The US dollar’s overall ranges have held true and the currency’s trend remains unchanged, despite swings in its performance. Asif Hassan / AFP
The US dollar’s overall ranges have held true and the currency’s trend remains unchanged, despite swings in its performance. Asif Hassan / AFP

Market analysis: US Federal Reserve needs more to justify a rate rise



The US dollar turned in a mixed performance against its major currency counterparts in the past two weeks, and expect volatility to continue leading up to the Federal Reserve meeting later this month.

Over the course of the two weeks leading to the Labor Day weekend that ended on Monday, the greenback closed stronger against the euro (by 1.38 per cent), Swiss franc (2.02 per cent) and Japan’s yen (3.08 per cent) while ending lower against the British pound (by 1.86 per cent) and the Indian rupee (1 per cent) on the Dubai Gold & Commodities Exchange (DGCX).

In the commodities segment, gold was down by 1.17 per cent while the West Texas Intermediary crude contract closed 1.56 per cent lower.

Despite the broader swings in the performance of the dollar to the end of summer, the overall ranges have held true and the dollar trend remains unchanged. Sensitivity towards Fed speak will continue to strengthen as interest rate expectations solidify and underpin the performance of the dollar to the end of the year.

Volatility is expected to pick up leading up to the Federal Open Market Committee (FOMC) rate decision on September 21.

Markets currently are expecting a 15 per cent chance of a rate hike at this meeting, which, I think, is way too optimistic. Of late, we have noticed a hawkish Fed but overall the signals of future Fed policy have been mixed and chairwoman Janet Yellen’s lack of conviction in Jackson Hole, a the symposium that has been historically notorious for market-developing announcements, would suggest the Fed is still sticking to a wait-and-see mentality.

The economic data docket still lacks upside traction – inflation and growth data slowed in the summer and the most recent US non-farm payrolls released last week did not add to the case for a hike.

The report showed a slower than expected gain in payrolls for last month (151,000 actual vs 180,000 expected). Besides, the figure was more than 100,000 jobs short of July’s upwardly revised figure, along with an unchanged unemployment rate of 4.9 per cent.

The Fed will need a much stronger and more consistent flow of data to justify any conviction of a rate hike this year, which is why any chatter of a rate hike before December seems premature.

This timeline also works from a political standpoint. The US elections culminate in November, at which point the Fed would have all the clarity it needs from Washington to take the economy forward under the new government.

Along with the FOMC rate decision this month, a host of central banks are set to convene over the next two weeks.

The Reserve Bank of Australia held rates unchanged at 1.5 per cent earlier in the week and we can expect the Bank of Canada to follow suit by holding rates unchanged at 0.5 per cent when it announces later today.

The European Central Bank convenes tomorrow and although we do not expect any further cuts to interest rates, we keenly await president Mario Draghi’s press conference.

We will not be surprised to see an extension to the current quantitative easing programme to beyond the spring of next year.

The Bank of England is set to convene on September 15 to decide rates and we do not expect major action from the central bank as it is likely to take its cues from the Fed a week later.

And, finally, Apple is all set to announce the iPhone 7, along with a host of other products at its annual keynote event today. Its timing could not have been better – the tech major has been under the hammer recently as a result of the EU tax commission’s findings which could involve upwards of €13 billion due by Apple in back taxes.

Apple’s futures on the DGCX dropped to below US$106 following the news, which forms the support level in the stock, while upsides following optimism at the keynote could result in the stock testing $110 levels following the keynote.

Gaurav Kashyap is the head of futures at Axitrader in Dubai.

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Company Profile

Company name: Cargoz
Date started: January 2022
Founders: Premlal Pullisserry and Lijo Antony
Based: Dubai
Number of staff: 30
Investment stage: Seed

COMPANY PROFILE

Company name: Revibe
Started: 2022
Founders: Hamza Iraqui and Abdessamad Ben Zakour
Based: UAE
Industry: Refurbished electronics
Funds raised so far: $10m
Investors: Flat6Labs, Resonance and various others

In numbers: China in Dubai

The number of Chinese people living in Dubai: An estimated 200,000

Number of Chinese people in International City: Almost 50,000

Daily visitors to Dragon Mart in 2018/19: 120,000

Daily visitors to Dragon Mart in 2010: 20,000

Percentage increase in visitors in eight years: 500 per cent

Aston martin DBX specs

Engine: 4.0-litre twin-turbo V8

Transmission: nine-speed automatic

Power: 542bhp

Torque: 700Nm

Top speed: 291kph

Price: Dh848,000

On sale: Q2, 2020
 

A cryptocurrency primer for beginners

Cryptocurrency Investing for Dummies+– by Kiana Danial 

There are several primers for investing in cryptocurrencies available online, including e-books written by people whose credentials fall apart on the second page of your preferred search engine. 

Ms Danial is a finance coach and former currency analyst who writes for Nasdaq. Her broad-strokes primer+(2019) breaks down investing in cryptocurrency into baby steps, while explaining the terms and technologies involved.

Although cryptocurrencies are a fast evolving world, this book offers a good insight into the game as well as providing some basic tips, strategies and warning signs.

Begin your cryptocurrency journey here. 

Available at Magrudy’s , Dh104 

Living in...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home. 

Sarfira

Director: Sudha Kongara Prasad

Starring: Akshay Kumar, Radhika Madan, Paresh Rawal

Rating: 2/5

Ways to control drones

Countries have been coming up with ways to restrict and monitor the use of non-commercial drones to keep them from trespassing on controlled areas such as airports.

"Drones vary in size and some can be as big as a small city car - so imagine the impact of one hitting an airplane. It's a huge risk, especially when commercial airliners are not designed to make or take sudden evasive manoeuvres like drones can" says Saj Ahmed, chief analyst at London-based StrategicAero Research.

New measures have now been taken to monitor drone activity, Geo-fencing technology is one.

It's a method designed to prevent drones from drifting into banned areas. The technology uses GPS location signals to stop its machines flying close to airports and other restricted zones.

The European commission has recently announced a blueprint to make drone use in low-level airspace safe, secure and environmentally friendly. This process is called “U-Space” – it covers altitudes of up to 150 metres. It is also noteworthy that that UK Civil Aviation Authority recommends drones to be flown at no higher than 400ft. “U-Space” technology will be governed by a system similar to air traffic control management, which will be automated using tools like geo-fencing.

The UAE has drawn serious measures to ensure users register their devices under strict new laws. Authorities have urged that users must obtain approval in advance before flying the drones, non registered drone use in Dubai will result in a fine of up to twenty thousand dirhams under a new resolution approved by Sheikh Hamdan bin Mohammed, Crown Prince of Dubai.

Mr Ahmad suggest that "Hefty fines running into hundreds of thousands of dollars need to compensate for the cost of airport disruption and flight diversions to lengthy jail spells, confiscation of travel rights and use of drones for a lengthy period" must be enforced in order to reduce airport intrusion.

Company Profile

Company name: Hoopla
Date started: March 2023
Founder: Jacqueline Perrottet
Based: Dubai
Number of staff: 10
Investment stage: Pre-seed
Investment required: $500,000

How does ToTok work?

The calling app is available to download on Google Play and Apple App Store

To successfully install ToTok, users are asked to enter their phone number and then create a nickname.

The app then gives users the option add their existing phone contacts, allowing them to immediately contact people also using the application by video or voice call or via message.

Users can also invite other contacts to download ToTok to allow them to make contact through the app.

 

COMPANY PROFILE

Name: SmartCrowd
Started: 2018
Founder: Siddiq Farid and Musfique Ahmed
Based: Dubai
Sector: FinTech / PropTech
Initial investment: $650,000
Current number of staff: 35
Investment stage: Series A
Investors: Various institutional investors and notable angel investors (500 MENA, Shurooq, Mada, Seedstar, Tricap)

COMPANY PROFILE

Company name: Klipit

Started: 2022

Founders: Venkat Reddy, Mohammed Al Bulooki, Bilal Merchant, Asif Ahmed, Ovais Merchant

Based: Dubai, UAE

Industry: Digital receipts, finance, blockchain

Funding: $4 million

Investors: Privately/self-funded

FFP EXPLAINED

What is Financial Fair Play?
Introduced in 2011 by Uefa, European football’s governing body, it demands that clubs live within their means. Chiefly, spend within their income and not make substantial losses.

What the rules dictate? 
The second phase of its implementation limits losses to €30 million (Dh136m) over three seasons. Extra expenditure is permitted for investment in sustainable areas (youth academies, stadium development, etc). Money provided by owners is not viewed as income. Revenue from “related parties” to those owners is assessed by Uefa's “financial control body” to be sure it is a fair value, or in line with market prices.

What are the penalties? 
There are a number of punishments, including fines, a loss of prize money or having to reduce squad size for European competition – as happened to PSG in 2014. There is even the threat of a competition ban, which could in theory lead to PSG’s suspension from the Uefa Champions League.

COMPANY PROFILE

Company name: Co Chocolat

Started: 2017

Founders: Iman and Luchie Suguitan

Based: Dubai, UAE

Industry: Food

Funding: $1 million-plus

Investors: Fahad bin Juma, self-funding, family and friends

Traces of Enayat

Author: Iman Mersal
Publisher: And Other Stories
Pages: 240

Captain Marvel

Director: Anna Boden, Ryan Fleck

Starring: Brie Larson, Samuel L Jackson, Jude Law,  Ben Mendelsohn

4/5 stars

Teaching your child to save

Pre-school (three - five years)

You can’t yet talk about investing or borrowing, but introduce a “classic” money bank and start putting gifts and allowances away. When the child wants a specific toy, have them save for it and help them track their progress.

Early childhood (six - eight years)

Replace the money bank with three jars labelled ‘saving’, ‘spending’ and ‘sharing’. Have the child divide their allowance into the three jars each week and explain their choices in splitting their pocket money. A guide could be 25 per cent saving, 50 per cent spending, 25 per cent for charity and gift-giving.

Middle childhood (nine - 11 years)

Open a bank savings account and help your child establish a budget and set a savings goal. Introduce the notion of ‘paying yourself first’ by putting away savings as soon as your allowance is paid.

Young teens (12 - 14 years)

Change your child’s allowance from weekly to monthly and help them pinpoint long-range goals such as a trip, so they can start longer-term saving and find new ways to increase their saving.

Teenage (15 - 18 years)

Discuss mutual expectations about university costs and identify what they can help fund and set goals. Don’t pay for everything, so they can experience the pride of contributing.

Young adulthood (19 - 22 years)

Discuss post-graduation plans and future life goals, quantify expenses such as first apartment, work wardrobe, holidays and help them continue to save towards these goals.

* JP Morgan Private Bank 

The chef's advice

Troy Payne, head chef at Abu Dhabi’s newest healthy eatery Sanderson’s in Al Seef Resort & Spa, says singles need to change their mindset about how they approach the supermarket.

“They feel like they can’t buy one cucumber,” he says. “But I can walk into a shop – I feed two people at home – and I’ll walk into a shop and I buy one cucumber, I’ll buy one onion.”

Mr Payne asks for the sticker to be placed directly on each item, rather than face the temptation of filling one of the two-kilogram capacity plastic bags on offer.

The chef also advises singletons not get too hung up on “organic”, particularly high-priced varieties that have been flown in from far-flung locales. Local produce is often grown sustainably, and far cheaper, he says.

Turkish Ladies

Various artists, Sony Music Turkey 

EXPATS

Director: Lulu Wang

Stars: Nicole Kidman, Sarayu Blue, Ji-young Yoo, Brian Tee, Jack Huston

Rating: 4/5

All The Light We Cannot See

Creator: Steven Knight

Stars: Mark Ruffalo, Hugh Laurie, Aria Mia Loberti

Rating: 1/5 

CONFIRMED LINE-UP

Elena Rybakina (Kazakhstan)
Ons Jabeur (Tunisia)
Maria Sakkari (Greece)
Barbora Krejčíková (Czech Republic)
Beatriz Haddad Maia (Brazil)
Jeļena Ostapenko (Latvia)
Liudmila Samsonova
Daria Kasatkina 
Veronika Kudermetova 
Caroline Garcia (France) 
Magda Linette (Poland) 
Sorana Cîrstea (Romania) 
Anastasia Potapova 
Anhelina Kalinina (Ukraine)  
Jasmine Paolini (Italy) 
Emma Navarro (USA) 
Lesia Tsurenko (Ukraine)
Naomi Osaka (Japan) - wildcard
Emma Raducanu (Great Britain) - wildcard


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