Bitcoin Recoups Some Losses in Asia After Plunging on Chinese Crackdown

(Adds dollar signs in 2nd paragraph, dropped word to quote in 6th paragraph)

By Alun John and Andrew Galbraith

The world’s largest cryptocurrency was last up 4.58% at $33,000, having dropped more than 10% on Monday. Ether, the second-biggest cryptocurrency, was up 5.05% at $1,983 after hitting a five-week low the day before.

Monday’s sell-off was sparked by an announcement from the Peoples Bank of China saying it had summoned China’s largest banks and payment firms urging them to crack down harder on cryptocurrency trading.

“It basically says now OTC transactions are not legitimate… we are not allowed by the banks to transfer money for cryptocurrency purchases and sales,” said Bobby Lee, founder and CEO of Ballet, a cryptocurrency wallet app, and formerly CEO of BTC China, China’s first bitcoin exchange.

Crypto exchanges were effectively pushed out of China by a 2017 rule change, but over the counter (OTC) platforms based-overseas sprung up to act as middlemen, receiving payment from people based in China and buying cryptocurrencies on their behalf.

“Essentially this puts all the OTC platforms out of business,” Lee said.

However, Tuesday’s price moves suggested Asian traders thought markets overnight had overreacted to the news.

“A Chinese ban on cryptocurrencies isn’t something new. The one that came out yesterday was almost a copy of a previous announcement, earlier this year,” said Justin d’Anethan, head of exchange sales at crypto exchange operator EQONEX.

“As always, leverage, large participants and fundamental events mean crypto can move dramatically,” he said. Last month, three industry associations issued a ban on crypto-related financial services, but these bodies have much less clout than the PBOC. [nL2N2N803D

Market participants said at the time that the earlier ban would be hard to enforce as banks and payment firms would struggle to identify crypto-related payments. However, following Monday’s PBOC statement, banks including Agricultural Bank of China and Alipay, the ubiquitous payment platform owned by fintech giant Ant Group, said they would step up monitoring to root out crypto transactions.

China’s crackdown has also had a dramatic effect on bitcoin mining. The hashrate, which measures the processing power of the bitcoin network and shows how much mining is taking place, on Monday hit its lowest level since late 2020.

Cryptomining is a big business in China, which accounts for over half of global bitcoin production. However, since the State Council’s statement, bans on cryptomining have been issued in major bitcoin mining hubs, including Sichuan, Xinjiang, and Inner Mongolia.

(Reporting by Alun John in Hong Kong and Andrew Galbraith in Shanghai; Editing by Stephen Coates & Shri Navaratnam)

BTC in a Precarious Position

Last Tuesday is also when the death cross between the 50- and 100-day moving average occurred, providing the technical data for the selloff. Fundamentally most analysts are blaming the crackdown in China for this recent selloff.

As of 4:30 PM Eastern daylight Time, BTC futures are trading down by 8%, now fixed at $32,445. This most recent move took us below the 200-day moving average, which had acted as support for the past few weeks. Pricing must hold above the 61.8% Fibonacci retracement level occurring at $30,798 if it is to remain in the $30,000 price range. A break below this level could signal a further selloff taking prices as low as $20,000. The 61.8% retracement level has acted as support twice in the past two months and has served as a base for prices to move higher; this support is crucial for the near-term path of BTC futures.

0621 chart 1

Another technical note is that last week’s action has cemented a head and shoulders pattern on a daily chart of BTC futures. This pattern usually identifies a trend reversal from bullish to bearish, which is precisely what we have been talking about over the past couple of weeks. This pattern is one of the most reliable patterns for predicting trend reversals and is signaling concurrently with the death cross that we will return to $20,000 pricing.

BTC 0621 chart 2

Inflation Conundrum Results in a Rally in Both Equities and Precious Metals

The Fed made it clear that they would continue to let inflation run hot compared to their previous monetary mandate. Whether current inflation levels are temporary or sustained will determine when and how much the Federal Reserve raises rates.

Last week’s announcement by the Federal Reserve that they have penciled in two interest rate hikes in 2023, and they are now talking about a timeline to taper their asset purchases sent the equities and precious metals markets into a meltdown last week.

However, today we witnessed a 180° reversal in both equities and precious metals, resulting in both financial markets yielding strong gains. The Dow Jones Industrial Average gained 586 points (+1.76%) today, and the precious metals across the board had a strong upside bounce. Today’s reversal in the markets is partially due to statements made by two Federal Reserve members, Dallas President Robert Kaplan and St. Louis Federal Reserve President James Bullard.

Both spoke today at a webinar sponsored by the Official Monetary and Financial Institutions Forum, saying that they see high inflation persisting in 2022 above the 2% target of the central bank and at a stronger rate than many of their colleagues predict.

According to MarketWatch, George Saravelos, currency strategist at Deutsche Bank, argued, “But a reading of the reaction across financial markets may be signaling that investors don’t think the Federal Reserve will have room to raise rates very far once the hiking cycle begins.”

As of 5:20 PM EST gold futures basis, the most active August 2021 contract is up $14.50 and fixed at $1783.50. Based upon our technical studies, gold closed above a key and critical area. This study is based upon a Fibonacci retracement which begins at the second low, creating a double bottom at the end of March, to the highs that occurred at the end of May when gold traded to $1918 per ounce. Last week’s tremendous downward move in gold pricing resulted in gold closing at $1769 an ounce on Friday.

gold june 21

That is the exact price point that the 61.8% Fibonacci retracement occurs from the data set mentioned above. Today gold opened below that price point at $1764.30 but rallied and closed well above that key level, closing up just shy of $20 from the lows. That could be signaling a technical bounce to the upside towards current resistance at $1795.40, which is based upon the 100-day moving average. This could be indicating that gold became extremely oversold, and many traders sought to buy the dip created from the massive declines from last week.

For those who want more information, please use this link.

Wishing you, as always, good trading and good health,

Gary S. Wagner

 

June 22nd 2021: Dollar on the Backfoot; DXY Trades South of 92.00

Charts: Trading View

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Down 2.5 percent MTD, June remains on the ropes. Reclaiming May’s gains and also chipping into April’s upside, EUR/USD recently touched gloves with familiar support at $1.1857-1.1352.

Upstream is concentrated on 2021 peaks at $1.2349, with additional enthusiasm welcoming ascending resistance (prior support [$1.1641]).

Based on trend studies, the primary uptrend has been underway since price broke the $1.1714 high (Aug 2015) in July 2017. Additionally, price breached major trendline resistance, taken from the high $1.6038, in July 2020.

Daily timeframe:

Snapping a decisive three-day bearish phase, Monday—ahead of Quasimodo support at $1.1836— kicked off the final full week of June chalking up a recovery. With a focus now likely on the 200-day simple moving average at $1.1992, extending recovery gains could be in store.

A $1.1836 breach, on the other hand, helps validate June’s bearish tone, highlighting Quasimodo support from $1.1688.

Reinforcing Monday’s gains, the RSI pencilled in hidden bullish divergence (commonly forms a trend continuation signal that suggests upside strength remains), with the value exiting oversold terrain (bullish cue).

H4 timeframe:

A closer examination of price action on the H4 scale informs traders a floor of support emerged just north of demand from $1.1794-1.1822, arranged under Quasimodo support at $1.1836 on the daily timeframe.

Overhead, resistance at $1.1937 calls for attention, followed by supply at $1.2006-1.1983 and resistance seen partnering with the zone at $1.1990 (38.2% Fib retracement value also visible at $1.2007).

H1 timeframe:

The dollar echoed weakness on Monday—DXY elbowed back under 92.00—as markets digest the recent Fed-induced bid. Technically, this lifted EUR/USD above $1.19 to within a stone’s throw of local resistance at $1.1924. Territory above the latter unmasks a relatively clear path to the $1.20ish neighbourhood, joined by supply from $1.2006-1.1983 and the 100-period simple moving average, currently circling $1.1973.

The picture drawn from the RSI indicator reveals the value levelling off ahead of overbought territory. Should a dip occur, trendline support is seen, taken from the low 8.62.

Observed levels:

The monthly timeframe rebounding from support at $1.1857-1.1352, in addition to the daily timeframe discovering a floor ahead of Quasimodo support from $1.1836, emphasises a bullish setting.

The above places H1 bulls in a favourable location, north of $1.19, with subsequent buying to perhaps pursue space north of H1 resistance at $1,924, targeting the $1.20 figure. Though do take into account this involves brushing aside H4 resistance at $1,1937.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support – $0.4776 low) and supply from $0.8303-0.8082. That was, of course, until last week’s one-sided decline, movement throwing light on support at $0.7394. Additional downside pressure also brings light to demand at $0.7029-0.6664 (prior supply).

June is currently down by 2.5 percent.

Trend studies (despite the trendline resistance [$1.0582] breach in July 2020) show the primary downtrend (since mid-2011) remains in play until breaking $0.8135 (January high [2018]).

Daily timeframe:

Leaving supply-turned demand at $0.7453-0.7384 unchallenged, AUD/USD booked gains on Monday as the DXY slumped back under 92.00. It is worth noting the aforementioned demand aligns with a collection of Fib studies and monthly support at $0.7394.

The currency pair is now within touching distance of the 200-day simple moving average at $0.7550, collaborating closely with resistance at $0.7563.

Out of the RSI, the indicator exited oversold territory yesterday, action some traders view as a bullish cue.

H4 timeframe:

$0.7485 support made an entrance Monday, stirring a bullish vibe that landed price action within reach of daily resistance at $0.7563, closely shadowed by H4 resistance at $0.7588.

H1 timeframe:

From the H1 chart, the technical picture has price toying with levels just beneath supply at $0.7558-0.7547, with a break here uncovering Quasimodo resistance at $0.7580, followed by the 100-period simple moving average at $0.7585 and then the $0.76 region.

Downstream, support at $0.7511 is on the radar.

Action from the RSI shows the value on the doorstep of overbought, eyeing resistance at 72.21.

Observed levels:

Knowing the daily timeframe is on the brink of shaking hands with the 200-day simple moving average at $0.7550 and resistance from $0.7563, a bearish theme could develop if the aforesaid barriers enter the fray.

This shines light on the area between daily resistance and H4 resistance at $0.7588 (yellow) as a possible ceiling, as well as H1 resistance zone between $0.7605 and $0.7580 (orange).

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

Have Gold Stocks Lost All Their Vigor?

The Gold Miners

While investors believed that superficial strength indicated clear skies ahead, I warned on Jun. 14 that storm clouds were likely to rain on gold, silver and mining stocks’ parade.

I wrote:

Not only has gold’s RSI fallen precipitously, but the yellow metal’s stochastic oscillator is also at levels that preceded significant historical drawdowns. As a result, while a $100+ decline is likely to materialize in the short term , an even larger decline will likely occur over the medium term. And with the 2008 and 2012-2013 analogues becoming even more valid by the day, gold’s ominous path forward will likely catch many market participants by surprise.

And with the technical realities finally drowning the yellow metal, it was a tough pill to swallow for those that didn’t heed the warning.

Please see below:

As part of the problem, the vast majority of individual investors and – sadly – quite many analysts focus on the trees while forgetting about the forest. However, once one zooms out and looks at the situation from a broad perspective, it’s clear that: “What has been will be again, what has been done will be done again; there is nothing new under the sun.” (-Ecclesiastes 1:9)

Therefore, while investors often focus all of their attention on the yellow metal, I warned on Jun. 14 that the HUI Index’s ominous behavior signaled significant downside for gold, silver and mining stocks.

I wrote:

With the HUI Index acting as the PMs’ canary in the coal mine, the bearish implications are as clear as day when eyeing the long-term chart. In the past three weeks, two key events unfolded:

  1. The stochastic oscillator delivered a clear sell signal.
  2. The self-similarity patterns became increasingly valid.

And with last week’s price action adding further confirmation, investors’ optimism is showing severe cracks in its foundation.

On top of that, even though the HUI Index plunged by more than 10% last week , the carnage may not be over. Case in point: the HUI Index is in the midst of forming the right shoulder of its bearish head & shoulders pattern, and if completed, could result in a profound decline over the medium term. For context, with gold approaching its late-April bottom and its rising medium-term support line, the yellow metal could bounce at roughly $1,750. In the process, the gold miners may follow suit. However, the bearish implications remain intact over the medium term, and a significant slide is likely to follow.

Please see below:

To explain, if you held firm in 2008 and 2013 and maintained your short positions, you almost certainly realized substantial profits. And while there are instances when it’s wise to exit one’s short positions and re-enter at more attractive prices, the smooth declines of gold, silver, and mining stocks mean that the risk-reward of doing so is tilted toward the downside.

Or to put it more bluntly, the prospect of missing out on the forthcoming slide makes exiting the short positions a risky investment decision. For context, we believe that holding the short position is the most prudent course of action. However, if gold, silver and mining stocks become extremely oversold, we may consider covering on a short-term basis.

If that wasn’t enough, I warned previously that the recent plunge was weeks in the making:

I wrote the following about the week start started on May 24 :

What happened three weeks ago was that gold rallied by almost $30 ($28.60) and at the same time, the HUI – a flagship proxy for gold stocks… Declined by 1.37. In other words, gold stocks completely ignored gold’s gains. That shows exceptional weakness on the weekly basis and is a very bearish sign for the following weeks.

To that point, the HUI Index is still following two medium-term historical analogies. To explain, back in 2008, right before a huge slide, in late September and early October gold was still moving to new intraday highs, but the HUI Index was ignoring that, and then it declined despite gold’s rally. However, it was also the case that the general stock market declined then. If stocks hadn’t declined back then so profoundly, gold stocks’ underperformance relative to gold would likely be present but more moderate.

Moreover, in 2012, the HUI Index topped on Sep. 21, and that was just the initial high in gold. At that time the S&P 500 was moving back and forth with lower highs – so a bit more bearish than the current back-and-forth movement in this stock index. And what was the eventual climax? Well, gold moved to new highs and formed the final top (Oct. 5). It was when the S&P 500 almost (!) moved to new highs, and despite both, the HUI Index didn’t move to new highs. Thus, the similarity to how the final counter-trend rally ended in 2012 (and to a smaller extent in 2008) ended is uncanny .

On top of that, the stochastic oscillator (which flashed a clear sell signal ) is singing a similar tune. Not only do these signals often precede massive price declines on their own, but the analogies of 2008 and 2012 serve as confirmation that the huge decline has only just begun and that forecasting lower gold prices is currently justified.

Thus, if history rhymes, as it tends to, the HUI Index will likely decline profoundly and find medium-term support in the 100-to-150 range. For context, high-end 2020 support implies a move back to 150, while low-end 2015 support implies a move back to 100. And yes, it could really happen, even though it seems unthinkable.

The HUI Index retraced a bit more than 61.8% of its downswing in 2008 and in between 50% and 61.8% of its downswing in 2012 before eventually rolling over. Now, in both (2008 and 2012) cases, the final top – the right shoulder – formed close to the price where the left shoulder topped. And in early 2020, the left shoulder topped at 303.02.

That’s why I previously wrote that “it wouldn’t be surprising to see a move to about 300 in the HUI Index”. And that’s exactly what we saw (a move above 320 is still close to 300 from the long-term point of view). To clarify, one head-and-shoulders pattern – with a rising neckline – was already completed, and one head-and-shoulders pattern – with a horizontal neckline – is being completed, but we’ll have the confirmation once miners break to new yearly lows.

Furthermore , three of the biggest declines in the mining stocks (I’m using the HUI Index as a proxy here), all started with broad, multi-month head-and-shoulders patterns. And in all three cases, the size of the declines exceeded the size of the head of the pattern.

As a result, we’re confronted with two bearish scenarios:

  1. If things develop as they did in 2000 and 2012-2013, gold stocks are likely to bottom close to their early 2020 high.
  2. If things develop like in 2008 (which might be the case, given the extremely high participation of the investment public in the stock market and other markets), gold stocks could re-test (or break slightly below) their 2016 low.

Keep in mind though: scenario #2 most likely requires equities to participate. In 2008 and 2020, the sharp drawdowns in the HUI Index coincided with significant drawdowns of the S&P 500 . However, with the Fed turning hawkish and investors extremely allergic to higher interest rates, the likelihood of a three-peat remains relatively high.

Let’s zoom in.

To explain, the senior miners’ weekly decline occurred relatively uninterrupted, with little buying pressure witnessed on Jun. 18. Moreover, not only did the GDX ETF close below its April lows and its March highs, but it also dipped below the 61.8% Fibonacci retracement level. Thus, while the senior miners’ RSI (Relative Strength Index) signals a buying opportunity (by falling below 30), the technical damage (breakdown below the 61.8% Fibonacci retracement) justifies the bearish outlook even in the short run. Of course, I remain on the lookout for this breakdown’s invalidation as it would be a sign of potential strength.

Finally, let’s consider the size of the possible corrective upswing based on the analogy to 2012. Back then, the GDX ETF’s corrective upswing didn’t recapture 61.8% or even 38.2% of its previous decline, and the bullish correction was rather “muted” relative to gold. Thus, the notable detail here is that the GDX ETF started its November 2012 correction with the RSI close to 30, but also when it moved slightly below its previous (August) lows, and the final short-term bottom took place after the second (!) day when it declined on big volume.

So, if history is going to continue to rhyme (which seems likely), even if gold corrects quite visibly, gold stocks’ corrective upswing might not be that significant. If we see “screaming short-term buy signals” or something like that, we might close or even briefly switch to the long side, but for now, the trend remains down.

In conclusion, gold, silver and mining stocks’ plight was a humbling experience for many investors. And while the recent slide highlights the importance of investing without emotion, we remain confident that the precious metals will soar once again. However, because secular bull markets don’t occur in a straight line, based on the similarity to how similar situations developed in the past, a final profound decline will likely occur before the metals resume their resurgence. As a result, even though gold, silver, and mining stocks are poised to shine in the long run, I still think that short positions in the precious metals sector – especially in the junior miners – currently remain attractive from a risk-reward perspective.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

For a look at all of today’s economic events, check out our economic calendar.

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Big U.S. Retailers Line Up Deals to Take on Amazon Prime Day Frenzy

By Siddharth Cavale

Target Corp, Walmart Inc, Bed, Bath & Beyond, Macy’s Inc and Kohl’s Inc are some top American retail chains offering big discounts and promotions to coincide with Prime day, which takes place on Monday and Tuesday this year.

The two-day sales event, which generated https://www.digitalcommerce360.com/article/amazon-prime-day-data $10.4 billion in gross merchandise sales for Amazon last year, is taking place earlier than its traditional July run date, as the e-commerce giant looks https://www.cnbc.com/2021/04/30/heres-why-amazon-is-moving-its-prime-day-event-earlier-in-the-summer.html to boost spending in what are historically slow sales days in the quarter.

And retailers are not missing the opportunity to get a slice of that pie.

Department store chain Macy’s is teasing customers with an “Epic Specials” event for two days starting Monday, while rival Kohl’s is promoting cashbacks and discounts on beauty, apparel and household goods through its Prime-day coinciding event called “Wow Deals.”

Target has taken it up a notch this year, increasing the number of products and discounts on its website during Prime Days, according to StyleSage data. This is in contrast to most U.S. mall stores, which have been cutting down on assortment and promotions this year, the data showed.

Home furnishing retailer Bed, Bath & Beyond is offering an “even bigger and better” challenger event to Prime Day this year, with same-day delivery on orders $39 or more and rewards that give customers up to $100 for future purchases.

Some of its top deals include 60% off on Crux appliances and 25% off on Graco Pack ‘n Play baby cribs.

Walmart’s competing sales event will start one day ahead of Prime Day and end on June 22. The world’s biggest retail chain, which launched its own subscription program called Walmart Plus last year, is offering deals on built-in Roku TVs and Roomba vacuum cleaners, among other electronic items.

Amazon Prime Day , which has grown into a two-day shopping bonanza rivaling the U.S. holiday shopping season, will see 20 countries participate this year. The event in India and Canada, however, has been postponed due to COVID-19.

Adobe expects Prime Day to top $11 billion in total online spend for U.S. retailers this year, surpassing sales generated on Black Friday and Cyber Monday last year.

(Additional reporting by Aishwarya Venugopal in Bengaluru; editing by Jonathan Oatis)

Bitcoin Tumbles 10% in Wake of Deepening China Crackdown

By Tom Wilson and Kevin Buckland

Bitcoin fell as low as $32,094 to its lowest in 12 days, dragging smaller coins down. It was last down 8.3%, on course for its biggest daily drop in a month.

The world’s biggest cryptocurrency, long plagued by volatility, has lost over 20% in the last six days alone and is down by half from its April peak of almost $65,000. Still, it has still gained over 10% this year.

The drop comes amid a growing crackdown on cryptocurrencies in China, where authorities in the southwest province of Sichuan on Friday ordered bitcoin mining projects to close.

The State Council, China’s cabinet, last month vowed to clamp down on mining and trading as part of a series of measures to control financial risks.

Data on mining is scarce. Yet production of bitcoin in China accounted last year for about 65% of global production, according to data from the University of Cambridge, with Sichuan its second-biggest producer.

Companies that mine bitcoin – an energy-intensive process – typically hold large inventories of the cryptocurrency, with any moves to sell large amounts depressing prices.

“(The) crackdown on Chinese miners might mean that they are offloading coin into a thin market and taking us lower,” said Ben Sebley of London-based crypto firm BCB Group.

China’s central bank said on Monday it had summoned some banks and payment institutions recently, urging them to crack down harder on cryptocurrency trading.

Agricultural Bank of China (AgBank), China’s third-largest lender by assets, said separately it was following the People’s Bank of China’s guidance and would conduct due diligence on clients to root out illegal activities involving crypto mining and transactions.

Smaller rival ether, which tends to move in tandem with bitcoin, dropped as much as 12%, falling below $2,000 for the first time in almost a month.

(Reporting by Tom Wilson in London and Kevin Buckland in Tokyo; Editing by Toby Chopra, Giles Elgood and Alison Williams)

Norwegian Air Fires Ceo in ‘Surprise’ Move After Restructuring

By Nora Buli and Victoria Klesty

The board voted on June 20 to end Schram’s 18-month tenure but the airline said he would support the carrier on a full-time basis during his notice period up to March 31.

“The board’s decision to fire me came as a big surprise,” Schram told Reuters.

His replacement, Karlsen, has been chief financial officer since 2018. For six months in 2019, he was acting CEO for the carrier, which is recovering from bankruptcy protection after the COVID-19 pandemic plunged the heavily indebted airline into a financial crisis.

“It’ll be very exciting to see whether we can make this company profitable,” Karlsen told Reuters. “We have a unique opportunity now with Norwegian to create the company I have wanted for a long time.”

The survival plan ended Norwegian’s long-haul business, leaving a slimmed-down carrier with Nordic and European routes.

The company declined to elaborate on Schram’s departure but said his replacement was the right person for the job.

“Karlsen has successfully led the financial reconstruction of Norwegian and has the competencies, focus, trust and dedication that makes him the best choice as CEO of Norwegian,” said Svein Harald Oeygard, the chair of Norwegian’s board.

Karlsen’s annual base salary will be 4.5 million Norwegian crowns ($521,000), unchanged from his CFO’s wage, but he will also receive a performance based bonus and share options. The fixed salary was less than Schram’s pay of 7.0 million crowns.

The board tussled with Schram over his severance package, which gives him the right to 15 months pay on top of the nine-month notice period, or 14 million crowns over 24 months.

“An effort has been made by the board to bring the severance payments to a level reflecting the challenges of the industry, but no agreement could be reached,” Norwegian said.

Schram said he had been willing to make concessions to adjust his pay, but also said no agreement had been reached.

Bankruptcy courts in Oslo and Dublin last month gave their approval for Norwegian to sharply cut its debt by converting it to stock and to raise new capital.

The chair, Oeygard, was appointed in early June after those proceedings were completed and new equity capital was secured.

The search for a new CFO commences immediately.

($1 = 8.6455 Norwegian crowns)

(Editing by Terje Solsvik and Edmund Blair)

Let the Vaccinated Travel, Uk Air Industry Demands

Airlines UK said in a letter to Transport Secretary Grant Shapps that fully vaccinated travellers from “amber” destinations should be exempt from the 10-day isolation requirement, while those coming from both “amber” and “green” countries should not need to have expensive PCR tests.

“Given the incredible efficacy of vaccines and their critical role in easing domestic restrictions, we believe that the framework can safely be adjusted to provide a pathway for vaccinated people to travel without restriction, alongside steps to reduce restrictions for green and amber categories, making them more proportionate for travellers,” the group said.

British Prime Minister Boris Johnson said on Monday that travellers would face hassle and delays this year if they sought to go abroad because the priority would be keeping the country safe from the coronavirus.

Data confirming that vaccines are more than 90% effective against hospitalisation from the fast-growing Delta variation should be considered when measures that apply to each tier of Britain’s traffic light system for travel are reviewed on June 28, it said.

“This effectiveness has been recognised by Europe, which is now opening its travel and leisure markets by introducing waivers from testing and isolation requirements for fully vaccinated persons, including arrivals from major markets such as the United States,” it said.

“Today 32 countries exempt travellers from quarantine and 27 from testing if fully vaccinated. The failure to adopt a similar approach risks the UK falling further behind the EU’s reopening of international travel, including the critical trans-Atlantic market.”

Popular European holiday destinations for Britons, including Spain, Portugal, France, Italy and Greece, are currently rated “amber”, which require returning passengers to take three COVID-19 tests and isolate for 10 days on return.

The 11 countries and territories rated “green” require two tests for passengers, including those who are fully vaccinated.

(Reporting by Paul Sandle)

German Competition Watchdog Launches Apple Investigation

The Bonn-based watchdog said it will examine whether Apple has “paramount significance across markets” that thwarts competition.

“A key focus of the investigation will be the operation of the App Store, as in many cases it empowers Apple to influence the operations of third parties,” said Andreas Mundt, president of the Federal Cartel Office (FCO).

The watchdog has made use of enhanced powers gained under recent reforms to Germany’s competition laws to open investigations into Alphabet’s Google, Facebook and Amazon over their data practices.

Further proceedings against Apple are also being considered with regard to complaints received about potentially anti-competitive practices, the watchdog said.

These include a complaint that Apple gives itself preferential treatment by pre-installing its own applications, the watchdog said.

An Apple spokesperson said the company’s App Store has given German developers of all sizes the same opportunity.

“We look forward to discussing our approach with the FCO and having an open dialogue about any of their concerns,” the spokesperson added.

(Reporting by Riham Alkousaa and Supantha MukherjeeWriting by Caroline CopleyEditing by Edmund Blair and David Goodman)

EU Measures to ‘Tighten Thumbscrews’ on Belarus

By Robin Emmott

Outraged at the forced landing of a Ryanair passenger plane in Minsk on May 23 to arrest a dissident journalist, EU foreign ministers will blacklist transport, defence and air traffic officials, EU diplomats and officials said.

“Today we will approve the package of new sanctions, which is a wider package, about 86 people and entities,” EU foreign policy chief Josep Borrell told reporters as he detailed a fourth round of measures before a meeting of EU foreign ministers in Luxembourg.

With Lukashenko so far impervious to foreign pressure, EU states are also soon set to impose economic sanctions on Belarus’ financial, oil, tobacco and potash sectors, after a provisional deal was agreed on Friday.

Belarus sovereign dollar bonds tumbled on Monday in response.

The benchmark 2030 bond slumped more than 3 cents – its biggest fall since the global market COVID rout in March last year – and the 2031 bond issued in June last year hit a record low, Tradeweb data showed.

The EU imported 1.2 billion euros’ ($1.5 billion) worth of chemicals including potash from Belarus last year, as well as more than 1 billion euros’ worth of crude oil and related products such as fuel and lubricants. Belarus also relies on loans from European commercial and development banks.

“We have to tighten the thumbscrews after this callous action of state air piracy,” Austria’s Foreign Minister Alexander Schallenberg told reporters. “We want to hit the state-affiliated economic sector, those responsible, not the people in Belarus, who are suffering anyway.”

After 27 years in power, Lukashenko is accused of rigging the presidential election last August and then imprisoning pro-democracy protesters.

The forced landing of the Ryanair flight last month to arrest Roman Protasevich and his student girlfriend Sofia Sapega, who were on board, has galvanized an often divided EU into action.

Lukashenko says he won the election fairly and accuses Protasevich of organising a rebellion.

‘STATE TERROR’

While the economic sanctions still need to be finalised to withstand any court challenge, Borrell said EU leaders would discuss giving political approval at a summit on Thursday.

Luxembourg’s Foreign Minister Jean Asselborn said it was up to the EU to show that “state terror has no place in the 21st century”.

Restrictions on the Belarusian financial sector are set to include: a ban on new loans, a ban on EU investors from buying bonds on the primary market and a ban on EU banks from providing investment services. EU export credits will also end, although private savings will not be targeted. Securities in circulation and traded between fund managers are not expected to be hit, but sanctions on the secondary market could come at a later stage.

The bloc will ban exports to Belarus of any communications equipment that could be used for spying, and tighten an arms embargo to include rifles used by biathletes, officials said.

Monday’s individual sanctions will hit 76 Belarusians, including the transport and defence ministers, as well as eight state entities, diplomats said. The names will be released later on Monday in the EU’s Official Journal.

(Reporting by Robin Emmott and Sabine Siebold; Editing by Catherine Evans and Andrew Heavens)

Ikea, Rockefeller Foundations to Pledge $1 Billion in Clean Energy Push

(Reuters) – IKEA Foundation, the charitable arm of the world’s biggest furniture retailer, and the Rockefeller Foundation said on Monday they plan to set up a $1-billion fund to support renewable energy programs in developing nations.

The fund, which will be launched this year, aims to reduce one billion tons of greenhouse gas emissions and empower one billion people with distributed renewable energy, the foundations said in a joint statement.

Each foundation will provide $500 million of risk capital, the Financial Times reported https://www.ft.com/content/7107cbd3-0837-46fe-8cc0-8d2cb7b5f40d, adding that they hope to attract additional funds of $10 billion this year from international development agencies, before opening up to institutional investors in their bid to expand renewables investment in countries such as India, Nigeria, and Ethiopia.

“This can be commercially viable. There’s $1 billion taking risk upfront, and that can unlock tens of billions of dollars,” the report quoted Rajiv Shah, president of the Rockefeller Foundation. “We’re not gambling here. We’ve seen it work in India. We know what it takes to become successful.”

The foundations have already signed agreements with the International Finance Corp, an organisation affiliated to the World Bank, and the U.S. International Development Finance Corp, according to the report.

IKEA aims to be climate positive by 2030, and Ingka Group — the owner of most IKEA stores — said in April it had earmarked 4 billion euros ($4.75 billion) to invest in green energy projects.

($1 = 0.8423 euros)

(Reporting by Akriti Sharma in Bengaluru; editing by Uttaresh.V)

EU Antitrust Regulators to Decide on AerCap’s $30 Billion Ge Deal by July 26

The world’s two largest aircraft leasing companies are seeking to create a new financing giant which would be the largest buyer of jetliners built by planemakers Airbus and Boeing.

The deal will reshape a global air finance industry that has attracted a flood of capital in recent years as investors look for higher returns.

AerCap requested EU approval on Friday.

The EU competition enforcer can approve the deal with or without concessions or it can open a four-month investigation if it has serious concerns.

Analysts said the scale of the combined entity, controlling about three times the number of aircraft as its nearest competitor, Dublin-based Avolon, could force AerCap to offload aircraft to meet antitrust demands.

(Reporting by Foo Yun Chee; Editing by Edmund Blair)

China Urges Banks, Alipay to Crack Down Harder on Cryptocurrencies

The People’s Bank of China’s meeting came after China’s State Council, or cabinet, last month said it would tighten restrictions on bitcoin trading and mining. Beijing has sharply ratcheted up its campaign in the last few weeks.

The PBOC urged institutions at the meeting to launch thorough checks on clients’ accounts to identify those involved in cryptocurrency transactions, and promptly cut their payment channels. It did not mention when the meeting was held.

“Speculative trading in virtual currencies roils economic and financial order, spawns the risks of criminal activities such as illegal asset transfers and money laundering, and endangers people’s wealth,” the PBOC said in a statement.

Other participants in the PBOC’s meeting included state-owned lenders Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (AgBank) and Postal Savings Bank of China.

Bitcoin’s bull run globally had revived speculative trading in China, where people buy cryptocurrencies using yuan via bank accounts or payment platforms.

Last month, three industry associations issued a ban on crypto-related financial services, but the bodies are much less powerful than the PBOC.

The PBOC said its recent meeting with financial institutions was aimed at fully implementing State Council’s crypto ban.

Bitcoin tumbled almost 10% on Monday, with market players citing jitters over China’s expanding crackdown on bitcoin mining in thin liquidity for the losses. It was last down 8.3%, on course for its biggest daily drop in a month.

KNOW YOUR CUSTOMER

The PBOC asked banks and payment companies to invest more in technologies used to better identify crypto-related transactions, and know their customers better, the central bank statement said.

After the central bank’s notice, AgBank, ICBC, CCB and Alipay vowed to execute what they were told to do.

AgBank said that it would conduct due diligence on clients to root out illegal crypto-related activities and shut down suspicious accounts.

Alipay, the ubiquitous payment platform owned by fintech giant Ant Group, said in a separate statement that it would set up a regulator monitoring system targeting key websites and accounts to detect illegal crypto-related transactions.

Alipay added it would blacklist any merchants involved in virtual currency transactions.

Alipay and Tencent-owned Wechat Pay had been listed as means of payment on the websites of some over-the-counter markets, where Chinese individuals buy cryptocurrencies with the Chinese yuan

ICBC, China’s biggest lender, cautioned the public in a statement against the risks of cryptocurrency trading and initial coin offerings (ICOs).

As China ramped up its campaign against cryptocurrencies in recent weeks, bans on cryptomining have been issued in major bitcoin mining hubs, including Sichuan, Xinjiang, and Inner Mongolia.

Cryptomining is a big business in China, which accounts for over half of global bitcoin production.

China has also blocked a slew of cryptocurrency-related social media accounts, and barred the search for major cryptocurrency exchanges such as Binance and Huobi on baidu.com and Twitter-like platform Weibo.

(Reporting by Shanghai Newsroom; Editing by Sumeet Chatterjee and Alex Richardson)

GameStop Names CEO Matt Furlong to Board

Furlong was named GameStop‘s CEO earlier this month, succeeding George Sherman who, the company said, also retired from the board.

Furlong oversaw a small but growing part of Amazon’s business as the country head for Australia, a role his LinkedIn profile said he assumed in May 2019.

GameStop has become one of the hottest and most visible “meme stocks” followed on social media after its meteoric rise in a Reddit-driven retail short squeeze that caught Wall Street off guard in January.

Top shareholder Ryan Cohen, who was made Gamestop’s chief technology office earlier in March, is driving the company’s transition into e-commerce and has been responsible for the shakeup in its top management.

(Reporting by Eva Mathews in Bengaluru; Editing by Anil D’Silva)

UK Rules Out Ditching ‘Triple Lock’ Pledge on State Pension Increases

British newspapers have reported that the government was looking at suspending the promise to increase pensions by whichever is higher of consumer price inflation, average earnings growth, or 2.5%. They said it could help pay for the cost of the government’s COVID-19 response.

“We are committed to the triple lock,” the spokesman said, when asked about the reports.

Due partly to distortions from the coronavirus pandemic, annual wages in the three months to April grew by an annual 5.6% – creating an extra 4 billion pound ($5.5 billion) annual cost for future pensions.

The promise to maintain the system for increasing pensions was in the Conservative government’s manifesto of pledges ahead of the 2019 election.

The spokesman also ruled out income tax rises. “There was a promise made at the election that we would not raise rates of income tax and when we stand by that,” he said.

(Reporting by Guy Faulconbridge; writing by Michael Holden and William James; editing by Alistair Smout)

Europe’s Wizz Air Expects to Fully Recover From Pandemic Next Year

(Fixes typo in headline, no other changes)

Speaking at the virtual Paris Air Forum, Jozsef Varadi repeated recent comments that the Hungary-based airline would fly more seats this summer than it was flying two years ago before the pandemic struck.

“From my perspective, 2022 should be a fairly robust year in terms of delivering not just the volume of traffic but also the financial performance attached to it,” he said.

“I’m looking at 2022 as a year of full recovery for Wizz Air.”

Speaking alongside Varadi, Air France-KLM CEO Ben Smith said he had been pleasantly surprised at the demand among travelers visiting friends and family.

“We are hoping to run about 60-65% of capacity this summer.”

(Reporting by Laurence Frost and Alexander Cornwell, editing by Louise Heavens)

What a Welcome US Equity Market Pullback! Fading Emotion

It was no secret that rates could not remain near-zero forever. It also is no secret that inflation has been real in the US . If you live in the US, you already know this from your day-to-day life. So, why the big fuss? Did you need someone to tell you?

I know it is painful when long positions move against a trader quickly. Nobody expected the Fed to come out with the language that appeared this week, at least not anybody that I know. I also realize that it may seem logical to sell equities as a result. But, since when does the obviously logical approach win?

So, the overnight Fed Fund rate is scheduled to begin increasing in 2023 (potentially late 2022 if you listened to Bullard on Friday). This news must mean that the Ten-year note yield had to go up, right? Nope. Down she went on Thursday and Friday; after catching a bid on Wednesday off the news.

Figure 1 – $TNX Ten-year note treasury yield February 10, 2021 – June 18, 2021, Daily Source stockcharts.com

Perhaps taking a trade like that is just too obvious; too logical. Now, will $TNX increase over time? Most likely it will, but 2023 is a long time from now. We have to wait and see how the new information is digested by the market and go from there.

Can we look to apply similar logic to the S&P 500? For that question, I would like to refer back to the May 12th publication where we discussed $SPX pullbacks to the 50-day simple moving average.

From May 12th:

  • $SPX found support around the 50-day moving average on 2 of its last 3 attempts.
  • When $SPX broke the 50-day on 1 of the last 3 attempts, it traded below it for 2 sessions.
  • When $SPX broke the 50-day in September 2020 & October 2020, it closed below it between 7 – 9 sessions.

Let’s keep in mind that the $SPX traded to the 50-day SMA on May 12th and May 19th, and is now below the 50-day SMA as I write this.

Today, for the SPY ETF traders out there, let’s take a fresh look at recent pullbacks.

Figure 2 – SPDR S&P 500 ETF December 04, 2020 – June 18, 2021, Daily Candles Source stockcharts.com

Can the previous price action near the 50-day SMA give us any clues about what could happen this time? Well, we have the 50-day SMA, and we also have the 414.15 50% Fibonacci retracement level and the 411.79 key 61.8% retracement level. We have been waiting for such a pullback and I don’t think the recent Fedspeak is any reason to negate consideration of buying pullbacks. I know it seems somewhat illogical; that’s why I like it even more.

Keep in mind that such pullbacks to certain price levels could take place in the overnight futures sessions. In that case, ETF traders may not get the exact price they are looking for if markets reverse to the upside during NY trading hours. At least this gives us some levels to consider.

Why I Welcome this Pullback So Much

If you have been following along and are a premium subscriber, you know that I have been waiting for pullback opportunities across many markets. In fact, out of the eight markets that I am covering, I have been waiting for pullback opportunities in six of them . The current price action and additional downside momentum could give us the opportunities that we have been patiently waiting for in several ETFs.

Now, for our premium subscribers, we have a lot to cover. As we approach potentially key levels that we have been waiting for with patience and discipline, a plan is required. There are buy idea levels that could be triggered soon and were very close to triggering on Friday. Not a Premium subscriber yet? Go Premium and receive my Stock Trading Alerts that include the full analysis and key price levels.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Rafael Zorabedian
Stock Trading Strategist

Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

This content is for informational and analytical purposes only. All essays, research, and information found above represent analyses and opinions of Rafael Zorabedian, and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. You should not construe any such information or other material as investment, financial, or other advice. Nothing contained in this article constitutes a recommendation, endorsement to buy or sell any security or futures contract. Any references to any particular securities or futures contracts are for example and informational purposes only. Seek a licensed professional for investment advice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Information is from sources believed to be reliable; but its accuracy, completeness, and interpretation are not guaranteed. Although the information provided above is based on careful research and sources that are believed to be accurate, Rafael Zorabedian, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. Mr. Zorabedian is not a Registered Investment Advisor. By reading Rafael Zorabedian’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Trading, including technical trading, is speculative and high-risk. There is a substantial risk of loss involved in trading, and it is not suitable for everyone. Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment when trading futures, foreign currencies, margined securities, shorting securities, and trading options. Risk capital is money that can be lost without jeopardizing one’s financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Rafael Zorabedian, Sunshine Profits’ employees, affiliates, as well as members of their families may have a short or long position in any securities, futures contracts, options or other financial instruments including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice. Past performance is not indicative of future results. There is a risk of loss in trading.

 

Octafx Ups the Leverage in Its Cryptocurrency Pairs Despite Stark Market Fluctuations

Two vivid and steep bitcoin corrections recently made the whole altcoin market plummet right down with it. Nevertheless, at the beginning of May, the hopes were still high after bitcoin had reached its new all-time high of over 60,000 USD in mid-April 2021.

All parties involved consider the first collapse from mid-May onwards as the harshest market crash since the infamous March 2020 fallout. Although the second correction also claimed many trading casualties, it was the first one that caught almost everybody off-guard. At the time of this writing, bitcoin is hovering around 36,000 USD.

Allegedly, insiders floated around Reddit and several other internet forums days before the crash began, in which they sought to make a credible case for an orchestrated market manipulation soon to shake retail investors and traders out of their positions, active orders, or spot bags. As a result of this disruption, many lost tremendous amounts of money, and the market’s fear index had reached record highs.

Tech-millionaire Elon Musk garners some love and much hate as he tweets along, making the public impression of having complete control over the crypto sphere, as well as bitcoin as its prime currency. Time will tell if this simple explanation amounts to anything. Perhaps, it is instead a collective effort of anonymous whales and institutional players, trying to salvage the best market conditions to position themselves long-term in the new infrastructure of future finance to come.

OctaFX decides to accommodate customer demand

Amid these historical fluctuations in the Bitcoin and altcoin markets, OctaFX decided to accommodate its clients with a leverage update:

The fintech company raised the leverage for all its cryptocurrency pairs from 1:10 to 1:25.

As a friendly reminder, the most-traded cryptocurrencies at OctaFX, ranked by popularity, are:

  • BTCUSD (Bitcoin/U.S. dollar)
  • XRPUSD (Ripple/U.S. dollar)
  • ETHUSD (Ethereum/U.S. dollar)
  • LTCUSD (Litecoin/U.S. dollar)
  • BCHUSD (Bitcoin Cash/U.S. dollar)

OctaFX decided upon meeting this customer demand after carefully analysing the client sentiment and attentively reviewing client communications.


OctaFX is a global Forex broker that provides online trading services worldwide since 2011. It offers a state-of-the-art trading experience to over 7 million trading accounts worldwide. The company is well-known for its prodigious IB program. Regularly engaged in charity activity, the broker takes its social responsibility very seriously. OctaFX has won more than 40 awards since its foundation, including the ‘Best ECN Broker 2020’ award from World Finance and, more recently, the 2021 ‘Decade of Excellence in Forex Asia’ award and the 2020 ‘Most Transparent Broker’ award from Global Banking & Finance Review and Forex Awards, respectively.

Stocks clamber up from 4-week lows, dollar eases from 10-week high

By Ritvik Carvalho

LONDON (Reuters) – Global stocks recovered some losses after hitting a four-week low on Monday as investors continued to digest last week’s surprise hawkish shift by the U.S. Federal Reserve, while the dollar stood just below a 10-week high.

Shares of banks, energy firms and other companies that tend to be sensitive to the economy’s fluctuations have fallen sharply since the Fed’s meeting on Wednesday, when the central bank caught investors off guard by anticipating two quarter-percentage-point rate increases in 2023.

Stocks in Asia took their cue from Wall Street’s falls on Friday but European shares bucked the trend, with the pan-European STOXX 600 index up 0.2% by afternoon trade in London. [.EU]

U.S. stock futures also moved firmly into positive territory, suggesting gains at the open on Wall Street later in the day. S&P 500 E-mini futures were up [.N]

“The interesting part about this correction is that it was lagged, so it took a while for the market to sort through the news,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.

“The situation in reality is actually pretty good – the Fed is stabilizing inflation…Cyclical sectors may have overshot the market in the short term and so you may have a bit of pressure on the sector.”

Britain’s FTSE 100 was down 0.1%, France’s CAC 40 index gained 0.3% and Spain’s IBEX 35 fell 0.3%. Germany’s DAX was up nearly half a percent, while Italy’s FTSE MIB index rose 0.2%.

MSCI’s All Country World Index, which tracks shares across 49 countries, was down 0.2%, trimming some losses after hitting its lowest since May 24.

Benchmark 10-year U.S. Treasury yields recovered to 1.4414% after falling to their lowest since Feb. 24 at 1.3540%.

The yield curve – measured by the spread between two- and 30-year yields – earlier hit its flattest since late January, and as investors brought forward rate hike expectations while lowering the longer-term outlook for growth and inflation.

The U.S. dollar index hovered just below the 10-week high of 92.408 touched on Friday, following its biggest weekly advance in more than a year.

“Last week’s dollar rally is a combination of expectations and positioning (sold dollars), a concern that the Fed is ‘behind the curve’ (and therefore must do more and earlier than expected), and that stock markets have started to lose ground which makes the dollar strengthen as the most defensive currency,” Filip Carlsson, junior quantitative strategist at SEB, said in a morning note.

“We still see this as a correction and not the beginning of a new trend.”

St. Louis Fed President James Bullard further fuelled the sell-off on Friday by saying the shift toward faster policy tightening was a “natural” response to economic growth and particularly inflation moving quicker than anticipated as the country reopens from the coronavirus pandemic.

“The Fed’s pivot to begin the tightening discussion caught most by surprise, but markets began discounting this inevitable process months ago in our view,” Morgan Stanley analysts wrote in a report.

“It’s exactly what the mid-cycle transition is all about, and fits nicely with our narrative for choppier equity markets and a 10-20% correction for the broader indices this year.”

Earlier in Asia, Japan’s Nikkei led declines with a 3.6% drop and dipped below 28,000 for the first time in a month, while MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.4%. Chinese blue chips lost 0.7%.

Several Fed officials have speaking duties this week, including Chair Jerome Powell, who testifies before Congress on Tuesday. European Central Bank President Christine Lagarde speaks before the European Parliament on Monday.

The euro traded above its lowest against the dollar since April 6 at $1.1896 on Monday, dropping from as high as $1.21457 last Tuesday.

Sterling recovered some ground, to trade 0.6% higher at $1.3880 after sliding to its lowest since April 16 on Friday. [GBP/]

Commodity-linked currencies have also suffered, with the Australian dollar hovering above a six-month low at $0.7495.

A stronger greenback has pressured cryptocurrencies too, with bitcoin falling 10% to around $31,930, while smaller rival ether lost 15% to around $1,903.

In commodities, gold rebounded 1.1% to $1,783 an ounce on Monday, looking to snap a six-day losing streak, but remained near the lowest since early May.

Three-month copper on the London Metal Exchange fell to its lowest since April 15, following an 8.6% drop last week, the biggest weekly fall since March 2020.

Crude oil rose for a second day, underpinned by strong demand during the summer driving season and a pause in talks to revive the Iran nuclear deal that could indicate a delay in resumption of supplies from the OPEC producer.

Brent crude futures rose 0.1% to $73.56 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 0.1% to $71.74 a barrel.

(Reporting by Ritvik Carvalho; Additional reporting by Kevin Buckland in Tokyo; Editing by Catherine Evans and Peter Graff)