EUR/USD Fails to Break Above Upper-1.0200 Highs, ECB Hikes Rate by 50 bps

Key Points

  • EUR/USD failed an earlier attempt to push above 1.0300 despite the ECB’s larger than expected hike.
  • USD/JPY fell under 138.0 on falling US yields, with the yen unreactive to the dovish BoJ.
  • GBP/USD languished below 1.20 as worrying UK borrowing data weighed on sterling.

EUR/USD Unable to Break Above Upper-1.02s Despite Large ECB Hike

The euro derived support on Thursday after a larger than expected rate hike from the European Central Bank and following the resumption of Russian gas flows to Europe via the Nord Stream 1 pipeline. However, EUR/USD was again unable to push beyond its recent highs in the upper-1.02s and was last trading back below the 1.02 mark and broadly flat on the day.

The ECB delivered a 50 bps rate hike on Thursday despite the central bank’s previous guidance that it was planning a 25 bps move. A report earlier this week had hinted that a larger move was on the table, but going into the meeting investors still weren’t convinced. The ECB’s hike lifted its benchmark deposit rate to 0.0%, ending an eight-year negative interest rate experiment and marking the bank’s first rate hike in 11 years.

The ECB said that further normalization would be appropriate at upcoming meetings. In the post-meeting press conference, ECB President Christine Lagarde said the bank had now abandoned its old forward guidance (that had said a 25 bps rate hike in July and a 50 bps hike in September), saying the central bank would instead take a data-dependent meeting-by-meeting approach. Some saw that as a sign that the ECB pushing back on expectations for a 50bps rate hike in September.

The ECB also unveiled the details of its new Transmission Protection Instrument (TPI), which is designed to prevent an “unwarranted” blowout in Eurozone bond yield spreads. In other words, to prevent a repeat of the 2011/12 Eurozone debt crisis which saw wild swings in the borrowing costs of countries like Italy, Spain, Greece and other highly indebted Eurozone nations.

However, in order to get such assistance from the ECB, countries will have to meet certain criteria, meaning that there is no guarantee they will benefit from the TPI. Some traders argued that uncertainty about access to the TPI was another reason why the euro struggled to hold onto gains.

Euro traders are monitoring a political crisis in Italy after the collapse of the nation’s ruling government coalition headed by Italian Prime Minister Mario Draghi on Wednesday. Draghi subsequently handed his resignation in to Italian President Sergio Mattarella and an election is expected in late Q3/early Q4, with Mattarella having dissolved parliament.

USD/JPY Slips Under 138.0 on Falling US Yields

US yields fell across the curve on Thursday after data showed weekly US jobless claims rose to its highest level in eight months, though remained at healthy levels, indicative of a modest cooling of the US labour market. Meanwhile, the July Philadelphia Fed manufacturing survey deteriorated to its worst level in a decade (excluding the 2020 pandemic shock).

Thursday’s downbeat data seems to have contributed to a pick-up in US slowdown fears, despite the tone of corporate earnings having been mostly upbeat so far just over one week on from the start of the reporting season, hence the bond market reaction. The drop in US yields helped the rate-sensitive yen outperform and helped push USD/JPY below 138.0.

The yen was unresponsive to a characteristically dovish policy announcement from the Bank of Japan during the Asia Pacific session. The bank doubled down on its pledge to maintain rates at 0.1% and its YCC policy of keeping 10-year government bond yields near 0.0% for the foreseeable future, despite raising its inflation forecast, which predicted inflation above the BoJ’s 2.0% target in the coming year.

“The economy is in the midst of recovering from the pandemic… (and) Japan’s worsening terms of trade are also leading to an outflow of income,” Kuroda said in the post-meeting press conference. “As such,” he continued, “we must continue with our easy policy to ensure rising corporate profits lead to moderate wage and price growth”. Kuroda also ruled out the possibility of using rate hikes to support the yen, which is currently trading near 24-year lows versus the US dollar.

GBP/USD Capped by 21DMA

GBP/USD chopped within a 100 pip range between the 1.1900 and 1.2000 levels on Thursday, with the pound undermined by worrying UK government borrowing figures released in the European morning. Data showed the size of the UK’s monthly budget deficit rose to its highest level since April 2021 amid rising debt costs as the Bank of England raises interest rates, highlighting some of the challenges that a new PM will face.

Technicians noted how in the past few days, cable has been unable to rally above its 21-Day Moving Average, which currently sits just above 1.20. With the ruling Conservative Party leadership contest now narrowed down to just two candidates, former Chancellor of the Exchequer Rishi Sunak and former Foreign Minister Liz Truss, pound traders will be monitoring UK political developments. A final vote on who replaces Boris Johnson and Conservative Party leader and UK PM will occur on 6 September.

Elsewhere in G10 FX, the Aussie gained slightly versus the buck, with AUD/USD recovering back above 0.6900, while NZD/USD languished in the low 0.6200s. USD/CAD, meanwhile, held close to recent multi-week lows under 1.2900, with the loonie resilient despite weakness in oil prices.

Top 3 Trending Coins: DOGE Slides Under $0.07 But Bulls Remain Hopeful, SOL Trails Behind, XMR Rallies

Key Points

  • Dogecoin is the underperforming top 20 cryptocurrency and is back below $0.07, though maintains a positive short-term technical outlook.
  • Solana is another underperformer, though has help above $40 and key support, also suggesting of a positive short-term outlook.
  • Monero is bucked the trend of broad crypto weakness as bulls target a rally towards the 200DMA.

Dogecoin (DOGE)

Dogecoin is the worst performing cryptocurrency in the top 20 by market capitalization on Thursday over the past 24 hours, according to CoinMarketCap. Over this time period, the cryptocurrency has fallen about 9%. DOGE/USD was last changing hands just below $0.069, a near 11% drop from the multi-week peaks it hit on Wednesday above $0.077.

Despite the recent pullback from highs, Dogecoin still looks good from a technical perspective. It found support earlier in Thursday’s session at its 50-Day Moving Average in the $0.0670s and also remains above its 21DMA. Moreover, much of Dogecoin’s upside on Wednesday was spurred amid a breakout above a downtrend that had been capping the cryptocurrency’s upside since mid-May.

DOGE/USD has remained above this downtrend, which is now acting as support, on Thursday, despite the recent pullback. Short-term speculators may see Dogecoin as an attractive buy at current levels. They may want to target a move back to weekly and late-June highs in the $0.077-$0.079 area over the coming sessions.

DOGE/USD
DOGE/USD rebound to recent highs on the cards? Source: FX Empire

A break above here could open the door to a run higher towards some highs from May/early June in the $0.090-$0.095 area and then a test of $0.10. But a breakdown back below the 50 and 21DMAs would deal a significant blow to short-term bullish hopes and signify that Wednesday’s move higher could have been a false breakout.

Tesla Sells Bitcoin But Not Dogecoin

In a call with investors following the release of Tesla’s Q2 earnings report, CEO Elon Musk confirmed that Tesla had sold down 75% of its Bitcoin holdings for $963 million. Musk said “the reason we sold a bunch of our Bitcoin holdings was that we were uncertain as to when the COVID lockdowns in China would alleviate”.

“It was important for us to maximize our cash position, given the uncertainty of the COVID lockdowns in China”, Musk continued, adding that Tesla is “open to increasing our Bitcoin holdings in future… So this should not be taken as some verdict on Bitcoin”.

Tesla first purchased Bitcoin back in Q1 2021, buying $1.5 billion at the time.

However, Musk said “we have not sold any of our Dogecoin… we still have it”. The company has been accepting Dogecoin as a form of payments for its merchandise since late 2021, with Musk having championed the coin repeatedly in recent years. SpaceX also accepts Dogecoin as a form of payment for merchandise.

Tesla currently holds $218 million in digital assets, according to its latest earnings report. It is unclear as to how much of this is Dogecoin.

Dogecoin has been volatile in recent months after Elon Musk tendered an offer to purchase Twitter that has since fallen through. Dogecoin HODLers had hoped that Musk would promote Dogecoin as a form of payment on the platform that could have boosted its notoriety and adoption.

Solana (SOL)

Solana is the joint second worst performing top 20 cryptocurrency over the past 24 hours alongside competitor Cardano, according to CoinMarketCap. Over this time period, the native token to the Solana blockchain SOL has slumped roughly 8.0%. It is currently changing hands just above $41 per token, down about 2.0% on Thursday and now down over 13% since earlier weekly highs around $47.50.

However, the cryptocurrency’s near-term technical outlook still looks good. SOL/USD has seen a decent intra-day rebound from earlier session lows under $40. The cryptocurrency bounced from support in the form of the 8 July high and a downtrend that had been capping the price action since early July prior to Monday’s break higher.

SOL also continues to trade well above its 21 and 50DMAs in the $36-$38 area. Short-term speculators may see current levels as attractive to add to SOL longs and target a retest of recent highs in the upper $40s per token.

SOL/USD
SOL/USD also eyeing a rebound after holding above key support. Source: FX Empire

Monero (XMR)

Despite the fact that most of the rest of the cryptocurrency market is moving lower amid profit-taking, concerns about further crypto winter casualties and Tesla’s Bitcoin sales, the native token to Monero’s privacy-focused blockchain XMR has continued to gain on Thursday. According to CoinMarketCap, the cryptocurrency is the best performer in the crypto top 50 with gains of around 5% over the last 24 hours.

XMR was last trading just below $152.50 and near its highest levels since 13 June. The cryptocurrency has seen an impressive more than 30% surge since last week’s lows in the $115 area. Its latest surge has seen it break substantially above its 50DMA for the first time since April. Prior to then, the 50DMA had on two key occasions provided significant resistance.

As a result, XMR traders may view the latest resurgence in the cryptocurrency’s price as signalling a shift in near-term momentum. As such, many will now likely target a test of the 200DMA at just under $180 per token.

XMR/USD
XMR/USD rally continues as bulls target 200DMA. Source: FX Empire

Cardano Price Forecast: ADA Could Test $0.46 Before Rebounding to $0.55

Key Points

  • Cardano has fallen from Wednesday’s highs near $0.55 amid a broad crypto pullback on Thursday.
  • ADA was last trading near $0.49 and below its 50DMA at $0.4950, spurring fears of a further drop.
  • But a retest of support around $0.46 could attract buyers and spur a recovery towards $0.55 once again.

Cardano Pulls Back 10% from Wednesday’s High, Slips Under 50DMA

Having rejected a test of a key area of support-turned-resistance in early June around $0.55, the native token to the Cardano blockchain ADA has slipped back below the $0.50 per token level. In doing so, the cryptocurrency has also fallen slightly back under its 50-Day Moving Average at $0.4950, though has stabilized above earlier session lows in the mid-$0.47s.

ADA, now more than 10% lower versus its Wednesday peaks, appears to have succumbed to broad pressure seen across cryptocurrencies. Some analysts cited profit-taking. Others cited the news of Tesla having sold down its Bitcoin holdings in Q2 and of fresh casualties in the ongoing crypto winter as weighing on crypto sentiment a tad.

But Cardano still trades well over 20% higher versus its multi-week lows posted just over one week ago. Indeed, with macro sentiment still looking fairly upbeat and major US equity indices eyeing a further push higher in pre-market trade, the ADA bulls will remain hopeful that the cryptocurrency can retest recent highs before the week is out.

Ahead, crypto traders will be watching the ECB’s monetary policy announcement at 1215GMT to see whether they raise interest rates by 25 or 50 bps and whether this impacts crypto via any FX market ructions. US economic data in the form of weekly jobless claims and the July Philadelphia Fed Manufacturing survey at 1230GMT are probably also worth watching, though probably won’t impact sentiment much.

Cardano Price Prediction: ADA to Fall Back to $0.46 Area Before Bouncing?

With Cardano having seen its recent bullish momentum since breaking above a downtrend from mid-June wane, and with the cryptocurrency having also now fallen back under its 50DMA, further near-term losses may be in store. But if ADA does retest the downtrend that, up until this week, had been capping its upside since mid-June, in the $0.46 area, that might attract buyers and spur a rebound back above $0.50 and towards weekly highs. The 21DMA will also be offering support in this area.

ADA/USD
ADA/USD could drop to $0.46 before rebounding. Source: FX Empire

Cardano Tops Santiment Developer Activity Ranking Ahead of Vasil Hard Fork

According to new rankings put out by crypto analytics firm Santiment, Cardano has seen the highest development activity in the last 30 days, surpassing the likes of Ethereum, Polkadot and its test experimental so-called “Canary” network Kusama. Santiment compiled the ranking by looking at the number of submissions, code pushes and interactions each crypto project saw on open-source code-sharing website GitHub.

Santiment gave Cardano a developer activity score of 387.33, Polkadot and Kusama scores of 281.97 and Ethereum a score of 274.87. Strength in Cardano development activity comes ahead of the blockchain’s much anticipated Vasil hard fork upgrade scheduled for later this month. Cardano’s developers say that the upcoming upgrade is the most complex program of development and integration on Cardano since its Alonzo hardfork added smart contract functionality to the blockchain back in September 2021.

The Vasil hardfork aims to improve the network’s speed and scalability by reducing transaction size and, as a result, increasing the network’s throughput whilst also lowering transaction fees on the network. The upgrade was initially scheduled to take place at the end of June but was delayed by Cardano’s developer Input Output Hong Kong (IOHK) out of an “abundance of caution” given the presence of a few minor bugs.

Once Cardano’s Founder Announces Date for Hard Fork, “This Puppy Will Rip”

According to a tweet from prominent crypto analyst and educator Lark Davis on Wednesday, given that Cardano recently surpassed its 50DMA, all that is needed now is for “Charles (Hoskinson, Cardano’s founder) to announce the date of the Vasil hard fork and this puppy will rip!”.

According to a survey of 53 FinTech experts conducted by researchers at finder.com last week, a majority of participants were bullish on the cryptocurrency in the years ahead. The median forecast from the experts was for ADA to recover to around $3 by 2025, before hitting $7 in 2030.

While still bullish, this is far less optimistic an outlook than that given by experts in a similar survey conducted back in January. Back then, when Cardano was trading in a $1.1 to $1.6 range versus current levels under $0.50, experts saw the cryptocurrency ending the year closer to $30 and hitting $58 by 2030.

Experts responding to finder.com’s survey were split over how the upcoming Vasil hardfork will impact Cardano. 20% said it would positively impact ADA’s price, 18% said it would have an adverse effect, while 50% said it would increase the functionality of the Cardano blockchain.

5 Things to Know in Crypto Today: BTC Slips Back Under $23,000, Probes 50DMA With Crypto Winter in Focus

Key Points

  • Cryptocurrency prices have pulled back from weekly highs on Thursday, with Bitcoin back under $23,000 and probing its 50DMA.
  • Further casualties in the crypto winter and Tesla selling down its Bitcoin holdings in Q2 may be weighing.
  • The UK on Wednesday proposed new stablecoin legislation in its Financial Services and Markets bill.

Bitcoin Pulls Back Under $23,000, Probes 50DMA

Macro sentiment remains upbeat, but major cryptocurrencies have pulled back from their Wednesday highs amid profit-taking. Some also cited the news of Tesla having sold down its Bitcoin holdings in Q2 and of fresh casualties in the ongoing crypto winter as weighing on crypto a tad.

The world’s largest cryptocurrency by market capitalization Bitcoin was last trading just below the $23,000 level once again where it is flirting with its 50-Day Moving Average, having been as high as $24,280 on Wednesday. Despite the modest retracement from highs, Bitcoin is still up by close to 10% on the week. The Bitcoin “Fear & Greed” index has risen again on Thursday to 34 from 31 on Wednesday, though it is still in a state of “Fear”.

Ethereum was last down about 2.5% on Thursday and on course for a third day in the red as it pulls back further from its earlier highs in the low-$1,600s. ETH/USD was last changing hands just below $1,500, still up nearly 11% on the week. Other major cryptocurrencies including BNB, XRP, ADA, SOL and DOGE were all last down between 3-10% in the last 24 hours, according to CoinMarketCap.

Ahead, crypto traders will be watching the ECB’s monetary policy announcement at 1215GMT to see whether they raise interest rates by 25 or 50 bps, and whether this impacts crypto via any FX market ructions. US economic data in the form of weekly jobless claims and the July Philadelphia Fed Manufacturing survey at 1230GMT are probably also worth watching, though probably won’t impact sentiment much.

Crypto Winter: Zipmex Halts Withdrawals, Vauld Files for Protection from Creditors

In the latest reminder that, despite the recent upturn in crypto prices, the “crypto winter” that has been so painful for so many firms in the industry is not over, another cryptocurrency exchange has halted withdrawals. Zipmex announced on Twitter on Wednesday that it had paused user withdrawals “due to a combination of circumstances beyond our control, including volatile market conditions, and the resulting financial difficulties of our key business partners, to maintain the integrity of our platform, we would be pausing withdrawals until further notice”.

According to industry sources speaking to CoinDesk, the exchange was forced to halt withdrawals given exposure to beleaguered crypto lending platform Babel Finance. The sources said that Zipmex faces a big haircut on about $100 million that it lent to Babel, who froze platform withdrawals back in June and are reportedly looking to restructuring experts.

Elsewhere, another popular crypto lending platform Vauld, which announced that it had frozen user withdrawals only a few weeks ago, announced in a new blog post that it has filed for protection from its creditors in Singapore. The company said it took this decision to give “Vauld management the breathing space it requires to prepare for the intended restructuring for the benefit of all stakeholders”.

Vauld said it remains in acquisition talks with fellow crypto lending platform Nexo. The firm reportedly owes $402 million to mostly retail investors.

Tesla Sells 75% of Bitcoin Holdings in Q2

Tesla CEO Elon Musk said in the company’s quarterly earnings call that the electric vehicle maker sold 75% of its Bitcoin holdings during the second quarter of 2022. Musk said the company took the decision given it wanted to boost cash amid uncertainty about lockdowns in China.

Musk was keen not to rule out a future build-up of the company’s Bitcoin position. Q2 sales “should not be taken as some verdict on Bitcoin”, Musk said. The company’s sales of the cryptocurrency last quarter amounted to around $936 million, with the company selling for an average price of around $29,000 per token, having sold mostly at the start of the quarter and prior to Bitcoin’s tumble below $20,000 in June.

UK Proposes Stablecoin Legislation

The UK’s Treasury on Wednesday proposed its long-awaited Financial Services and Markets bill that proponents say is aimed at strengthening the UK’s financial sector following the country’s exit from the European Union in 2020. The bill includes legislation that covers digital assets, or as it refers to them, “digital settlement assets” and specifically focuses on stablecoins.

Stablecoins are cryptocurrencies that are supposed to maintain a 1:1 peg to an existing currency like the US dollar, euro, yen or pound sterling. According to the Treasury, the bill seeks to embrace “crypto asset technology to establish a stablecoin regime and enable the use of a wider set of payment methods in the UK”.

The UK government promised earlier in the year to make the UK a global crypto hub and to introduce broad legislation on the sector before the year’s end. But recent government upheaval may delay things, with a new Conservative Party Leader and Prime Minister not scheduled to be chosen until September after Boris Johnson’s recent resignation from the post.

Firms Issuing USD-pegged Stablecoins To Face Tough Reserve Requirements

Leading US lawmakers have agreed that issuers of USD-pegged stablecoins should back the digital token with liquid safe-haven assets such as cash and US treasury bonds, a source told CoinDesk on Wednesday. According to the sources, progress has been made in negotiations on crypto regulations, with the House Financial Service Committee Chairwoman Maxine Waters and panel’s ranking Republican Patrick McHenry agreeing that USD stablecoins should face tough reserve requirements.

The source added that, under the new regulatory regime, existing commercial companies would be banned from issuing their own stablecoins (such as Facebook, Twitter or Amazon). Moreover, regulators look set to insist on interoperability in order to prevent anti-competitive behavior. Back in early June, US lawmakers Cynthia Lummis and Kirsten Gillibrand proposed the Responsible Financial Innovation Act, the first major attempt by US lawmakers to regulate crypto.

EUR/USD Slips Back Towards 1.0200, ECB and Russia Gas Flows in Focus

Key Points

  • The DXY rose slightly on Wednesday but was unable to break back above 107.0 ahead of Thursday’s risk events.
  • EUR/USD fell back towards 1.0200 ahead of Thursday’s ECB policy announcement as the restart of Russian gas flows.
  • Sterling and the loonie both shrugged off CPI data.

The US Dollar Index (DXY), a trade-weighted basket of major USD pairs, edged higher on Tuesday and was able to press back above the 107.0 level. The index had previously tumbled back from multi-decade highs above 109.0 in the last few days. The rally in the safe-haven US dollar came despite upbeat macro sentiment and a rally in US equities.

Euro Slips Ahead of ECB Meeting, Potential Russia Gas Flow Restart

The euro slipped slightly against the US dollar on Wednesday amid profit-taking following its recent bounce from sub-1.0 levels last week. Euro traders are looking ahead to two key event risks on Thursday.

Firstly, the European Central Bank is set to announce its latest monetary policy decision. Markets are unsure whether the central bank will kick off its tightening cycle with a 25 or 50 bps rate hike after reports earlier this week surprised investors by hinting that the bigger option was on the table.

Traders also await the ECB’s unveiling of its “anti-fragmentation” tool, designed to prevent any blow-outs in Eurozone bond yield spreads between nations that might hamper monetary transmission. The other risk is whether Russia restarts gas shipments through the Nord Stream 1 pipeline after planned maintenance commences. Reports earlier this week suggested they would.

A larger rate hike and restarting of gas flows could offer support to the euro. EUR/USD might be in with a shot of retesting weekly highs in the 1.0270 area.

Pound Flat Despite Hot CPI Figures

The pound moved a little lower against the US dollar on Wednesday, with cable hovering just below the 1.20 level that it has struggled to break above in recent days. GBP failed to gain any ground despite data out in the European morning that showed UK consumer inflation hitting its highest annual rate since February 1982.

According to the UK Consumer Price Index, the headline rate of inflation rose to 9.4% in June from 9.1% in May, above expectations for a rise to 9.3%. Analysts said that taken in combination with Tuesday’s robust jobs figures, the data solidified the likelihood of a 50 bps rate hike from the BoE at its next meeting in August.

The BoE has hiked rates by 25 bps at its last five meetings. In a speech earlier in the day, the governor of the BoE Andrew Bailey refused to be drawn into confirming what the central bank will do next month. He said a 50 bps move was possible but not “locked in”.

Loonie Shrugs Off Mixed CPI Data

The Canadian dollar was broadly flat against the US dollar on Wednesday. Sellers kept it below 1.2900, while support in the form of the 50-Day Moving Average just above 1.2850 gave the price action a floor.

The loonie broadly shrugged off the latest Canadian Consumer Price Index figures for June, which were mixed. The headline rate of inflation was revealed to have risen on a YoY basis to 8.1% from 7.7% in May, less than the expected rise to 8.4%. MoM, headline prices were up 0.7% versus an expected 0.9% rise, after May’s 1.4% jump.

But Core inflation unexpectedly rose on a YoY basis to 6.2% from 6.1% in May versus an expected drop to 5.9%. However, the MoM pace of Core price gains was just 0.3%, down from 0.8% in May.

The BoC hiked interest rates by 100 bps at its last meeting and with inflationary pressures having worsened in June, is expected to implement further aggressive tightening measures at its next few meetings as it seeks to cool the hot Canadian economy.

Elsewhere in G10 FX

The Kiwi was on track to post modest gains against the buck on Wednesday while the Aussie was a tad in the red. Both had paired back from earlier session highs in the respective 0.6270 and 0.6930 areas. Both still carry solid short-term momentum following their recovery from multi-year lows hit last week, boosted by central bank tightening bets.

Specifically, back on Monday, New Zealand inflation came in significantly higher than expected in Q2 when it hit a new 32-year high of 7.3% YoY, prompting the market to start betting that the RBNZ hikes interest rates by 75 bps next month.

Meanwhile, RBA commentary in the minutes of its last meeting and from governor Philip Lowe this week signaled that the central bank is uncomfortable with interest rates still so far below the so-called neutral level of 2.5% given how hot the economy is. Some analysts are also calling for a 75 bps rate hike from the RBA at its next meeting.

Like most of its G10 peers, the yen was broadly flat against the buck, with USD/JPY trading just above 138.00. Traders are on standby for what is likely to be a resolutely dovish BoJ policy announcement during Thursday’s Asia Pacific session.

S&P 500 Rallies 0.5%, Netflix Gains Nearly 7% on Upbeat Subscriber Outlook

Key Points

  • The S&P 500 and Nasdaq 100 indices rallied on Wednesday amid outperformance in big tech/growth stock names.
  • Netflix’s share price surged after the company said it expected to return to subscriber growth in Q3.
  • All three major US indices are above their 50DMAs, signaling a shift of near-term momentum.

S&P 500 and Nasdaq 100 Rally, All Major US Indices Hold Above 50DMA

Major US equity indices were mixed on Wednesday, with the more big tech/growth stock weighted S&P 500 and Nasdaq 100 indices outperforming while the Dow Jones Industrial Average came under modest pressure. The former two both managed to hit their highest levels in more than one month.

One key takeaway from US equity markets on Wednesday, however, is that all three of the major indices have managed to reconquer their 50-Day Moving Averages for the first time since April, signaling that the recent positive shift in momentum may have further legs.

Analysts said that a better-than-expected start to the US earnings season is giving the major indices tailwinds. Ahead, electric car-maker Tesla is set to report earnings after the close.

US equity markets shrugged off data showing that the sales of previously owned homes hit a two-year low in June, having dropped 14.2% YoY from their post-pandemic booming levels last summer. A slowing economy, worsening cost-of-living crisis and a sharp rise in interest rates has hurt the US housing market in recent months.

“Although the outlook is bleak, a vast majority of existing homes sold in June were on the market for less than a month”, said Jeffrey Roach, the chief economist at LPL Financial, as quoted by Reuters. “This indicates core underlying demand for home buying in the midst of a slowing economy”.

Big Tech/Growth Stocks Lead the Charge

The big tech/growth stock dominated Information Technology and Consumer Discretionary GICS S&P 500 sectors led the rally in US equity markets on Wednesday, boosted by stronger than expected Netflix earnings that sent the company’s share price surging. The streaming platform reported that it had lost nearly 1 million subscribers in Q2 but predicted that its subscriber tally would start growing again in Q3.

Netflix’s upbeat outlook for Q3 saw other members of the once-market leading FAANG group rally. FAANG stands for Facebook (now Meta Platforms), Apple, Amazon, Netflix and Google (whose parent company is called Alphabet). Alphabet, Meta and Amazon will all have reported earnings by the end of next week.

Elsewhere, another notable outperforming subsector of the US equity space was semiconductor makers. The Philadelphia Semiconductor index was up over 2.0% on Wednesday, with analysts citing the fact that the US Senate on Tuesday moved forward with legislation aimed at boosting the US semiconductor industry.

In notable individual movers, Merck & Co’s share price dropped after its Keytruda cancer therapy drug failed to meet end-point targets in a late-stage neck and head cancer trial.

WTI Chops Above $100, Gold Slides Back Towards $1,700

Key Points

  • WTI prices were choppy a few bucks above $100 as traders digested US inventory data and Keystone pipeline disruptions.
  • US gas prices jumped as the EU advised member states to reduce gas usage by 15% until next March.
  • Gold fell back towards $1,700, weighed by the stronger buck and higher US equities.

WTI Chops Above $100

CFDs that track the price of WTI, the main US sweet light crude oil benchmark, chopped within familiar intra-day ranges slightly above the $100 per barrel mark on Wednesday. Prices were weighed earlier in the session by the latest weekly US EIA crude oil inventory report, which revealed a 3.5 million rise US gasoline inventories, well above an expected 71,000 barrel gain, triggering fears about fuel demand weakness despite it being peak US driving season. Analysts said it could be an early sign that high gas prices (US gasoline prices record highs in June) could be destroying demand.

But market commentators said that concerns about supply tightness kept oil prices underpinned later in the session. Indeed, oil traders monitoring reports that the Keystone pipeline, Canada’s largest oil export routes, continued to operate at reduced capacity for a third successive day on Wednesday. North American supply difficulties come after Saudi Arabian government officials signaled an unwillingness to rapidly increase oil output earlier this week.

Analysts say that the only countries in the world with any spare capacity to significantly increase oil output in the short-term are Saudi Arabia and the UAE, excluding Russia, whose oil exports have been shunned in recent months amid sanctions on the country over its invasion of Ukraine.

Nat Gas Jumps as EU Advises Members States to Reduce Usage

CFDs tracking US natural gas future prices were up over were up sharply on Wednesday after vaulting above their 50-Day Moving Average just below $7.50. Prices have now rebounded nearly 50% since earlier monthly lows, with traders monitoring a worsening energy crisis in Europe.

The EU advised its member states to reduce gas usage by 15% between now and next March in response to comments from Russian President Vladimir Putin where he threatened to further slow gas exports to Europe. Russian gas exports to Europe via the Nord Stream 1 pipeline are currently halted for routine annual maintenance and are scheduled to resume on Thursday.

There had been fears that Russia might never bring the pipeline, which is run by its state-owned gas exporter Gazprom, back online. But reports earlier this week played down these fears. Still, gas deliveries may come back in even lower quantities than before the closure, if Putin’s threats are to be taken seriously. A 15% gas usage reduction implies a significant hit to the EU economy between now and next March.

Gold Eyeing Break Back Under $1,700

A rebound in the US dollar coupled with a rally in major US equity bourses to fresh multi-week highs put safe-haven precious metals under pressure on Wednesday. Spot gold prices were last eyeing a retest of the psychologically important $1,700 level, a break below which could open the door to a drop towards 2021 lows in the $1,680 area. Spot silver prices were also trading in the red, having again failed to rally above $19 per troy ounce.

Elsewhere, CFDs tracking the price of spot copper were up, despite the stronger US dollar that would usually weigh.

Top 3 Trending Coins: BTC Eyeing Return to $30K, DOGE Eying $0.10 Amid Crypto Rally

Key Points

  • Bitcoin briefly surpassed $24,000 on Wednesday, with bulls eyeing a near-term test of $25,400 and possibly also $30,000.
  • Dogecoin outperforms after breaking above a short-term downtrend and its 50DMA and is eyeing a test of $0.10.
  • Shiba Inu is also outperforming and is eyeing a break above $0.000013 that could signal a move to $0.000017.

Bitcoin (BTC) Surpasses $24,000, Eyes Move to $25,400

Bitcoin, the world’s largest cryptocurrency by market capitalization, surpassed the $24,000 per token mark on Wednesday, rallying at one point more than 2.0% on the day despite a moderate pullback from weekly highs in US equities, which with crypto typically has a close correlation. Broadly speaking, the macro mood this week is still one of risk on, with US earnings for the most part surprising to the upside and fears about the energy crisis easing amid expectations that Russia will restart gas flows via the Nord Stream 1 pipeline on Thursday as planned.

This continues to offer cryptocurrency markets broad support. Chatter has also been building in recent weeks about Bitcoin (and other major cryptocurrencies) having already bottomed for this bear market. Glassnode and Grayscale have both this week cited a metric that indicates that Bitcoin HOLDers (who have owned their coins for more than three months) now account for over 80% of total USD wealth stored in the cryptocurrency. When this threshold has been hit in previous bear markets, it has reliably signaled that the bottom is close.

In another sign that the cryptocurrency market bottom may be in, at least for now, alternative.me’s Bitcoin “Fear and Greed” Index rose back to 30, lifting it to a state of “Fear” from “Extreme Fear” for the first time in 73 days.

The more Bitcoin rises, Fear Of Missing Out (FOMO) is likely to rise also and this could drive further gains for the cryptocurrency. Bitcoin broke above its 50-Day Moving Average (just under $23,000) on Tuesday. It fell briefly fell back below $23,000 earlier on Wednesday to test the level, before proceeding to rally above $24,000 for the first time since 13 June.

According to CoinMarketCap, Bitcoin is one of the best performing cryptocurrencies in the top 20 by market cap with gains of above 8.0% in the last 24 hours, lagging only Dogecoin and Shiba Inu. With the cryptocurrency now above its 21 and 50DMAs, short-term bulls have their sights set on a test of resistance in the form of the May low at $25,400.

BTC/USD
BTC/USD’s next stop – $25,400. Source: FX Empire

Bitcoin to Move Back Above $30,000?

At the start of this week, Bitcoin broke above a key long-term downtrend that had been capping its price action going all the way back to early April. Some technicians think that this may give the cryptocurrency enough technical momentum to recover all the way back above the $30,000 level and on towards a test of the support-turned-resistance area in the $32,500-$32,900 area. If things really go well, Bitcoin might even be looking at a test of its 200DMA at $35,200.

BTC/USD
BTC/USD back to $30,000? Source: FX Empire

Dogecoin (DOGE) Eyes Return to $0.10?

Dogecoin is the best performing cryptocurrency in the top 20 by market cap on Wednesday over the past 24 hours, according to CoinMarketCap. Over this time period, the cryptocurrency has rallied an impressive 9%. DOGE/USD is currently changing hands in the $0.0735 area, having been as high as $0.077 earlier in the day.

Wednesday’s rally marks a significant shift in the cryptocurrency’s near-term technical momentum. Firstly, Wednesday’s move higher marks a clean break above a downtrend that had been capping the price action since mid-May. It also marks a clean break above the cryptocurrency’s 21 and 50-Day Moving Averages in the respective $0.066 and $0.067 areas.

Dogecoin has now rallied a stunning more than 25% since last Tuesday’s sub-$0.060 lows. Short-term bulls are now eyeing a test of resistance near $0.08. A break above here could open the door to a run higher towards $0.10. Notably, Dogecoin still remains caught well within a long-term downwards trend channel that has been capping its price going all the way back to the start of the year.

DOGE/USD
DOGE/USD back to $0.10? Source: FX Empire

An announcement by the world’s largest cryptocurrency exchange Binance on Wednesday that it was offering new rewards for those who stake their Dogecoin holdings may be helping the recent rally. Binance users holding Dogecoin could earn annual percentage yields of up to 10%.

Shiba Inu (SHIB)

Shiba Inu has been a beneficiary of the recent upturn in crypto risk appetite, marching through various key levels of resistance in the form of late-May/June highs in the $0.000012 to $0.000013 areas in recent days. SHIB was last changing hands around $0.0000129 per token on Wednesday, up an impressive around 8.5% in the past 24 hours on Wednesday, making it the second best performing cryptocurrency in the top 20, lagging only its dog-inspired meme coin peer Dogecoin, which is up over 9.0% over the same time period.

If SHIB can muster a clean break above the $0.000013 level, this would open the door to a swift rally back towards the $0.000017 level. Between $0.000013 and $0.000017, there aren’t any notable areas of resistance to block bullish progress. A jump between these levels would mark an impressive 30% rally. Beyond $0.000017, there is more resistance around $0.0000184 and then the 200DMA just below $0.000020.

SHIB/USD
SHIB/USD eyeing breakout higher towards $0.000017. Source: FX Empire

Cardano Price Prediction: Upbeat Crypto Sentiment Plus Vasil Update to Send ADA to $0.69?

Key Points

  • Cardano is an outperformer amid a broad rally in crypto markets on upbeat macro sentiment.
  • Analysts are citing optimism about the upcoming Vasil upgrade as supportive, whilst positive technical developments are also helping.
  • ADA was last near $0.53, having earlier rejected a test of resistance at $0.55, though bulls still eye $0.69.

Market Update: Cryptocurrencies Rally

Major cryptocurrencies are on the front foot on Wednesday. Analysts cited a rally in global equity markets driven by upbeat US earnings and an easing of fears about the energy crisis in Europe, with Russia reportedly set to restart gas flows to Germany via the Nord Stream 1 pipeline on Thursday, as boosting crypto risk appetite.

Total cryptocurrency market capitalization was last around $1.035 trillion and eyeing a test of the May low around $1.082 trillion. The world’s largest cryptocurrency by market capitalization, Bitcoin, was last changing hands just below $23,500, having come close to testing the $24,000 level earlier in the day. According to CoinMarketCap, Bitcoin is up around 7% in the last 24 hours.

Cardano Price Prediction: ADA Tests Resistance at $0.55, Eyes Break Towards $0.69

Cardano is the third best-performing cryptocurrency in the top 20 by market capitalization over the past 24 hours, according to CoinMarketCap. Over this time period, ADA has gained more than 10%. Analysts put Cardano’s outperformance down to optimism about its upcoming Vasil hardfork upgrade scheduled for later this month that should significantly improve the blockchain’s speed and scalability.

ADA was last changing hands around $0.53 per token, having backed off from earlier session highs in the $0.55 area after failing to break above a key support-turned-resistance area from June. Despite pulling back from earlier session highs, ADA bulls will remain confident. The cryptocurrency is up an impressive more than 30% from last week’s lows just above $0.40.

Moreover, ADA/USD’s technical outlook took a significant turn for the better this week when it broke above a downtrend from mid-June and its 21-Day Moving Average (at $0.462) on Monday and then its 50DMA (at $0.497) on Tuesday. A break above resistance at $0.55 would open the door to a swift move back to late-May highs in the $0.69 area.

ADA/USD
ADA/USD’s technical outlook takes a turn for the better. Source: FX Empire

Beyond the $0.69 level, the next key area of resistance would be a test of February/early May lows in the $0.74 area. Above that, there is then the 200DMA at $0.83. Should a continued improvement in macro sentiment, perhaps if US earnings continue to surprise to the upside, continue to drive broad crypto gains and should Cardano’s developers successfully pull off the upcoming Vasil hard-fork upgrade, then a test of some of these upside resistance levels is most certainly on the cards.

Another factor that could help lift ADA in the days/weeks ahead is if the cryptocurrency’s 21DMA rises back above its 50DMA. Some technical/algorithmic traders might see such a development as bullish for the cryptocurrency, with it signaling a near-term shift in momentum. When the 21DMA fell under the 50DMA back in early May, this proved an excellent predictor of near-term downside.

TVL in Cardano’s DeFi Ecosystem Hits Highest Since Early June

The Trade Value Locked (TVL) within Decentralized Finance (DeFi) platforms running on the Cardano blockchain has surged in recent days. TVL was last up nearly 10% in the last 24 hours to around $170 million, a rise of about $37 million since this time last week. Analysts said the surge in TVL is likely tracking to recent bullish breakout in Cardano’s ADA token and amid optimism about the blockchain’s upcoming Vasil hard fork.

Cardano still plays a very small role in the broader DeFi ecosystem. TVL across the space was last around $77.5 billion, up sharply from last month’s lows in the $66 billion area, but still way down from record highs hit in early 2022 above $220 billion. In terms of TVL locked into its DeFi apps, Cardano still lags its major rivals by a significant margin.

Ethereum last had a TVL of around $45 billion, Binance of around $6.8 billion, Tron of just under $6 billion, Avalanche of just under $3.5 billion, Solana of around $2.3 billion and Polygon of just over $2.0 billion.

Cardano Joins Mongolia’s US Chamber of Commerce Affiliate

The company behind the creation of the Cardano blockchain Input Output Global (IOG, formally known as Input Output Hong Kong or IOHK) has joined the official affiliate of the US Chamber of Commerce in Mongolia. Mongolia’s American Chamber of Commerce (AmCham), an independent membership-driven organization that seeks to build, strengthen, and protect business between the US and Mongolia, described IOG as a “leading technology company committed to the highest principles of academic rigor and evidence-based software development”.

Cardano’s founder Charles Hoskinson will participate in a presumably virtual meet & greet with the organization later on Wednesday. IOG’s move to join AmCham comes after it joined the Linux Foundation as a gold member back in June, making it the only non-profit to have secured this level.

5 Things to Know in Crypto Today: BTC Breaks Above 50DMA, Eyes $24K as ETH Rally Slows

Key Points

  • Bitcoin surged above its 50DMA on Wednesday and is now eyeing a test of $24,000 amid upbeat macro sentiment.
  • Ethereum’s rally has slowed but bulls still target $1,700 amid “Merge” optimism.
  • Cardano is an outperformer amid apparent optimism about its upcoming Vasil hardfork upgrade.

Bitcoin Surges Above 50DMA, Eyes $24,000 Mark

The world’s largest cryptocurrency by market capitalization Bitcoin surged above its 50-Day Moving Average just under $23,000 on Wednesday, before rallying to as high as the $23,800 level, below which it is now consolidating. At current levels, Bitcoin is up a further 1.5% on the day, taking its gains this week to over 14% and taking its market cap back above $450 billion.

Technicians are targetting a near-term test of the $25,400 May low. In a sign that the cryptocurrency market bottom may be in, at least for now, alternative.me’s Bitcoin “Fear and Greed” Index rose back to 30, lifting it to a state of “Fear” from “Extreme Fear” for the first time in 73 days.

Analysts cited a rally in global equity markets driven by upbeat US earnings and an easing of fears about the energy crisis in Europe, with Russia reportedly set to restart gas flows to Germany via the Nord Stream 1 pipeline on Thursday, as boosting crypto risk appetite. Total cryptocurrency market capitalization was last around $1.05 trillion and eyeing a test of the May low around $1.082 trillion.

Ethereum’s Progress to $1,700 Slows as EthCC Kicks Off

Ethereum has been consolidating in the $1,500s over the past day or so, with its bullish momentum since breaking above its 50DMA in the low-$1,300s back on Monday having waned somewhat. Its consolidation comes just as the Ethereum Community Conference (EthCC) kicked off in Paris on Tuesday. There will be more than 250 speakers, including Ethereum co-founder Vitalik Buterin on Thursday.

Analysts continue to cite optimism about continued progress towards Ethereum’s “Merge”, which senior developers have tentatively penciled in for September, as supportive for ETH. The Merge will see Ethereum’s blockchain shift from an energy-intensive “Proof-of-Work” consensus mechanism to “Proof-of-Stake”. Bulls continue to target a near-term test of resistance around $1,700 (the May and mid-2021 lows).

Cardano Surges Amid Droad Altcoin Rally

Amid the broadly upbeat mood in cryptocurrency markets so far this week, Cardano’s ADA token has been a strong performer, and this is again the case on Wednesday. Where some of its major altcoin rivals like Ripple, Binance Coin, Solana, Dogecoin, Polkadot and Polygon are up 3-7% in the last 24 hours, Cardano’s ADA is up over 10% over the same time period, according to CoinMarketCap.

ADA/USD was last up nearly 6% alone on Wednesday, having surged into the $0.54s where it is testing a supported-turned-resistance area from June. At current levels, the pair is up nearly 22% this week, having broken above a downtrend from mid-June and its 21DMA (at $0.462) on Monday and then its 50DMA (at $0.497) on Tuesday. A break above current levels would open the door to a move back to late-May highs in the $0.69 area.

Analysts put Cardano’s outperformance down to optimism about its upcoming Vasil hardfork upgrade scheduled for later this month that should significantly improve the blockchain’s speed and scalability.

Bitcoin Reaching Peak HOLDer Saturation Could Signal Market Bottom

“Against a backdrop of extremely challenging macroeconomic and geopolitical turmoil, bitcoin is reaching peak investor saturation by high conviction HODLers, and it is becoming quite plausible that a genuine bottom formation could be underway,” Glassnode said in a note on Tuesday. Glassnode pointed to potential signs of seller exhaustion, such as when realized losses on Bitcoin sales jumped to a record high of $36 billion over 30 days on 18 June.

The on-chain data analytics firm also cited a similar metric as cited by Grayscale earlier in the week. The percentage of the USD wealth stored in Bitcoin that hasn’t moved in the last three months recently 80%, a level that has historically signaled a bear market bottom forming process. However, Grayscale said earlier this week that this bottom formation could take up to 250 days.

SEC Wants More Resources to Regulate Crypto

In a hearing before the House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets on Tuesday, the head of the US Securities and Exchange Commission (SEC) asked Congress for more resources to enforce regulation on crypto firms. SEC Enforcement Head Gurbir Grewal told US lawmakers that the number of new enforcement actions being taken against crypto firms is straining its Crypto Assets and Cyber Unit division, even though it expanded as recently as May (from 30 to 50 employees).

Commodities Mid-Session Recap for July 19, 2022

Key Points

  • WTI prices whipsawed between the $100-$103.50 levels on Tuesday as traders considered developments in the European energy crisis.
  • The latest reports suggest Russia plans to restart gas exports on Thursday once Nord Stream 1 maintenance concludes.
  • Natural Gas fell after rejecting the 50DMA, copper was weighed by China Covid-19 worries and precious metals were rangebound.

Oil Experiences Chop as Traders Mull Whether Russia Will Stop Gas Flows

Global oil prices were choppy on Tuesday, with market commentators citing fears about a slowdown in the global economy. CFDs that track the price of the front-month WTI futures chopped within a $100-$103.50ish range on Tuesday and were last trading slightly in the green on the day in the low-$102.00s per barrel.

Russia’s main gas exporter and state-owned Gazprom reportedly told its European customers on Tuesday that gas supplies can’t be guaranteed given “extreme” circumstances. However, separate reports alleged that Gazprom will restart gas flows via the Nord Stream 1 pipeline as expected once the maintenance is completed on Thursday, easing imminent energy crisis fears for now.

The International Monetary Fund on Tuesday warned that this could result in a 5% drop in economic activity over the next 12 months in the likes of some major central European countries and Italy. But most analysts think that the short-term impact of a Russian oil embargo would be to boost oil prices via 1) increased demand for alternative fossil fuel energy and 2) increased geopolitical risk premia. Oil traders will be waiting with bated breath to see whether the gas starts flowing once again on Thursday.

Oil shrugged off comments from Saudi Arabia’s Foreign Minister that suggest an imminent boost to the Kingdom’s oil output remains unlikely. He said on Tuesday that he doesn’t see a shortage of oil in global markets, but instead sees a lack of refining capacity.

Natural Gas Fails to Break above 50DMA, Copper Falls on China Covid Woes

Elsewhere, CFDs that track spot US Natural Gas prices fell around 2.8% on Tuesday. Spot natural gas prices were last around $7.3, having failed for a second successive session to mount a rally above the 50-Day Moving Average in the $7.40s. Elsewhere, despite further US dollar weakness and the upbeat tone in global equities, CFDs that track spot Copper prices were down about 0.9% to under $3.3. Covid-19 cases continue to rise in China and more cities are implementing restrictions.

According to Nomura, 41 Chinese cities now have some sort of restrictions in place, up from closer to 10 only a few weeks ago, impacting nearly 23% of national GDP. Analysts suspect China’s zero Covid-19 strategy plus the worsening global economic outlook will remain a headwind preventing a broad recovery in the copper price.

Precious metals, meanwhile, were locked within recent ranges on Tuesday, supported by the further downside in the US dollar, but weighed amid a rise in global stock prices and US government bond yields. Spot gold prices were last trading roughly flat in the mid-$1710s, still below the key resistance area just above $1720. Spot silver was last trading a little over 0.5% higher but still stuck below $19.0 per troy ounce.

Stock Market Mid-Session Recap for July 19, 2022

Key Points

  • US and European equities rallied across the board, with the S&P 500 gaining nearly 2.0% and Stoxx 600 1.5%.
  • Reportedly, Russia will restart gas flows via Nord Stream 1 on Thursday as scheduled, easing energy crisis fears.
  • The Stoxx 600 broke out to fresh multi-week highs, while the S&P 500 remains capped below recent highs.

US Indices Rally But Remain Capped Below Recent Highs

Major US indices rallied on Tuesday, with the S&P 500 gaining nearly 2.0% to hit fresh weekly highs above 3,900. The Nasdaq 100 was last up about 2.2% and trading in the mid-12,100s. Both indices, for now, remain capped below recent highs in the respective 3,920-3,950 and 12,170ish areas.

Sentiment was boosted on Tuesday amid reports that Russia is going to restart gas flows to Europe via the Nord Stream 1 pipeline as expected once planned maintenance concludes on Thursday, easing fears about a full-blown energy crisis and resultant recession in Europe that would act as a drag on global growth. Analysts have also, for the most part, taken a positive view on the start of the US earnings season.

Earnings in Focus, Apple Attempts Recovery, Boeing Gets a Boost

Earnings were in focus once again on Tuesday, with the impact of the recent surge in US dollar strength a key theme. In earnings released late on Monday, IBM (-6.2%) said the dollar surge had cost it $3.5 billion, while Johnson & Johnson (-0.3%) had to reduce its annual profit forecast, though its share price was still relatively well supported given the company’s Q2 earnings exceeded forecasts.

Elsewhere, investors were also closely monitoring movements in Apple’s (+1.9%%) share price, after prices fell over 2.0% on Monday amid reports that the company plans to slow hiring and spending growth in 2023 given an increasingly dim outlook. In other stock-specific news, Boeing (+4.1%) shares rose after private equity firm 777 Partners announced plans to buy 66 further Boeing 737 MAX jets.

Stoxx 600 Breaks Out to Fresh Multi-week Highs as Energy Crisis Fears Ease

Reports that Russia is to restart gas flows through the Nord Stream 1 pipeline into Europe as expected on Thursday saw major European equity indices break higher. The pan-European Stoxx 600 index vaulted above resistance around 420 to reach the 423s, its highest level since 10 June. The index closed 1.4% higher on the day and is now convincingly back above its 50DMA for the first time since mid-April.

Aside from an easing of energy crisis fears, a standout story in European equity markets on Tuesday was the French government’s proposal to buy out EDF for 12 euros a share and take full control of the company. The French government wants more control over the energy sector in order to get France through the ongoing European energy crisis. EDF shares were up x% as a result.

Forex Mid-Session Recap for July 19, 2022

Key Points

  • EUR/USD got a 1.0% boost from reports that the ECB might hike 50 bps on Thursday and hit 1.0250.
  • The Aussie and kiwi also performed well as hawkish RBA minutes and hot NZ CPI boost RBA/RBNZ tightening bets.
  • GBP/USD was just about able to recover above 1.20 amid the weakening buck and robust UK jobs figures.

Buck Continues Slide as Euro Flies on ECB Rate Hike Bets

While not the best-performing currency in the G10 on Tuesday, the euro was in the vanguard of a group of currencies that rallied against the buck, forcing the Dollar Index (DXY) to pull back further from its recent multi-decade highs above 109.0. The DXY, a trade-weighted basket of major USD pairs, was last trading lower by about 0.8% around the 106.50 mark, with bears eyeing a test of support below 106.0 and the 21-Day Moving Average at 106.10.

EUR/USD rallied roughly 1.0% and was last changing hands in the 1.0250 area, now up around 3.0% versus last week’s multi-decade lows below parity. The euro got a boost by reports that the European Central Bank may consider raising interest rates by 50 bps at its upcoming meeting on Thursday. The bank had previously guided markets to expect a 25 bps move. Given the ECB’s slower approach to rate hikes versus the Fed and continued concerns about the European energy crisis, analysts suspect that EUR/USD’s potential for further upside is limited.

Antipodes Also Strong

Elsewhere, the Aussie and kiwi dollars were amongst the best performers in the G10 on Tuesday. Continued buck weakness and a set of very hawkish minutes from the Reserve Bank of Australia’s (RBA) latest meeting helped AUD/USD extend on its recent rally from the multi-year lows it printed under 0.6700 last week to test the 0.6900 level. The pair was last trading just above 0.6900, up around 1.4% on the day and now over 3.0% higher versus last week’s lows.

In the minutes from its latest meeting, the RBA board noted that, at current levels (1.35%), interest rates are “still very low for an economy with a tight labor market and facing a period of high inflation”. This prompted markets to ramp up tightening bets, with the head of Australian economics at big Aussie bank ANZ saying he now expects four consecutive 50 bps rate hikes to take the RBA’s benchmark interest rate to 3.35% by November.

NZD/USD, meanwhile, was last trading higher by a similar margin in the 0.6230 area, after vaulting above its 21DMA near 0.6200 earlier in the day. Like its antipodean counterpart, the kiwi is benefitting from greenback weakness, although, like the Aussie, it is also benefitting from a ramping up of central bank tightening bets. Q2 New Zealand Consumer Price Inflation (CPI) figures surprised to the upside and hit a 32-year high of 7.3%, prompting analysts to double down on calls for further 50 bps rate hikes from the RBNZ in the months ahead.

Cable Reclaims 1.20

GBP/USD also rallied, though not as much as its aforementioned peers. GBP/USD was last higher by about 0.6% on the day and tentatively above the 1.20 level. Jobs data released earlier in the day showed that the UK labor market, whilst not improving anymore, remains tight. The UK unemployment rate remained near pre-pandemic levels of 3.8%, but the data revealed that wage growth continued to fall well short of inflation, which analysts took to imply consumer spending will remain very weak. UK CPI data will be in focus on Wednesday ahead of UK Retail Sales and flash UK PMIs on Friday.

Elsewhere in currency markets, USD/CAD fell amid the weaker US dollar, despite lower oil prices, with the pair probing the 1.2900 level ahead of Canadian CPI figures on Wednesday and Retail Sales figures on Friday. USD/JPY, meanwhile, was little moved in the 138.00 area, as a rise in US yields/US stocks prevented the rate-sensitive/safe-haven yen from benefitting from the buck’s broad drop.

Top 3 Trending Coins: NEAR Surge Continues as ETH Pulls Back from Highs, FTT Lags

Key Points

  • Ethereum has slipped back from earlier session highs around $1,630, but bulls still target $1,700.
  • NEAR is the best performer in the crypto top 50, up over 11% in the last 24 hours.
  • FTT is a laggard over that same time period, but its technicals still look positive.

Market Update: Bitcoin Pulls Back Below $22,000

Profit-taking has triggered a reversal in most major cryptocurrencies from the multi-week highs that many hit during Asia Pacific trade, as investors mull macro events approaching later in the week. Bitcoin was last trading around $21,900, having pulled back from earlier session highs near-$23,000, its highest level since mid-June.

The world’s largest cryptocurrency, like most other major coins, still trades with healthy on-the-week gains, with Bitcoin still up over 5.0% since Sunday’s close. For now, BTC/USD’s path higher has been blocked by its 50-Day Moving Average just above $23,000. There isn’t much on the US macro calendar this week that could impact broad crypto sentiment aside from Friday’s flash July PMI data that will update on the health of the Service and Manufacturing sectors.

Ethereum (ETH)

Ethereum pushed as high as the $1,630 area in early trade on Tuesday, the cryptocurrency getting ever closer to the next upside target marked out by technicians just above $1,700. ETH/USD has since pulled back a little and is trading just under 3.0% lower on Tuesday in the $1,530s.

But ETH is still higher by around 3.5% versus 24 hours ago according to CoinMarketCap, making it one of the best performing cryptocurrencies in the top 50 by market capitalization. At current levels, Ethereum is up a staggering more than 50% since last week’s lows just above $1,000.

ETH/USD
ETH/USD bulls still target $1.700. Source: FX Empire

The cryptocurrency certainly seems to be carrying a lot of upside momentum, suggesting a test of $1,700 resistance (the May 2022 and mid-2021 lows) is very likely in the days ahead. Technical buying after a breakout above resistance at $1,280 has been a major factor driving recent gains, but analysts have also noted optimism about Ethereum’s upcoming Merge to Proof-of-Stake. Senior Ethereum developers last week outlined their expectations for the transition to occur in September.

NEAR Protocol (NEAR)

Up-and-coming Ethereum competitor blockchain the NEAR Protocol, which boasts amongst the fastest transaction speeds/highest transaction capacity of any existing blockchain, is the best performing cryptocurrency in the top 50 over the last 24 hours according to CoinMarketCap. Over this time period, it was last up around 11.5%, though at current levels in the $4.30s, has backed off from earlier highs above $4.50.

Since last week’s lows just above $3.0, NEAR Protocol’s NEAR token has surged a staggering nearly 45%. In doing so, it has rallied to the north of both its 21 and 50DMAs near $3.50 and $3.93 respectively. The latest rally on Tuesday comes despite the broader pullback in crypto and saw NEAR surpass its late-June highs just under $4.40 and hit its highest level since 11 June.

With NEAR/USD having cleared key levels of resistance to the upside, the door is seemingly now open for a test of late-May lows in the $4.70 area, the next obvious bull target. Beyond that, the next major level of resistance that the bulls will be looking at is the psychologically important $5.0 level and then around $6.50.

NEAR/USD
NEAR/USD surges. Source: FX Empire

FTT

FTT, the utility token of the FTX crypto exchange ecosystem that provides holders with discounted trading fees, OTC rebates and can serve as collateral for futures positions, has reversed sharply from multi-week highs above the $30 level that it hit earlier in the session. The cryptocurrency was last trading just below $28.50, down just under 5.0% on the day and down about 4.0% in the last 24 hours, according to CoinMarketCap.

This makes the token one of the worst performers over this time period in the crypto top 50 (by market cap). That being said, FTT’s short-term technical outlook is still looking upbeat. The cryptocurrency rose convincingly above a downtrend linking recent highs going back to late May on Monday and has since found support at a retest of this trendline.

Traders may well be adding to bullish positions and targeting a more convincing break above the $30 in the sessions ahead. FTT’s 21DMA (at $26.10) looks likely to cross above its 50DMA (at $26.25) in the coming days, which could add to the bullish impetus. Beyond $30, the next logical target is the $32.00 balance area (early 2022 lows and then some mid-May highs).

FTT/USD
FTT/USD pulls back from $30, but still looks good technically. Source: FX Empire

FTT Struggles Despite FTX’s Position of Strength

Regarding the FTX exchange, despite the ongoing crypto winter, the exchange looks to be in a strong position. Unlike other major rivals such as Coinbase and Gemini, FTX has not shrunk its workforce and has even been looking to expand via M&A, having agreed to a deal that could see it acquire troubled crypto lending firm BlockFi for as little as $240 million.

There were also rumors recently it was looking to buy out popular US-based retail trading application Robinhood. FTX is the second-largest cryptocurrency spot exchange after Binance and the tenth-largest derivatives exchange in the world by trading volume. Despite this, at current levels, FTT is over 65% below last year’s record levels around $85 per token.

Cardano (ADA) Price Prediction: ADA Fails to Break Above 50DMA at $0.50, For Now

Key Points

  • Cardano has pulled back after failing to break above its 50DMA near the $0.50 level.
  • As the date for the blockchain’s major Vasil upgrade approaches, traders are wondering whether this could boost ADA’s price.
  • A break above $0.50 could open the door to a swift rally towards $0.55 resistance.

Cardano Unable to Break Above 50DMA or $0.50 Level

The native token to the Cardano blockchain ADA has pulled back just over 2.0% on Tuesday after failing to break above its 50-Day Moving Average near the $0.50 level. Still, since breaking to the north of a downtrend that has been capping the price action for ADA/USD since mid-June on Monday, the cryptocurrency’s near-term technical outlook continues to look upbeat. The cryptocurrency still trades in the green by over 7.0% on the week.

A retest of the downtrend that had previously been acting as resistance, but has now turned into support, may prompt investors to reinitiate Cardano long positions. This could help ADA bounce back to retest the $0.50 level and its 50DMA. Of course, ADA is at the mercy of broader cryptocurrency market sentiment. And most other major cryptocurrencies have also pulled lower on Tuesday, though, like ADA, most still trade with gains on the week.

ADA/USD
ADA/USD breaks above short-term downtrend. Source: FX Empire

Bitcoin was last trading around $21,800, down just under 3.0% on the day. Ethereum was last trading down a little over 4.0% on the day just above $1,500. But Ethereum bulls remain confident that the cryptocurrency is soon going to test resistance in the $1,700 area.

Analysts have said that the latest Ethereum rally that has seen it rally about 50% from last week’s lows just above $1,000 has been catalyzed in part by optimism about the upcoming Ethereum Merge from Proof-of-Work to Proof-of-Stake. Some have argued that this optimism towards Ethereum is a negative for Cardano, which is a competitor of smart-contract-enabled blockchain. But it seems likely that if Ethereum does regain bullish momentum and hit $1,700, this should help give a broad boost to crypto risk appetite that could help lift Cardano too.

Vasil Hardfork Nears

By the end of this month, Cardano’s developers are expected to have implemented the much-anticipated Vasil hardfork. Cardano’s developers say that the upcoming upgrade is the most complex program of development and integration on Cardano since its Alonzo hardfork added smart contract functionality to the blockchain back in September 2021.

The Vasil hardfork aims to improve the network’s speed and scalability by reducing transaction size and, as a result, increasing the network’s throughput whilst also lowering transaction fees on the network. The upgrade was initially scheduled to take place at the end of June, but was delayed by Cardano’s developer Input Output Hong Kong (IOHK) out of an “abundance of caution” given the presence of a few minor bugs.

Where Next For ADA if it Breaks Above $0.50

Just as Ethereum has been benefitting from optimism about an upgrade to its network in recent sessions, there is every possibility that Cardano could as well. According to a survey conducted by finder.com last week, 50% of a panel of 53 fintech experts said they expect the Vasil upgrade to increase the functionality and use cases of the Cardano blockchain. Traders may soon begin to take the same view and bid up ADA’s price.

Moreover, on many metrics, Cardano’s blockchain is better than Ethereum. Gas fees on the former’s blockchain are typically around 0.16-0.17 ADA (currently around 8 cents). Gas fees on the Ethereum network are currently at their lowest since 2020 and in single digits (in US dollars), but can spike during times of major network congestion. Cardano’s network is also widely viewed as faster and more scalable than Ethereum’s.

If Cardano is able to break above the key $0.50 resistance area in the coming sessions, that opens the door to a swift test of resistance in the $0.55 area. If it was to break above that level, it could then rally back to the late-May highs in the $0.69 area. The next bullish target would be the February/April 2022 lows around $0.75.

ADA/USD
ADA/USD’s possible near-term upside. Source: FX Empire

ADA Still at Risk of Fresh Annual Lows?

Despite rising in recent days in tandem with a broad crypto rally, Cardano is still teetering only about 20% above earlier annual lows at the key $0.39 resistance level. In the crypto world, that is not very much. Meanwhile, the cryptocurrency is still trading nearly 85% below the record highs it hit above $3.0 last year.

Support around $0.40 has been steadfast in recent weeks. But if ADA/USD was to lose momentum and fall under $0.39, things could get very ugly very quickly. Below $0.39, there aren’t really any significant levels of resistance until all the way below $0.20. That would imply a decline of at least a further 60% from current levels.

ADA/USD
ADA/USD bearish scenario. Source: FX Empire

5 Things to Know in Crypto Today: ETH Closing in on $1,700 Bull Target

Key Points

  • Amid a subdued macro tone, Bitcoin is back below $22,000 after running into resistance at its 50DMA near $23,000.
  • Ethereum has also pulled back from earlier highs, but made further progress towards $1,700 during Asia Pacific trade.
  • The Bitcoin bear market could last another 250 days, Grayscale argued in a note.

Bitcoin Consolidates Runs Into Resistance at 50DMA, Falls Back Under $22,000

Amid a distinctly subdued tone to global macro trade after US equities handed back early session gains to end Monday in the red, Bitcoin has fallen back below $22,000. During Asia Pacific trade, the world’s largest cryptocurrency by market cap came within a whisker of hitting the $23,000 level. However, it ran into resistance in the form of its 50-Day Moving Average just above the $23,000 mark and profit-taking has since driven it lower into the $21,600s.

At current levels, Bitcoin trades lower by just over 3.5% on the day and is down close to 2.0% in the last 24 hours. However, the cryptocurrency is still up about 4.0% this week. Indeed, Monday, when Bitcoin rose nearly 8.0%, was the cryptocurrency’s strongest day since February. It is likely to be a quiet day on the macro front, with the only notable events some commentary from the governors of the Bank of England and Reserve Bank of Australia. Neither are likely to say anything drastic enough to shift global crypto markets.

Crypto traders should note a sub-committee hearing at 1500GMT on Capitol. “US lawmakers will likely dive into the way the US Securities & Exchange Commission is handling the crypto space, which has been considered overly punitive by some,” said FX Empire’s head of crypto analysis Bob Mason. Events later in the week will be in the spotlight; the European Central Bank and Bank of Japan both set policy on Thursday and flash PMI survey results will be released out of Europe and US to give an update on economic health.

Ethereum Continues its March Towards $1,700 Resistance

Ethereum pushed as high as the $1,630 area in early trade on Tuesday, the cryptocurrency getting ever closer to the next upside target marked out by technicians just above $1,700. ETH/USD has since pulled back a little and is trading just under 3.0% lower on Tuesday in the $1,530s, but is still higher by around 6.5% versus 24 hours ago and is up a staggering more than 50% since last week’s lows just above $1,000.

ETH/USD
ETH/USD keeps getting closer to $1,700. Source: FX Empire

The cryptocurrency certainly seems to be carrying a lot of upside momentum, suggesting a test of $1,700 resistance (the May 2022 and mid-2021 lows) is very likely in the days ahead. Technical buying after a breakout above resistance at $1,280 has been a major factor driving recent gains, but analysts have also noted optimism about Ethereum’s upcoming Merge to Proof-of-Stake. Senior Ethereum developers last week outlined their expectations for the transition to occur in September.

Bitcoin Bear Market has Just Begun and Could Last 250 Days, Says Grayscale

In a recently released note from crypto investment product provider Grayscale, the company argues that, as of 13 June, Bitcoin entered a bear market. This is because the market cap of Bitcoin fell below its Realized Price (i.e. an estimate of what people actually paid for their coins). According to Grayscale, based on the experience of the past three Bitcoin market cycles, “we may see another ~250 days of high-value buying opportunities”.

Non-banks Can Issue Stablecoins, Says Senior US Treasury Official

US President Joe Biden’s Working Group on Financial Markets, which last year recommended that crypto stablecoins belong inside the banking regulatory regime, did not mean to imply that only existing banks can issue stablecoins, a senior US Treasury Department official said on Monday. Speaking at the Financial Services Forum event in Washington, Nellie Liang said that “there’s some flexibility under that framework… It’s meant to be open… It was not meant to limit to current banks”.

This will be welcome news to USD-pegged stablecoin issuers like Circle Internet Financial and Tether, who are pushing for their tokens to become legal tender in the US, which would expand their global usage. Bringing stablecoins into the regulatory regime is a key step in this direction.

Retail Investors Set to Bear Brunt of Celsius Bankruptcy

Lawyers working for beleaguered crypto lending service Celsius Network confirmed during the first day of the company’s bankruptcy hearing on Monday that there is a $1.2 billion hole in its balance sheet. Celsius owes its creditors, most of whom are retail investors, around $5.5 billion, while it only holds about $4.31 billion in assets.

Monday’s hearing revealed that a significant part of Celsius’ plan to close its balance sheet gap relies on betting on the future profitability of its mining subsidiary Celsius Mining. The company’s lawyers argued that Celsius Mining is already mining 14.2 Bitcoins per day and is expected to mine 10,100 Bitcoins this year (worth around $222 million at current prices). The lawyer added that this was expected to rise to over 15,000 in 2023.

Forex Fundamental Daily Forecast – DXY Briefly Drops Under 107.0 as Pullback from Multi-Decade Peaks Extends

Key Points

  • The DXY pulled back sharply on Monday, at one point dropping under 107.0 amid profit-taking.
  • Recent macro developments has seen Fed tightening bets modestly pared, dimming the bucks appeal.
  • Morgan Stanley thinks markets underestimate the Fed’s willingness to tackle what they expect to be sticky inflation in 2023.

Profit-taking Weighs on the Buck

The US Dollar slumped on Monday, with the Dollar Index (DXY) at one point falling below 107.0 from earlier session highs above 108.0. The DXY, a trade-weighted basket of major USD pairs, was last trading in the 107.40 area, down about 0.5% on the day and around 1.8% below the multi-decade highs it hit above 109.0 as recently as last Thursday.

US equities have given back earlier gains and are now trading in the red, indicative of a pullback in risk sentiment in the last few hours. However, profit-taking on overstretched USD-long positions appears to be preventing the buck from recovering back into the green on an intra-day basis.

Traders Pare Back on Fed Tightening Bets

Recent US macro developments have also somewhat dimmed the buck’s appeal. In the July University of Michigan survey released last Friday, 5-year consumer inflation expectations fell to one-year lows of 2.8% from above 3.0% in June. That will have eased fears at the US Federal Reserve that inflation expectations are becoming de-anchored, reducing the pressure they feel to hike interest rates quite so aggressively.

In fact, the Fed had cited an upside surprise in the UoM inflation expectations guage back in June as a key reason why it opted to accelerate the pace of its rate hikes to 75 bps at last month’s meeting from 50 bps at the May meeting. Speaking of Fed rate hikes; last Wednesday’s hotter-than-expected US Consumer Price Index numbers, which showed headline price pressures hitting a four-decade high above 9.0%, initially sparked fears that the Fed might implement an even larger 100 bps rate hike later this month.

However, Fed policymakers speaking later last week (Christopher Waller and James Bullard) both pushed back against this idea and said a 75 bps rate hike later this month was most likely. This, combined with Friday’s data, has seen markets pare back expectations for how aggressively the Fed is going to hike interest rates in the quarters ahead, supporting stock prices. According to the CME’s Fed Watch Tool, there is only around a 30% chance that the Fed hikes interest rates by 100 bps later this month, down from above 75% last Thursday.

This week, Fed policymakers are in blackout, meaning they are not allowed to comment publically on the economy or policy, ahead of the July meeting. Meanwhile, aside from some housing data which should show the sector feeling the strain from a slowing economy, high inflation and higher mortgage rates, the US economic calendar is pretty bare this week. Friday’s flash July PMI survey data will likely be the highlight of the week and will give a timely update on the health of the US economy.

Markets Underestimating Extent of Fed Tightening in 2023

Morgan Stanley argued in a note on Monday that markets appear to be underestimating the willingness of the US Federal Reserve to keep monetary policy tight in 2023. Fed funds futures are currently priced for the Fed to have lifted interest rates to just over 3.5% by the end of Q1 2023, before then dropping rates back to around 3.0% by Q4 2023.

But Morgan Stanley thinks that rate cuts in 2023 would only happen under two conditions. Firstly, if inflation quickly recedes to the Fed’s 2.0% target and, secondly, if the Fed decides to focus on supporting growth even when inflation remains above its target. Morgan Stanley views both scenarios as unlikely and argues that, given the experience of the last 50 years, Consumer Price Inflation is unlikely to fall back to 2.0% quickly next year.

Rather, Morgan Stanley said they think the fed is likely to hike interest rates to around 4.0% in 2023 above what markets are currently priced for. If Morgan Stanley’s thesis proves correct as inflation remains sticky at high levels for longer than thought later this year and Fed tightening bets subsequently are built up once again, that could provide long-term support for the US dollar.

Dollar Pullback Supports G10 Rivals

Despite ongoing worries that Russia is not going to restart gas flows once Nord Stream 1 pipeline maintenance is complete on Thursday, a move which would surely confirm a European recession, the oversold EUR/USD rallied about 0.6% on Monday. The pair was last changing hands just below 1.0150, up about 2.0% from earlier monthly lows under 1.0. However, that still leaves it lower by around 3.0% on the month. The euro has been battered in recent weeks by spiraling energy prices and growing expectations for a recession.

Euro traders are looking ahead to this week’s ECB meeting, with the central bank expected to kick off a tightening cycle with a 25 bps move, as well as unveil a new tool to prevent “unwarranted” so-called “fragmentation” of Eurozone bond yields that prevents its monetary transmission. In other words, the tool is designed to prevent the yields of highly indebted Eurozone nations like Italy from blowing out as the ECB tightens. Speaking of Italy, traders are also monitoring what is going to happen with the government there after PM Mario Draghi resigned following a governing coalition member pulling out.

Elsewhere, the impact of the US dollar pullback is also evident in GBP/USD and USD/JPY. The former was last trading about 0.8% higher on the day but failed an earlier attempt to break back above the 1.20 level and is back to trading just above 1.1950. Sterling traders are this week keeping an eye on the Conservative Leadership race that will see the party select a replacement for outgoing PM Boris Johnson.

But a barrage of UK data, including jobs and inflation, will likely be the more important driver. “We expect this week’s data flow to help markets fully price in a 50bp rate hike by the Bank of England (currently, 42bp is priced in), which could offer some moderate support to sterling,” said analysts at ING.

Elsewhere, USD/CAD fell back under 1.30 and was last down about 0.4%, with the loonie supported by higher oil prices despite the pullback into the red in US equities. Meanwhile, NZD/USD was unable to hold onto Asia Pacific sessions it made in wake of much hotter than forecast New Zealand inflation figures for Q2.

The Aussie was able to hold onto gains of about 0.3% on the day, though AUD/USD pulled back a fair amount from earlier session highs in the 0.6850 area to current level around 0.6810. The Aussie is on Monday benefitting from a rise in global energy and industrial metal prices.

Commodities Fundamental Daily Forecast – WTI Rallies Above $100 Amid Risk-on Flows/Europe Gas Crisis Woes

Key Points

  • Oil prices rallied sharply on Monday amid risk-on flows/European gas crisis woes, with WTI recovering back above $100.
  • But WTI remains in the same downtrend that has weighed on prices since mid-June.
  • Natural gas and industrial metals also rose amid improved risk appetite, while gold struggled to get above key resistance.

Market Update

Oil prices rallied hard on Monday, with sentiment bolstered by a weaker US dollar risk-on flows across asset classes that also saw stocks, risk-sensitive currencies and cryptocurrencies rise. CFDs for the front-month WTI futures contract were last up slightly more than 4.0% or roughly $4.0 on Monday, with prices vaulting from earlier session lows near $96.00 per barrel to current levels around $101.50.

European Gas Crisis Underpins Oil

Market commentators also cited concerns about gas supply from Russia to Europe as boosting prices via a higher geopolitical risk premia. “Crude will find support at the end of the week if Russia does not turn the gas back on to Germany after Nord Stream 1 maintenance”, said Jeffrey Halley, OANDA’s senior analyst, in a note to clients on Monday.

Nord Stream 1 maintenance is scheduled to end on Thursday, but reports on Monday that Russia’s state-owned gas producer/exporter Gazprom had declared a force majeure to one of its major customers has upped fears that the pipeline won’t be reopened.

WTI Still in Bearish Trendchannel

Despite recent upside that has now seen WTI bounce over $10 from last week’s multi-month lows below the 200-Day Moving Average (at $94.30) and just above the $90 per barrel mark, oil remains within a bearish trend channel that has been in play since June. In the absence of a convincing push above say the 21DMA around $104, which would improve the near-term technical outlook, WTI remains at risk of further losses.

WTI
WTI is still stuck in a downtrend. Source: FX Empire

Growing fears about a global recession over the last few weeks, coupled with continued stop-start lockdowns/restrictions in China as the nation struggles to implement its zero Covid-19 strategy have weighed heavily on prices in recent weeks. As recently as early June, WTI was above $120.

But, for now, WTI is holding above key support in the low-$90s in the form of March/April lows and its 200DMA. Global oil markets remain tight, with OPEC+ having struggled in the last 18 or so months to lift output as fast as it wanted. US President Joe Biden’s trip to the Middle East last week seemingly failed to result in any pledge to increase output. Analysts say the only countries with any serious spare capacity to boost output are Saudi Arabia and the UAE.

Natural Gas, Copper Rally as Risk Appetite Rebounds

The upbeat tone to risk appetite, upside in global oil prices and also some modest spillover impact from increased concerns about Europe’s energy situation as tensions with Russia escalate is helping to support US natural gas prices on Monday. CFDs for front-month Natural Gas futures were last up over 4.0%, or just over 30 cents, to around $7.40. At current levels, US Natural Gas is testing its 50DMA, a break above which could open the door to a test of resistance in the $8.0 area.

Elsewhere, industrial metals are also moving higher, boosted by the weaker US dollar as well as hopes that the Chinese government might successfully stimulate construction activity in the country as its property sector continues to struggle. Reports on Monday said that regulators there are stepping up efforts to encourage loans to qualified real estate projects.

Copper CFDs were last up around 3% or just over 10 cents on Monday in the $3.3 area. A weaker US dollar makes USD-denominated commodities like spot Copper cheaper for foreign buyers. Copper is still down over 25% versus its early June levels near $4.50 and around one-third versus earlier annual highs above $5.0.

Risk-on Flows Prevent Gold Recovery

The upturn in risk appetite that is boosting risk-sensitive assets such as stocks, energy prices, industrial metals, risk-sensitive commodities and crypto is weighing on demand for safe-haven precious metals like gold. Spot gold prices were last just above $1710, still about 0.25% higher on the day, but having pulled back over $10 from earlier session highs near $1,724.

Gold had rallied earlier in the session amid a weakening US dollar and as investors pared back on aggressive Fed tightening bets. Technical selling also seemed to weigh on gold. Traders appeared reluctant to push spot prices back to the north of the September 2021 low around $1,722. Spot silver, meanwhile, was last trading higher by about 1.0%, though has been unable to rally back above $19 per troy ounce.

Despite the uptick in global recession fears and worsening of the European energy crisis in recent weeks, dollar strength and Fed tightening bets have weighed heavily on precious metals. Gold is down nearly 7.0% since the start of June, whilst silver is down over 12%.

Stock Market Fundamental Daily Forecast – Nasdaq 100 Eyes Bullish Break Towards 12,900 Amid Upbeat Sentiment

Key Points

  • Major US equity indices have started the week strong with the Nasdaq 100 eyeing a breakout towards 12,900.
  • Strong earnings and recent positive data that has seen Fed tightening bets pared is supporting sentiment, analysts say.
  • The Stoxx 600 was higher but failed to conquer 420 or test its 50DMA on European energy crisis woes.

Wall Street Gains Ground, Nasdaq 100 Eyes Breakout Towards Early June Highs

Wall Street has picked up where it left off with things last Friday, with major US equity indices firmly on the front foot once again on Monday. The S&P 500 index was last trading higher by around 0.7% just below 3,900. The tech-heavy Nasdaq 100 index was performing a little better and up around 1.3%, having come within a whisker of testing recent multi-week peaks in the upper 12,100s.

However, the Nasdaq 100 has managed to leap-frog its 50-Day Moving Average for the first time since early April, a sign that a test of early June highs in the 12,900 area might be in the offing in the sessions ahead if the index can break above recent highs. Outperformance in the Information Technology (+1.2%) and Consumer Discretionary (+2.5%) S&P 500 GICS sectors, both of which are weighted heavily in the Nasdaq 100, is helping the index.

Nasdaq 100
Nasdaq 100 eyes break above key resistance and a rally towards 12,900. Source: FX Empire

The Dow Jone Industrial Average, meanwhile, was last higher by around 0.5% in the 31,500 area. Unlike the Nasdaq 100, the Dow failed on Monday to break above its 50DMA (around 31,650). Underperformance in the Health Care S&P 500 GICS sector, which was last down about 0.7% on Monday, is weighing somewhat on the Dow given its larger weighting.

What’s Driving the Gains?

Market commentators have cited a variety of factors as boosting risk appetite in the past few days. Firstly, it’s been a decent start to the earnings season. Earnings from US megabanks Goldman Sachs (on Monday) and Citigroup Inc (last Friday) were solid. Of the 35 S&P 500 companies to have reported earnings prior to Monday, 80% had beaten analyst expectations, Reuters earlier said citing Refinitiv data.

This week is set to be a busy one for major earnings releases, with IBM reporting after Monday’s close. Should earnings continue to surprise to the upside, that could be a catalyst that drives further US equity market gains.

Elsewhere, investor fears about a deteriorating macroeconomic backdrop have eased in recent days. June US Retail Sales and July University of Michigan (UoM) Consumer Sentiment data released last Friday both surprised to the upside, modestly easing US recession fears. Perhaps more importantly, the UoM’s survey showed 5-year consumer inflation expectations falling to a one-year low of 2.8% from above 3.0% in June.

That will ease fears at the US Federal Reserve that inflation expectations are becoming de-anchored, reducing the pressure they feel to hike interest rates quite so aggressively. Indeed, the Fed cited an upside surprise in the UoM inflation expectations guage back in June as a key reason why it opted to accelerate the pace of its rate hikes to 75 bps at last month’s meeting from 50 bps at the May meeting.

Fed Rate Hike Bets Pared

Speaking of Fed rate hikes; last Wednesday’s hotter-than-expected US Consumer Price Index numbers, which showed headline price pressures hitting a four-decade high above 9.0%, initially sparked fears that the Fed might implement an even larger 100 bps rate hike later this month. However, Fed policymakers speaking later last week (Christopher Waller and James Bullard) both pushed back against this idea and said a 75 bps rate hike later this month was most likely.

This, combined with Friday’s data, has seen markets pare back expectations for how aggressively the Fed is going to hike interest rates in the quarters ahead, supporting stock prices. According to the CME’s Fed Watch Tool, there is a less than 20% chance that the Fed will have raised interest rates to 3.25-3.50% by the September meeting from current 1.50-1.75% levels.

The market’s base case for where rates will be by the September meeting is 3.0-3.25% (seen as around 53% likely), a further 150 bps of tightening from current levels. That implies that a 75 bps rate hike later this month, followed by another 75 bps in September is the market’s base case.

European Stocks Pullback from Highs on Gas Crisis Worries

Most major European equity indices are also on course to post solid gains on Monday. The pan-European Stoxx 600 index was last around 0.9% higher in the 417.50 area, though has pared back from earlier session highs in 420 area. Unlike the Nasdaq 100 and Dow, the index was unable to test its 50DMA just above 422.

Analysts said that the risk of a worsening of the European energy crisis weighed on sentiment. European nations have imposed harsh sanctions on Russia for its invasion of Ukraine and, in response, Russia has been tacitly threatening to halt gas flows to the continent.

The Nord Stream 1 pipeline, which carries large sums of gas directly from Russia to Germany, is currently closed until Thursday as it undergoes routine maintenance, but there are fears that the Russians won’t restart flows. Worsening these fears were reports on Monday that Gazprom, Russia’s state-owned gas producer/exporter, had declared a force majeure to one of its major customers.

Top 3 Trending Coins: ETH to $1,700, MATIC to $1.0 and AVAX to $28?

Key Points

  • Pre-“Merge” FOMO has driven Ethereum towards $1,500, with bulls eyeing a retest of $1,700.
  • Bulls continue to target $1.0 as Polygon’s post-Disney Accelerator Program selection melt-up continues.
  • Avalanche broke above the key $22 support-turned-resistance level on Monday amid a more than 15% intra-day surge.

Market Update

Though most major cryptocurrencies have pulled back from earlier session highs in the run-up to the open of US markets, most continue to trade with solid gains on the day/over the past 24 hours. Bitcoin was last trading around $22,100, a little below earlier highs in the $22,500 region, but still up over 6.0% on the day and more than 3.0% in the last 24 hours, according to CoinMarketCap.

The world’s largest cryptocurrency and broader crypto markets are being lifted in tandem with a rise in global stock prices as investors take a more positive view on recent global macro developments. Data released out of the US on Friday revealed a drop in Consumer Inflation expectations, easing fears about a 100 bps rate hike from the Fed later this month, with Fed policymakers having also pushed back against the idea of an even larger hike last week.

Meanwhile, data last Friday revealed that US Retail Sales are holding up better than expected, easing recession fears. In sum, markets have been lifted by the combination of reduced fears about an overly hawkish Fed and weakness in economic growth.

Ethereum (ETH)

Ethereum is one of the best performing major cryptocurrencies on Monday and was last trading higher by nearly 10% over the last 24 hours according to CoinMarketCap. ETH/USD was last trading in the $1,470 area, having earlier probed the psychologically important $1,500 level.

The surge in Ethereum buying pressure has resulted in a spike in short-position liquidations in recent days, according to data on the crypto derivative analytics website CoinGlass. When ETH broke out to fresh multi-week highs and above the key $1,280 resistance level on Saturday, short-positions worth nearly $180 million were liquidated that day, the highest in more than three months.

Meanwhile, short-position liquidations have already reached nearly $130 million so far this Monday, with Ethereum up a further more than 10% on the day as it surges above its 50-Day Moving Average. ETH bulls continue to target a test of resistance at $1,550 (the late-March 2021 lows) and then the $1,700 level above that (mid-2021 and May 2022 lows).

ETH/USD
ETH/USD eyes move higher towards $1,700. Source: FX Empire

Pre-“Merge” FOMO Driving ETH Upside

According to analysts, anticipation about the Ethereum blockchain’s so-called “Merge” to a Proof-of-Stake consensus mechanism in September has driven the latest upturn in sentiment towards ETH.

Some are pointing to a closing of the staked ETH token to the actual ETH token, which has narrowed to only about 2% from around 4% last Thursday, as further evidence that pre-Merge FOMO (Fear Of Missing Out) has arrived. The price of staked ETH, which is supposed to remain around 1:1 to actual ETH, rose to around 7% in May when the Terra ecosystem (LUNA classic and UST classic) collapsed.

“ETH has undergone a rapid change in narrative over the past week with speculators purely focused on the upcoming ‘merge’ as a catalyst for appreciation,” said COO and co-founder of Stack Funds Matthew Dibb, as quoted by CoinDesk. “Adding to this, we believe that there is a significant amount of sidelined capital that has been waiting on bullish momentum to establish new positions”.

Polygon (MATIC)

Polygon is once again the stronger performer in the top 20 cryptocurrencies by market capitalization, with its native MATIC token last up about 20% on Monday alone. MATIC/USD was last trading around $0.91 but went as high as $0.93 earlier in the day. The popular Ethereum scaling solution has now surged around 75% since last Wednesday’s sub-$0.52 lows.

While a broad upturn in cryptocurrency market sentiment has helped drive the recent surge, news last week that Polygon had been selected by massive multinational media and entertainment conglomerate Disney for its Accelerator business development program has fuelled much of the rally. Technicals have also helped, with MATIC last week breaking to the north of a downtrend that had been capping the price action since mid-May.

MATIC/USD bulls continue to target a near-term test of the next area of significant resistance to the north of the $1.0 level.

MATIC/USD
MATIC/USD melt-up continues as bulls target $1.0. Source: FX Empire

Avalanche (AVAX)

The native token to the Avalanche blockchain AVAX surged above a key level of resistance on Monday amid a more than 15% on-the-day jump in its price to at one point higher than $24 from earlier session lows around $20.50. $22 had been a significant area of support turned resistance since mid-May.

Now that AVAX has broken to the north of this level, its near-term technical outlook has shifted significantly for the better. A test of the $28 area, another area of support turned resistance, is likely, implying the probability of a further 18% ish rally from current levels.

If AVAX can get above here, a test of $30 is on the cards. Beyond that, there aren’t any clear levels of resistance until the October 2021 lows around the $48 mark.

AVAX/USD
AVAX/USD breaks above the key $22 resistance level. Source: FX Empire