With the Dow and DAX indexes at all time highs there has never been a better time to start playing the markets on Tiql. Will traders go long in the hope it continues or go short on the chance the bubble’s bursting?
Analysts have a mixed view of the markets as we start the week. For those new to this kind of market, the Dow Jones Industrial Average (DJIA), aka the Dow, is an important index people watch to get an idea about how the overall stock market is doing. It looks at the stocks of 30 different key US companies to see how they’re doing. The Dax index does the same for German companies.
Closing last week the Dow stood at 21394.76 going into the weekend. Gold has dropped 1% since the global trading week opened as analysts look ahead to the big banking speeches and traders move away from safe havens giving us an indication of rising markets. The Dax hit a record high last Tuesday as the eurozone looks stronger with positive market news across the week.
It’s an exciting time to have a go at Tiql’s newest games!
Most weeks there isn’t a speech in sight and now we know why. The heads of various banks around the world have ganged up to deliver a record 7 speeches in one week. Currency traders are in for a volatile ride.
European Central Bank President Draghi tops the bill with three speeches this week.
You have to wonder what he will have left to say by Wednesday but all three events are at the European Central Bank forum on Central Banking in Portugal. You could say he’s getting dinner, breakfast and lunch out of it.
Over in the UK, Bank of England Governor Mark Carney is due to speak twice (Tuesday 11am GMT and Wednesday 2.30pm). He will be taking questions at a press conference on Tuesday after the release at 10.30am GMT of the BoE Financial Stability report. There have been murmurs about a rate rise so markets will be watching closely. Then he’s joining Draghi for the panel lunch at 2.30pm on Wednesday 28th.
Federal Chair Yellen gets in on the act on Tuesday at 6pm GMT talking about global economic issues in London, while Japanese BoJ Governor Kuroda is on the panel discussion on Wednesday at 2.30pm.
When PM May called the election eight weeks ago she had an enormous majority in the polls and was trying to capitalise on it. It takes quite a feat of bad management to reduce that to a hung parliament. But that’s exactly what’s happened and the uncertainty has caused no end of problems for GBP.
The once great currency is looking decidedly rocky so there is little hope BoE governor Carney can fix it when he speaks at the Mansion House tomorrow. Slightly confusingly it has been rescheduled to a breakfast speech at 8.30am but is still being called a dinner speech. The recent murmurs caused by 3 votes for a rate rise after poor economic performance and rising inflation will lead to traders and analysts looking for any clue on timescale. Some pundits are suggesting it’s very much a case now of when, not if, the rate will change.
Increased US oil drilling is pushing oil prices towards $45 despite last week’s reduction in Crude Oil Inventories. Will we see further reductions attempting to shore up the price on Wednesday 21st at 3.30pm GMT?
OPEC’s recent agreement to keep supply limited won’t do much good if other producers step into the breech. You’ve got to wonder what the Trump administration thinks will happen long-term. Some markets like China are increasing oil consumption, but this may be more about playing to the domestic consumers and manufacturers than anything international. What is Joe Public going to think when he can fill his gas-guzzling SUV for less than he did last year? It’s a Trump-tastic move.
Just don’t mention water supply pollution on Indian reservations, or maybe stick your fingers in your ears and shut your eyes singing la-la-la. You never know, that might work. Either which way, oil prices have as good a chance of going down as up right now. OPEC will not be happy.
Politics are having a field day with the value of GBP. Last week’s snap election saw the currency plummet against the dollar and the hung parliament result didn’t help.
No clear winner and no clear Brexit mandate means markets are cautious about investing when everything could easily change again soon. At the moment, this is a currency for those who like a little risk in their day.
GBP movement can be expected on Thursday 15th when the BoE announces its bank rate decision. BoE Governor Carney is speaking at 9pm GMT on 15th to add a little more turbulence. Enjoy the ride, everyone.
The big headlines for currency traders this week are the rate statements from the UK, the USA and Japan. The king of these is, of course, the dollar rate decision on Thursday 14th June at 7pm GMT.
At the start of the year the big news was three rate rises for the dollar in the year ahead. We’ve had one but it’s June now and unless Yellen changes her mind, as every girl can, it looks reasonably likely we could expect a change on Thursday. The problem is the slower than expected Q1 growth figures.
Some analysts are arguing that short-term traders should bear in mind the position of others who will sell if rates rises, which could actually push the dollar down temporarily.
UK bank rates look set to stay the same at 0.25%. Let’s face it after last Thursday’s hung parliament and May’s steely grip on power, the BoE isn’t likely to want to rock the boat in any way whatsoever. The beleaguered GBP currency has enough to deal with.
And if you like something a little different take a look over the pond at Japan whose central bank meets on Friday 16th. Expect announcements at the 7.30am GMT Press Conference to make things interesting.
BTCUSD has been climbing the page and has surged in trading this week to over $2900. What has been driving the demand for Bitcoin recently? Here are some reasons for Bitcoins dramatic rise and some interesting trading levels as we go into the next trading week.
Japan Legalises Bitcoin
Japan legalised the cryptocurrency as a payment method recently and this has led to a greater amount of bitcoin being bought with yen, which is helping to support the price. The legalisation of Bitcoin in Japan was supported by some of the big retailers who have begun accepting Bitcoin for purchases. With the new law’s implementation, Bitcoin exchanges will a be required to meet strict anti-money laundering guidelines and have yearly audits. Achieving this level of compliance may be a challenge for some exchanges there. Following the Japanese move, South Korea are considering introducing regulations on Bitcoin this year.
The legalisation has led to Japan’s bitcoin trading volumes overtaking that of the U.S. and China. Bitcoin trading in Japanese Yen is now the second-most liquid market globally.
Russia Moves To Legitimise The Cryptocurrency
Russia, one of the strongest opponents of bitcoin is seeking to regulate the digital currency. The authorities there hope to recognise bitcoin and other cryptocurrencies in 2018 as they seek to enforce rules against illegal transfers.
Interest from Asia and Exchange Trading Resumes in China.
Investing in Bitcoin in Asia is popular and there is huge demand from Asian countries. Trading on China’s Bitcoin exchanges has resumed as a four month long withdrawal freeze came to an end at the start of June.
Europe: Exchange Traded Notes in Bitcoin.
The Winklevoss brothers proposed an exchange-traded fund (ETF), which would have allowed large institutional investors to gain exposure to Bitcoin. The Securities and Exchange Commission (SEC) rejected the application twice so far. The SEC has taken comments on the decision but has not come back with an additional ruling. We are possibly a ways off from regulatory approval in the US for a Bitcoin ETF; a ETF would give further credability to Bitcoin and attract institutional investors into Bitcoin.
In Europe, however, there are Bitcoin based investment products offered from exchanges, called Exchange Traded Notes(ETN). One ETN provider is now offering products through a high street UK broker; UK investors will be able to purchase Bitcoin ETN related shares for their pension and trading accounts.
Global Geopolitical and Financial Risk.
Its a mad world and Bitcoin behaves a bit like gold when things get risky: it attracts buyers! With the potential slowdown of China, Brexit, Trump and the geopolitical risk of North Korea; its no wonder that investors are looking to allocate their money in alternative markets which they think might be safe if things get a little edgy!
There are some headwinds however..
There is a scaling issue to be fixed.
The price of Bitcoin transactions have been rising and transactions can be too slow for bricks and mortar retail.
US regulators are confused about that status of Bitcoin; its is viewed as a form of property by the US Revenue, a commodity by the Commodity and Futures Trading Commission and the Treasure as a currency.
Nobody really knows why Bitcoin has been climbing the page so steadily but for right now and for whatever reason, the bulls have the ball. Bitcoin is up over 172% this year.
The upcoming UK election on Thursday 8th June announced by Prime Minister Theresa May is hanging over every GBP trade this week. Most pundits believe the sitting Conservative government will win, but no-one has forgotten the effect of the surprise Brexit and US Presidential results and the mood is cautious.
Many feel this is no time to take risks so safe havens gold and Bitcoin have seen boosts as traders look elsewhere for returns on their investments.
All eyes are on cable (GBPUSD) this week as we go into the elections on Thursday. Cable is sitting on well defended support presently and the recent highs may have some sell orders. For now, traders are trading the edges on this pair with support near 1.2780 and resistance at 1.3040. Keep an eye on this market as Friday’s election results approach, any surprises and this pair will move.
The elections are also affecting EUD and USD so keep the fickle British public in mind as you make your plays for those currencies this week.
There are murmurs and whispers in the ECB corridors of power that, while Thursday’s ECB Minimum Bid Rate is likely to stay low, there may be signs that the current bond-buying policy could start to slow down later in the year. With opposing pressures between weaker economies and Germany’s domestic market, nothing will happen quickly but any change in the official line will be pounced on as Draghi takes credit for the upswing in the Eurozone economy.
The ECB Press Conference at 1.30pm GMT will have traders ready to act as journalists press officials for more information. Whether or not they agree that cutting back bond-buying is the right strategy remains to be seen.
EURUSD is at a significant resistance zone with previous chart structure and the 161 ABCD pattern completing into 1.1280. Drilling down into the lower time frames, there is possibly intermediate support at 1.1235 and a possible stronger case for support at 1.12 which has the half way back and the completion of an equidistant swing nearby.
Casting its shadow over the EUR is the UK elections also on Thursday 8th. Results won’t be in until the early hours of Friday but with strikingly different attitudes towards Brexit negotiations between the two main parties, currency traders will be watching the exit polls all day.