Markets Crash, USD at New Highs

Anxiety and nervousness in the markets continued on Monday as investors piled in into the USD, selling basically every other major currency.

Equities came under selling pressure, with US indices falling toward June’s lows while EU benchmarks are already at new cycle lows.

At the same time, commodities continue to suffer, with the WTI oil falling to 9-month lows below 78 USD, while silver, gold, and copper are down sharply over the last few days.

Sterling craters to all-time lows

In the aftermath of last week’s announcement of the nation’s largest package of tax cuts in 50 years to bolster sluggish economic development, the British pound hit a new low on Monday. In an interview with the BBC on Sunday, Kwarteng further stated that he wanted to maintain lowering taxes in an effort to stimulate the UK economy, adding that there was “more to come.”

Given that the nation is dealing with a sluggish economy and twin deficits, the decline in the pound serves as an example of the market’s skepticism over the viability of such a move. As of writing, the GBPUSD pair fell to 1.04 before recovering slightly. Investors are now openly talking about parity between GBP and USD.

Anti-EU governments are forming

Early exit polls from Italy’s national election indicate that Giorgia Meloni’s right-wing bloc, which the ultra-left wing press can’t stop comparing to Mussolini, is on track to win a historic victory and a clear majority (though not a super-majority), which will elevate Meloni to the top of the Italian government as the country’s next prime minister, ushering in a historic right-wing shift for a nation that, like Sweden until two weeks ago, used to be very left-wing. Meloni’s party is known for her anti-immigration and anti-EU (anti-sanctions) policies.

As a result, the euro continued to be under pressure, falling to fresh cycle lows against the greenback below 0.96.