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El Salvador “Buys the Dip” on Bitcoin, EURUSD Climbs to 1-Month High & Despite Slow U.S. GDP Growth, the S&P 500 Rallies

EURUSD climbs to 1-month high, as ECB keeps rates unchanged

EURUSD rallied in today’s trading session, as the European Central Bank opted to keep interest rates unchanged.

Despite inflation rates rising well beyond the bank’s 2% target, the bank’s President Christine Lagarde opted to maintain current policy measures.

💡 Inflation in the Euro area
The Eurozone annual inflation rate was confirmed at 3.4 percent in September 2021, the highest rate since before the global financial crisis in September 2008 and well above the European Central Bank’s target of 2.0 percent.

In a statement following the decision, Lagarde stated that, “Our analysis certainly does not support that the conditions of our forward guidance are satisfied at the time of lift-off as expected by markets, nor anytime soon thereafter”.

With the Bank of England expected to “lift off” in November, there were perceived expectations that Lagarde could be tempted to do likewise.

However, she added that, “We really looked and very deeply tested our analysis of the drivers of inflation, and we are confident that our anticipation and our analysis is actually correct”.

As of writing, EURUSD hit an intraday high of 1.1692, its highest level in a month.

S&P 500 rallies despite slowing U.S. GDP

The benchmark S&P 500 neared all-time highs on Thursday, as markets rallied despite U.S. GDP slowing in Q3.

Figures from the Commerce Department showed that Gross domestic product in the U.S. rose 2.0% last quarter, less than the expected 2.7%.

This was the slowest rate GDP in the United States has risen since Q2 of 2020 and comes as the rise of the Delta Variant slowed down the re-open of the economy.

💡 What was the determining factor for the slow in growth?
Consumer spending, which makes up 69% of the $23.2 trillion U.S. economy, increased at just a 1.6% pace for the most recent period, after rising 12% in the second quarter.

Despite the Q3 weakness, economists largely expect the U.S. to bounce back in the fourth quarter and continue growth into 2022.

Many have viewed this as a huge setback to economic recovery, as it falls well short of the 6.7% growth rate in the second quarter.

Despite this, the S&P 500 was trading 0.84% higher as of writing.

Bitcoin rallies as El Salvador “buys the dip”

The rollercoaster ride that is Bitcoin took another turn on Thursday, this time rallying above $60,000, after sell-offs on Wednesday and Thursday.

Prices of the world’s largest cryptocurrency rebounded today, after falling to a low of $58,957 on Wednesday.

Thursday saw BTCUSD hit an intraday high of $61,785, as it reported that El Salvador “bought the dip”, of the previous session.

In a tweet confirming the reports, El Salvador’s President Nayib Bukele, said that “It was a long wait, but worth it. We just bought the dip!”.

Many now wait to see if today’s move will stop the bleeding, or if we will see further bearish pressure in upcoming days.

“I know where I’m getting out before I get in.”

– Bruce Kovner

Eliman Dambell

Senior Market Analyst


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