ) (USA)  
  • Initial Jobless Claims
  • New Home Sales (USA)
  • Crude Oil Inventories
  • FOMC Meeting Minutes  
  • Trade Balance (YoY) (MoM) (NZD)

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