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Dagelijkse Markt Analyse 11 Januari 2019
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- A Bitcoin-style digital currency is being actively investigated by the UK central bank.
- A new level of legitimacy but how will Bitcoin compare to a central bank digital token?
Bank of England Cryptocurrency Research Continues Apace
The Bank of England's (BoE) multi-year research program into the implications of a central bank backed digital currency could add another layer of respectability to the cryptocurrency space but may have other implications for market heavyweight Bitcoin (BTC).
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- GBP/USD is nearing levels last seen in June 2016 and may push higher in the short-term.
- Sterling positioning data points to GBP/USD rallying further.
GBP/USD has started the year in robust fashion and looks set to continue its positive run. The current lull in Brexit commentary is helping Sterling to push higher as negative headlines disappear, while in the US the Trump tax cuts are not seen as a driving force behind higher interest rates. Today’s FOMC minutes may give greater clarity to the Fed’s intentions in the short-term.
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- Altcoin valuations are surging as investors move into low cash price cryptocurrencies.
- Ripple (XRP) is now eyeing a place in the top 50 most valuable companies in the world list.
Altcoins Surge Leaving Bitcoin’s Place as the Market Leader under Pressure
A range of altcoins – Bitcoin (BTC) alternatives – continue to post daily double-digit gains, sending their market valuations soaring. And a look at the most popular coins show that investors are buying on price as much as on company specifics, hoping to find the next company that jumps from a few cents to tens of thousands of US dollars.
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- EUR/USD may come under pressure after weak inflation data, while US payroll data looms large.
- Client sentiment data provides a bullish impulse for EUR/USD.
Euro-Zone inflation slipped lower in the final month of 2017, increasing the pressure on the central bank to keep its monetary policy looser for longer. December Euro-Zone CPI fell to 1.4% from a prior 1.5%, once again missing the ECB’s mandate of close to or around 2%. Core inflation was 1.1%.
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• Aussie Dollar corrects lower as speculative net-short positioning swells
• Canadian Dollar continues to build higher after blockbuster jobs report
• US Dollar might find a bit of a lifeline in comments from Fed officials
The Australian Dollar underperformed in Asia Pacific trade, falling against all of its top currency counterparts. A singular catalyst for the shift was not readily apparent, hinting it may have been corrective after recent gains. CFTC data showing speculative futures positioning at its most net-short in 11 months may have offered some encouragement.
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• Yen pops as BOJ trims bond uptake but gains may quickly fizzle
• Aussie Dollar back on the offensive as building approvals soar
• Euro, Franc unlikely to see fireworks after incoming data flow
The Japanese Yen led the way higher in Asia Pacific trade, rising against all of its major currency peers after the Bank of Japan soaked up a smaller amount of local government bonds than in its previous buying operation. That spooked traders ever watchful for signs of stimulus withdrawal.
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• Japanese Yen extends gains as risk aversion amplifies BOJ-inspired surge
• FTSE 100, S&P 500 futures warn against assuming anti-risk follow-through
• Lackluster data docket might make for elevated sensitivity to headline flow
The Japanese Yen led the way higher for a second day in Asia Pacific trade. The currency has been pushing higher since an unusually timid round of bond-buying from the Bank of Japan sparked speculation about stimulus withdrawal by stealth. A sour mood on local stock exchanges probably helped as well, amplifying the appeal of the perennially anti-risk currency.
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• Euro may fall as ECB minutes cool bets on QE cutback
• BOE financial conditions surveys unlikely to boost Pound
• Aussie Dollar gains on retail sales data, Yen pulls back
ECB monetary policy meeting minutes headline the economic calendar in European trading hours. Markets are scouring for signs of stimulus withdrawal across the G10 space – as amply demonstrated in the Yen’s reaction to standard fluctuation in BOJ bond uptake – and any commentary suggesting Mario Draghi and company may alter the path of QE purchases faster than advertised will likely drive Euro volatility.
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- German coalition breakthrough sends EUR/USD soaring.
- The rally comes a day after hawkish ECB minutes hint that central bank guidance could be moved forward.
A breakthrough in German coalition talks has sent EUR/USD spinning higher, hitting levels last seen at the end of 2014, as investors take a positive view on renewed German stability after last September’s inconclusive elections cast a shadow over the single currency. And in further good news for the Euro-Zone, the coalition said that it will commit to strengthening the single-bloc alongside France and boost the German contribution to the EU budget.
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- GBPUSD trades at highs last seen on Brexit day as the US dollar slumps.
- The European Union Withdrawal Bill – Brexit Bill - will be debated in the House of Commons this week.
GBPUSD Continues to Push Ahead, Aided by a Weak US Dollar
The British Pound rally continues apace, especially against a weak US dollar, aided in part by slightly more positive Brexit talk coming out of Europe. At the end of last week Dutch and Spanish officials both made it known that they would like a ‘soft’ Brexit, to help keep the UK onside in the upcoming trade agreements.
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- Inflation turns lower as air fares and recreational goods fall.
- GBPUSD gives back some of its recent gains but remains supported by positive Brexit sentiment.
UK Inflation Data Falls for the First Time in Six Months
Headline UK inflation rose to 0.4% from 0.3% on a monthly basis as widely expected, but annual inflation fell to a six-month low of 3.0% from 3.1% in November. Core annual UK inflation – headline minus food and energy prices – also fell to 2.5% from 2.7% in November.
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- Fundamental, technical and political factors all suggest that EURUSD may slip back near-term.
- Longer-term, further strength is likely.
EURUSD climbed steadily throughout 2017 and that advance has continued into the early days of 2018, with the pair reaching a three-year high. However, it may be due for a correction lower before its advance resumes.
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• Massive sell-off in cryptocurrencies met by sharp reversal days; prior swoons met by buying
• But if buyers don’t come in and we soon see a failure, change in character in progress
• Bitcoin, Ethereum, and Ripple charts with price levels and lines
In yesterday’s cryptocurrency technical outlook, we expressed the notion that the charts may be broken and that the ‘animal spirits’ of the manic rise may have finally broken. But even if so, as we also stated there will be huge bounces along the way.
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- U. of Michigan Confidence Survey to Increase for First Time Since October.
- 12-Month Inflation Expectations Currently Sit at 2.7%- Highest Reading for All of 2017.
A meaning rebound in the U. of Michigan Confidence survey may fuel the recent series of lower highs & lows in EUR/USD as it encourages the Federal Open Market Committee (FOMC) to further normalize monetary policy over the coming months.
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- EUR/GBP may push higher if the ECB gives even a modest hint of ending QE.
- Data releases and a potential German coalition deal may boost the single currency.
EUR/GBP is likely to remain stuck in a range ahead of the latest European Central Bank (ECB) monetary policy announcement with investors keeping a close eye on the accompanying statement for any signals that the central bank may give on the current bond buying program (QE).
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• Gold prices rise as US Dollar selling resumes after gov’t shutdown ends
• Crude oil prices push upward after major US refiner files for bankruptcy
Gold prices rose as lawmakers reached a deal ending the US government shutdown. The stopgap measure will allow for full operations to resume through February 8. The disruption amounted to just one working day, which is probably not enough to meaningfully derail US or global growth momentum. That breathed new life into the “reach for yield” narrative and hurt the US Dollar, boosting the yellow metal by extension.
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• Cryptocurrencies are in 'retest' mode, hold or fold?
• Bitcoin testing trend-line again, a failure here puts a drop below 9222 in focus
• Ethereum & Ripple aren’t at support levels, but still need to hold soon, or else…
We are nearing a point in time which looks like it’s ‘hold or fold’ time for the group. Last week’s plunge and reversals were extremely fierce, indicating a significant inflection point. The modest weakness we’ve seen in recent days could simply be a retest (a common occurrence at meaningful turning points), and if the case, then we should see the group firm up and turn up.
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- The ECB meeting this week won’t produce any substantive change in policy, although the press conference could bring dovish commentary from President Mario Draghi.
- Euro strength has become a concern for policymakers in recent weeks, and its nearly 5% above the ECB’s 2017 year-end expectation of 1.1700.
The Euro’s hot streak versus the US Dollar finally started to cool off last week, with the pair slipping back by -0.16% despite the US government being on the precipice of a shutdown. But gains were still widespread elsewhere, with five of the seven major EUR-crosses turning in positive performances over the past five days: EUR/AUD added +0.82% and EUR/GBP gained +0.78%.
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- U.S. 4Q Gross Domestic Product (GDP) to Grow Annualized 3.0%.
- Core Personal Consumption Expenditure (PCE) to Climb 1.9% per Annum.
The advance 4Q U.S. Gross Domestic Product (GDP) report may generate headwinds for the greenback as the update is expected to show a small slowdown in the growth rate.
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• Gold prices in digestion mode, chart setup warns of downturn ahead
• Crude oil prices rise with stocks on US durables data, Trump speech
Gold prices marked time on Friday as markets digested a drop inspired, a move inspired by comments from President Donald Trump. He voiced support for a strong US Dollar, driving the benchmark currency upward and punishing the standby anti-fiat alternative by extension. The remarks contradicted Treasury Secretary Steven Mnuchin, who seemed to praise depreciation as a boost for exports.
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