Friday afternoon rolls in and a zillion things cross my mind that I need to talk about on my weekly blog. In summary the Global Equities are feeling the jitters from the escalating tariff war between U.S. & its trade partners, Cryptos have resumed their next leg down and any hopes a bounce or a rebound have been quashed for now. While the Greenback took a breather from its resilient strength finally towards the end of the week in FX markets.
The Crazy Cryptoverse
The digital coins are in dire straits to say the least as I begin to write this with the Bitcoin making new lows. The biggest story was yet another Crypto heist that occurred in the sixth biggest digital exchange Bithumb (yet another South Korean exchange) where hackers took off with $31 million worth of bounty. I don’t know if these hacks have any direct effect on the prices of the Cryptos but the constant attacks do bog down the general sentiment around them for sure. The price of Bitcoin has just plunged below the $6000 mark as I am writing this & it is dragging all the other Alt. coins with it like a house of cards.
I had to put both the daily & hourly chart together to have a clear perspective of the price drop that we have seen recently. Technically speaking the bearish momentum has gained pace. It seems like a pretty slippery slope right now with the immediate resistance lying around the $6220-$6300 zone which needs to be overcome to turn the bias back to neutral territory. Only a move above the $6900 level would signal a pause in the bearish run. For the daily you can see that $8000 & $10000 can be designated as MT & LT game changers. The CCI30 Crypto index value sits @ 5396.40 from 6252.51 last week with falls of 64.28% and 27.08% for YTD and MTD respectively at the time of writing. Also the MarketCap for Cryptos continued to drop sitting at $253.1 billion this week from $281.7 last week & BTC dominance soaring to 41%.
That is a lot of bad news to digest in a day. Let’s look at some of the good news making rounds this week:
- Ethereum getting ready for the Casper & sharding upgrade
- BitTorrent sold for a $140 million in cash to Justin Sun, founder of the cryptocurrency startup Tron
- Amsterdam Schiphol Airport installs Europe’s First Airport Bitcoin ATM
- UK-based crypto futures exchange Crypto Facilities is launching Litecoin (LTC) derivatives
- Brazil’s Central Bank Unveils Blockchain Data Exchange Platform for Regulators
- Stellar in Talks to Acquire Blockchain Startup Chain for $500 Million in XLM
This week was marked with the further strengthening of the Greenback followed by a relief rally towards the end of the week. By & large the dominant bullish trend of the mighty dollar persists, but technical rebounds appear to be taking shape in Majors. Emerging market currencies remain under pressure against the USD. The next week has some key data releases with the RBNZ reporting the interest rate decision on Wednesday, Germany CPI & U.S. GDP on Thursday & German employment and Canadian GDP data numbers on Thursday.
Looking at the Dollar Index (DXY) – it has carved out a new high @ 95.53 before receding to close just below the resistance zone of 95.50 – 95.53. This might prove to be a difficult resistance to pass considering the last reversal of the index occurred from this level. However currently the upside is favored as long as the support zone of 92.50 – 93.20 holds. With the risk aversion in global equities the money flow to the safe haven dollar is going to continue to fuel its demand.
The most impressive rebound came from the Pound (GBPUSD) where it was able to manage a recovery to just above 1.3300 after printing a new low of 1.3102 earlier in the week. This rebound of course was on the heels of a hawkish rate hold from the BoE. This rebound might have a little more room to run but the larger bearish trend stays in tact. The other major mover has been USDCAD for the past few week. It printed a high of 1.3379 on softer CPI numbers out of Canada on Friday but quickly gave away the gains before the close. The overbought condition in the pair is due for a correction which might come next week. The fundamentals & technicals however point towards the continuation of the MT bullish trend.
Global Equities have been under pressure led by the Chinese stocks which have plummeted over 10% in the past month on the back of the U.S. tariffs imposition which is blowing into a full-scale trade war. The Chinese central bank injected $37 billion into their financial system to ensure liquidity as the Shanghai composite Index dropped to its 2-year lows. EU, China & India have already retaliated with counter tariffs on U.S. products citing they had no choice after U.S. decision to do so.
The U.S. equities came under pressure all week with news driven moves, Friday however brought a respite breaking the 8-day losing streak. The only silver lining was the Tech Index Nasdaq printing an all time high. Analyzing the S&P 500 Index the bullish trend is just holding sitting right on the cusp of the 20EMA & the bullish trend line – No alarm bells yet but any convincing move down from the confluence of this and the support area of 2740 would trigger a bigger correction. A Look at the Major global indices performance last week:
U.S. – DJIA (-2.03%), S&P500 (-0.89%), NASDAQ (-0.69%),
Europe – FTSE100 (+0.63%), DAX (-3.31%), CAC 40 (-2.08%)
Asia – Nikkei 225 (-1.47%), BSE Sensex (+0.19%), Shanghai Composite(-4.37%)
Here are some the major News makers last week:
- Toronto Stock Exchange is going to start trading New Blockchain ETF.
- Argentina and Saudi Arabia yesterday when both countries were added to MSCI Inc.’s group of emerging markets.
- Walgreens Boots Alliance (WBA) is joining the Dow Jones Industrial Average
(DJIA), replacing General Electric (GE), where it was an original member in 1896 and a member continuously since 1907 – falling 55% over the last 12 months and more than 25% YTD
- The world’s biggest IPO in nearly two years… Chinese smart phone maker Xiaomi (BATS:XI) has started taking orders for its upcoming listing, which aims to raise up to $6.1B for a total valuation $54.3B, or as much as $70.3B if a 15% “greenshoe” is exercised.
Here’s a little fun fact for you from the last week in history (#Investopedia):
June 20, 2003: GM announced a $10b bond sale. It was held to cover the company’s pension liabilities that were underfunded. The years leading up to the financial crisis led to filing for bankruptcy in ’09. It then emerged later and scripted a comeback.
And finally to put a little comic twist to things… Happy Trading everyone!