This article was written by Justin Low at www.forexlive.com.

• Prior +4.2%
• Market index 322.7 vs 320.4
• Purchase index 243.1 vs 242.8
• Refinancing index 726.1 vs 712.7
• 30-year mortgage rate 5.84% vs 5.98% prior

A slight rise in mortgage activity was seen last week after what I would say was a bit of a rush in home buying before the Fed raised rates again. The average rate of the most popular mortgage tenor did drop by 14 bps to 5.84%, but it still isn’t of much comfort to prospective home owners I would say after having seen a 33 bps rise in the week prior.

US dollar

This article was written by Justin Low at www.forexlive.com.

• Central banks need to be resolute in acting to bring inflation down
• Policymakers cannot be complacent about a rise in longer-term inflation expectations
• Current inflation situation is a very challenging one
• Our policy communications are important for keeping inflation well anchored

Nothing new really by Mester. As mentioned earlier, markets have already more or less priced in a 75 bps rate hike next month and it’s tough to see the Fed go beyond that.

This article was written by Justin Low at www.forexlive.com.

There isn’t much in this that hasn’t already been said in previous posts:

• EUR/CHF sticks with gradual descend to parity
• Parity beckons for EUR/CHF

The SNB policy pivot remains a key change to the major currencies landscape in the past few weeks and that is continuing to see the swissie gain as the central bank lifts up the anchor that has been weighing on the currency.

EUR/CHF is just steps away from parity and as mentioned before, that could just be the beginning of a bigger slide for the pair. The franc is the top performer today and one pair that I have also been harping about is CHF/JPY and that is up to 143.00 now. It was holding around 135.00 before the SNB pulled off the surprise two weeks back.

This article was written by Justin Low at www.forexlive.com.

TerraUSD’s (UST) and
Luna’s crash is perhaps one of the most unexpected events in the cryptocurrency
market. While there was a lot of optimism about Luna’s future and the
ecosystem, the Terra venture still somehow nearly ended.

 

Seeing what happened,
now may be an excellent time to reexamine any expectations you have about
stablecoins. So here are four lessons to note from the collapse of UST and
Luna.

 

Crashes are Almost
Immediate

 

Being an algorithmic
stablecoin, the UST is pegged to the value of a steadier asset, the greenback.
However, that peg broke when the market was in a downtrend, pushing its value
as low as 4 cents. And since the UST has a strong correlation with Luna, its
sister token also lost around 90% of its value.

 

That slump occurred
only in hours, and some investors could not have enough time to make their
exit. That is why being alert and ready is crucial when you’re faced with
events such as this. One good move is to use stop-loss and take-profit orders
on your open positions.

 

Stable Reserves are
Vital

 

Stablecoins aims to
provide the benefits of the cryptocurrency’s speed and decentralization and the
fiat currency’s stability in value. However, the well-known stablecoins today
don’t follow a completely decentralized model.

 

Meanwhile, UST is an
algorithmic stablecoin that uses an alternative model. Instead of dollars
backing the token, the model made UST programmatically supported by the crypto
Luna.

 

UST holders can always
exchange their stablecoin for a dollar worth of newly minted Luna. Conversely,
investors can redeem their Luna holdings for a UST equal to the dollar value of
Luna redeemed.

 

That system resulted in
arbitrage incentives like the USDT that regularly redirected the stablecoin’s
market price to one dollar.

 

However, UST’s
stability and liquidity were not as strong as the real dollar. If many UST
holders were to exchange their holdings simultaneously, Luna’s value could take
a steep dive after exchanges were swamped with a great deal of supply. That,
unfortunately, is what exactly happened this month.

 

The UST could have
avoided such a situation if it was supported by an asset with a more robust
market and less unstable value when pressured.

Major Crypto Players
Can Still Fail

 

The UST’s and Luna’s
crash supports that cryptocurrency assets remain highly risky. While cryptos
like Bitcoin, Ethereum, and Cardano are already significantly valuable, they
still carry a lot of risks.

 

Like other assets,
cryptocurrencies are not entirely safe. Technical malfunctions, hacks, or
conflicts can disrupt the crypto market. As a result, even major crypto players
are at risk of experiencing sharp declines and losing their credibility.

 

Choose Value Over Hype

 

UST’s and Luna’s
misfortune proves that several professional investors don’t have much helpful
information about what is safe and not in the cryptocurrency space.

The reliability of an
investment is not based on its market value. While the majority is going where
the money is, that doesn’t mean you should do the same. Remember, using due
diligence is crucial.

 

UST failed due to a
flawed arbitrage mechanism that nearly everyone can analyze from the start.
Previous coins that used similar mechanisms were tested and failed several
years ago. That information, however, did not concern most investors.

 

So when they had the
chance to leave before the collapse took place, many investors could not do
their research and make the necessary preparations.

This article was written by ForexLive at www.forexlive.com.