#Crypto market capitalisation changed little at the end of trading on Wednesday, remaining close to $1.59 trillion (-0.14% d/d). But this modest result is a show of strength, given the pressure in equity markets, which intensified selling in #Bitcoin and #Ethereum.
Meanwhile, Altcoins got their chance to catch up with the leaders. For example, XRP added 2% in 24h) and #Cardano added 4%.
#XRP has formed an upward trend since mid-October. An attempt to accelerate growth last month failed, but it also failed to break this line at the start of December. In addition to the trend line, the 50-day moving average, the touch of which stops the sell-off for the last 50 days, also turned out to be on the side of buyers.
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Meanwhile, Altcoins got their chance to catch up with the leaders. For example, XRP added 2% in 24h) and #Cardano added 4%.
#XRP has formed an upward trend since mid-October. An attempt to accelerate growth last month failed, but it also failed to break this line at the start of December. In addition to the trend line, the 50-day moving average, the touch of which stops the sell-off for the last 50 days, also turned out to be on the side of buyers.
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#JPY was the hero of the day on Thursday, adding over 1.7% vs USD and 1.6% vs EUR. The yen has been sided by Japan's regional banks, which are rumoured to be lobbying for the abandonment of the yield targeting policy. USDJPY dipped below 145, and EURJPY fell under 156.
Simultaneously, markets are laying that Fed and ECB rates have reached a plateau, and the next step will be to lower them. The logical outcome of this divergence is an accelerated narrowing of yield spreads between Japanese and other G7 economies bonds, bringing capital back into the yen.
Yen appreciation has been on a steady course since early November, a couple of weeks after the peak in US 10-year yields, when markets became convinced that their decline had become a trend.
Also, the yen may work the cautious mood of the stock markets in recent days. The yen is very often used as a funding currency to buy risky assets. The shift of market sentiment to profit-taking on major indices triggered a predictable deleveraging.
Simultaneously, markets are laying that Fed and ECB rates have reached a plateau, and the next step will be to lower them. The logical outcome of this divergence is an accelerated narrowing of yield spreads between Japanese and other G7 economies bonds, bringing capital back into the yen.
Yen appreciation has been on a steady course since early November, a couple of weeks after the peak in US 10-year yields, when markets became convinced that their decline had become a trend.
Also, the yen may work the cautious mood of the stock markets in recent days. The yen is very often used as a funding currency to buy risky assets. The shift of market sentiment to profit-taking on major indices triggered a predictable deleveraging.
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#WaveAnalysis
#GBPCHF reversed from support level 1.1000
Likely to rise to resistance level 1.1125
GBPCHF recently reversed up from the round support level 1.1000, lower boundary of the sideways price range inside which the pair has been trading from the start of November.
The support level 1.1000 was strengthened by the lower daily Bollinger Band and by the 38.2% Fibonacci correction of the upward impulse from October.
Given the strength of the support level 1.1000, GBPCHF currency pair can be expected to rise further to the next resistance level 1.1125 (upper boundary of the active sideways price range).
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#GBPCHF reversed from support level 1.1000
Likely to rise to resistance level 1.1125
GBPCHF recently reversed up from the round support level 1.1000, lower boundary of the sideways price range inside which the pair has been trading from the start of November.
The support level 1.1000 was strengthened by the lower daily Bollinger Band and by the 38.2% Fibonacci correction of the upward impulse from October.
Given the strength of the support level 1.1000, GBPCHF currency pair can be expected to rise further to the next resistance level 1.1125 (upper boundary of the active sideways price range).
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#WaveAnalysis
#EURNZD reversed from support level 1.7530
Likely to rise to resistance level 1.7800
EURNZD recently reversed up from the strong support level 1.7530, which has been steadily reversing the pair from the middle of January.
The support level 1.7530 was strengthened by the lower daily Bollinger Band.
Given the strength of the support level 0.9420 and the oversold daily Stochastic, EURNZD can be expected to rise further to the next resistance level 1.7800.
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#EURNZD reversed from support level 1.7530
Likely to rise to resistance level 1.7800
EURNZD recently reversed up from the strong support level 1.7530, which has been steadily reversing the pair from the middle of January.
The support level 1.7530 was strengthened by the lower daily Bollinger Band.
Given the strength of the support level 0.9420 and the oversold daily Stochastic, EURNZD can be expected to rise further to the next resistance level 1.7800.
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A wave of profit-taking hit the crypto market on Monday morning. It seems that the failure of cryptocurrencies to rise over the weekend caused players to pull stop orders very close to market prices, and we saw a massive exit from long positions in low liquidity before the regular session in Asia. Strong demand for risk assets in traditional markets suggests that the market will try to get back on its previous growth track.
Bitcoin started the day at $43.8K, soon fell to $40.7K, and then stabilised at $42.1K, losing 4% since the start of the day. In our view, the uptrend will remain in force if Bitcoin manages to hold above $40K.
The sudden sell-off proved even harder for altcoins. At one point, Ethereum was losing over 9%, XRP was losing over 10%, Solana collapsed by 13%, and Cardano lost 14%. The largest altcoins have already recovered about half of those losses. The sell-off attracted buyers who were waiting for lower prices to enter the market, and the market gave them that chance.
Bitcoin started the day at $43.8K, soon fell to $40.7K, and then stabilised at $42.1K, losing 4% since the start of the day. In our view, the uptrend will remain in force if Bitcoin manages to hold above $40K.
The sudden sell-off proved even harder for altcoins. At one point, Ethereum was losing over 9%, XRP was losing over 10%, Solana collapsed by 13%, and Cardano lost 14%. The largest altcoins have already recovered about half of those losses. The sell-off attracted buyers who were waiting for lower prices to enter the market, and the market gave them that chance.
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Consumer prices in China accelerated their decline in November, losing 0.5% yoy vs. 0.2% yoy expected and the same amount a month earlier.
Producer prices also intensified their decline, losing 3.0% y/y vs -2.6% previously and a softer-than-expected -2.8%. PPI has been in negative territory for the past 13 months, also losing 1.3% y/y in November 2022.
The weakness in consumer prices has brought the markets' focus back to the health of the national economy and led analysts to suggest that consumers are choosing to save. This is a negative signal for markets, which had hoped that domestic consumption in China would be a growth driver in the face of waning external demand.
Low inflation is a negative for the local currency for the following reasons. First, falling consumer prices point to problems with domestic demand, indicating room for stimulus. Second, the intensified fall in producer prices also hints at sales problems of the "global factory".
Producer prices also intensified their decline, losing 3.0% y/y vs -2.6% previously and a softer-than-expected -2.8%. PPI has been in negative territory for the past 13 months, also losing 1.3% y/y in November 2022.
The weakness in consumer prices has brought the markets' focus back to the health of the national economy and led analysts to suggest that consumers are choosing to save. This is a negative signal for markets, which had hoped that domestic consumption in China would be a growth driver in the face of waning external demand.
Low inflation is a negative for the local currency for the following reasons. First, falling consumer prices point to problems with domestic demand, indicating room for stimulus. Second, the intensified fall in producer prices also hints at sales problems of the "global factory".
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A weaker yuan for China would be an attempt to address several issues at once, from improving the competitiveness of Chinese exports to trying to boost retail sales by encouraging Chinese to spend now rather than save.
The USDCNH exchange rate approached as close as 7.20 on Monday, playing off the weakness in inflation and the general dollar trend that prevailed on Monday. In addition, the pair's ability to quickly move back into territory above the 200-day average and begin to recover from a local oversold condition should be considered a bullish signal for the pair.
The pair's ability to consolidate above 7.20 would be an indication that we are seeing more than a correction from the decline. If this is the case, the road to 7.26 potentially opens up, and beyond that, possibly to all-time highs above 7.36.
The USDCNH exchange rate approached as close as 7.20 on Monday, playing off the weakness in inflation and the general dollar trend that prevailed on Monday. In addition, the pair's ability to quickly move back into territory above the 200-day average and begin to recover from a local oversold condition should be considered a bullish signal for the pair.
The pair's ability to consolidate above 7.20 would be an indication that we are seeing more than a correction from the decline. If this is the case, the road to 7.26 potentially opens up, and beyond that, possibly to all-time highs above 7.36.
#WaveAnalysis
#Nasdaq100 broke resistance level 16000
Likely to rise to resistance level 16500
Nasdaq-100 index recently under the bullish pressure after the price broke above the round resistance level 16000, which stopped the weekly uptrend earlier this year, as can be seen below.
The breakout of the resistance level 16000 accelerated the active intermediate impulse wave (3) .
Given the strong uptrend from the start of this year, Nasdaq-100 index can be expected to rise further to the next resistance level 16500 (which started the weekly downtrend at the end of 2021).
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#Nasdaq100 broke resistance level 16000
Likely to rise to resistance level 16500
Nasdaq-100 index recently under the bullish pressure after the price broke above the round resistance level 16000, which stopped the weekly uptrend earlier this year, as can be seen below.
The breakout of the resistance level 16000 accelerated the active intermediate impulse wave (3) .
Given the strong uptrend from the start of this year, Nasdaq-100 index can be expected to rise further to the next resistance level 16500 (which started the weekly downtrend at the end of 2021).
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#WaveAnalysis
#CHFJPY reversed from support level 162.40
Likely to rise to resistance level 167.35
CHFJPY recently reversed up sharply from the key support level 162.40, which has been reversing the pair from the start of August.
The upward reversal from the support level 162.40 created the daily Japanese candlesticks reversal pattern Long legged Doji.
Given the strong daily uptrend, CHFJPY currency pair can be expected to rise further to the next resistance level 167.35 (former support from the end of November).
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#CHFJPY reversed from support level 162.40
Likely to rise to resistance level 167.35
CHFJPY recently reversed up sharply from the key support level 162.40, which has been reversing the pair from the start of August.
The upward reversal from the support level 162.40 created the daily Japanese candlesticks reversal pattern Long legged Doji.
Given the strong daily uptrend, CHFJPY currency pair can be expected to rise further to the next resistance level 167.35 (former support from the end of November).
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The UK labour market is cooling, showing an increase in claims from claimants. In addition, wage growth is slowing. The data provided further evidence that the UK economy has moved into a new phase of the economic cycle, although the inflation genie remains at large.
In November, the number of people receiving benefits rose by 16K to 1575K - the highest since April 2022. The UK labour market is cutting jobs more actively, a reversal after a plateau between September last year and February this year.
On the one hand, the Bank of England has seen slowing inflation and there are growing signs of a cooling labour market, supporting the sentiment that it will reach a plateau and that the next move after a prolonged pause will be lower.
In November, the number of people receiving benefits rose by 16K to 1575K - the highest since April 2022. The UK labour market is cutting jobs more actively, a reversal after a plateau between September last year and February this year.
On the one hand, the Bank of England has seen slowing inflation and there are growing signs of a cooling labour market, supporting the sentiment that it will reach a plateau and that the next move after a prolonged pause will be lower.
Meanwhile, wages continue to contribute to inflation, adding 7.2% in the August-October period to the same period a year earlier. The rate of wage growth is down 1.3 percentage points from a peak of 8.5% four months ago, although it remains notably above the consumer inflation rate of 4.6% y/y.
On the other hand, both price and wage growth rates have been held at elevated levels for an extended period (3 years for wages and over two years for inflation), working to raise inflation expectations and making returning to the norm more difficult.
And this divergence creates intrigue ahead of the Bank of England’s looming meeting on Thursday. If the Bank of England acts based on hard data, it should remain in inflation-suppressing mode, warning it is ready to raise rates to bring inflation back on target more quickly.
On the other hand, both price and wage growth rates have been held at elevated levels for an extended period (3 years for wages and over two years for inflation), working to raise inflation expectations and making returning to the norm more difficult.
And this divergence creates intrigue ahead of the Bank of England’s looming meeting on Thursday. If the Bank of England acts based on hard data, it should remain in inflation-suppressing mode, warning it is ready to raise rates to bring inflation back on target more quickly.
However, major peers - the ECB and the Fed - are signalling that they are done with hikes and have moved into a 'wait-and-see' mode, and the Bank of England may announce the same shift in two days.
The #GBPUSD pair retreated towards 1.25 at the end of last week, approaching its 200-day average from above. This week, the battle for the long-term trend has every chance of intensifying, and a bull or bear victory could signal a lasting signal of further Pound movement. A consolidation under 1.25 opens a quick path to 1.22 or even 1.2060.
The ability to hold above due to a strong economy or a hawkish stance from the Central Bank will kick-start a growth momentum with a quick update to 1.27 and the potential to rise above 1.30 before the end of Q1.
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The #GBPUSD pair retreated towards 1.25 at the end of last week, approaching its 200-day average from above. This week, the battle for the long-term trend has every chance of intensifying, and a bull or bear victory could signal a lasting signal of further Pound movement. A consolidation under 1.25 opens a quick path to 1.22 or even 1.2060.
The ability to hold above due to a strong economy or a hawkish stance from the Central Bank will kick-start a growth momentum with a quick update to 1.27 and the potential to rise above 1.30 before the end of Q1.
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A second wave of liquidation of long positions on Monday afternoon hit the #crypto world. Total capitalisation rolled back to $1.53 trillion at the low point against $1.66 trillion on Saturday.
At the low point of the sell-off, #Bitcoin's price was down to $40.1K, nearly nullifying the gains of the previous seven days and touching the former upper boundary of resistance of the two-month trading range. Bitcoin's decline on 11 December was the highest in nine months.
Thus, bitcoin erased the results of last week's acceleration but is still formally clinging to a more global upward trend.
The dynamics of the first cryptocurrency diverge dramatically from what we see in the US and eurozone equity indices. But the big question is, is Bitcoin the canary in the coal mine? A reversal after an acceleration could be a leading signal of a shift in risk appetite. Then, the flight to defensive securities will spread to the equity market very soon.
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At the low point of the sell-off, #Bitcoin's price was down to $40.1K, nearly nullifying the gains of the previous seven days and touching the former upper boundary of resistance of the two-month trading range. Bitcoin's decline on 11 December was the highest in nine months.
Thus, bitcoin erased the results of last week's acceleration but is still formally clinging to a more global upward trend.
The dynamics of the first cryptocurrency diverge dramatically from what we see in the US and eurozone equity indices. But the big question is, is Bitcoin the canary in the coal mine? A reversal after an acceleration could be a leading signal of a shift in risk appetite. Then, the flight to defensive securities will spread to the equity market very soon.
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⏰ The US Consumer Price Index will be released at 13:30 GMT today. It is expected to slow from 3.2% to 3.1% y/y with 0.0% month-on-month growth. 📉
💭Also, keep an eye on Core CPI, which strips food and energy from its calculations. Here, analysts, on average, expect to see it unchanged at 4.0%
💲 The numbers above forecasts can positively impact the USD, easing expectations of the Fed's policy reversal.🏦
💭Also, keep an eye on Core CPI, which strips food and energy from its calculations. Here, analysts, on average, expect to see it unchanged at 4.0%
💲 The numbers above forecasts can positively impact the USD, easing expectations of the Fed's policy reversal.🏦
Economic Sentiment in Germany Is Improving but Slowly
Fresh business sentiment assessments from ZEW saw the sentiment index rise from 9.8 to 12.8, a positive surprise for analysts who had anticipated a slight decline to 9.6. The current optimism level is the highest since March this year but below the long-term average of 20.8.
Some signs of a reversal can be found in the assessment of current conditions. The corresponding index has risen to -77.1 after -79.9 and -79.8 in the past two months. This is a retreat from a cyclical low but is still at the depressed-low levels seen in early 2020 and 2009.
Wholesale prices fell 0.2% in November after falling 0.7% a month earlier and -3.6% y/y. Negative annual inflation rates over the past eight months have helped to reduce inflationary pressures, allowing the ECB to turn its rhetoric towards greater softness and willingness to cut rates earlier than previously expected.
Fresh business sentiment assessments from ZEW saw the sentiment index rise from 9.8 to 12.8, a positive surprise for analysts who had anticipated a slight decline to 9.6. The current optimism level is the highest since March this year but below the long-term average of 20.8.
Some signs of a reversal can be found in the assessment of current conditions. The corresponding index has risen to -77.1 after -79.9 and -79.8 in the past two months. This is a retreat from a cyclical low but is still at the depressed-low levels seen in early 2020 and 2009.
Wholesale prices fell 0.2% in November after falling 0.7% a month earlier and -3.6% y/y. Negative annual inflation rates over the past eight months have helped to reduce inflationary pressures, allowing the ECB to turn its rhetoric towards greater softness and willingness to cut rates earlier than previously expected.
US Inflation: Without Notable Decline
US consumer prices rose by 0.1% m/m (stronger than expected 0.0%). Annual inflation slowed from 3.2% to 3.1%. Core (excluding food and energy) rose 0.3% m/m, maintaining its annual growth rate of 4.0%.
Overall inflation has stabilised at levels above 3% y/y since June, with no meaningful downward progress. The nominal CPI has added over 1.4% in the meantime.
The core index stabilised at twice the target. Monthly growth rates for the last six months also show no signs of slowing down.
Strictly speaking, with this data, the Fed has no reason to sing a victory song over inflation on Wednesday night. This is moderately positive data for the US dollar, justifying the Fed’s ‘rates higher for longer’ motto. Nevertheless, the markets seem to have saved the main reaction for the FOMC outcome on Wednesday evening, as in the end, it is not so much the data that matters but the central bank’s interpretation of it.
US consumer prices rose by 0.1% m/m (stronger than expected 0.0%). Annual inflation slowed from 3.2% to 3.1%. Core (excluding food and energy) rose 0.3% m/m, maintaining its annual growth rate of 4.0%.
Overall inflation has stabilised at levels above 3% y/y since June, with no meaningful downward progress. The nominal CPI has added over 1.4% in the meantime.
The core index stabilised at twice the target. Monthly growth rates for the last six months also show no signs of slowing down.
Strictly speaking, with this data, the Fed has no reason to sing a victory song over inflation on Wednesday night. This is moderately positive data for the US dollar, justifying the Fed’s ‘rates higher for longer’ motto. Nevertheless, the markets seem to have saved the main reaction for the FOMC outcome on Wednesday evening, as in the end, it is not so much the data that matters but the central bank’s interpretation of it.
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#WaveAnalysis
#CADCHF reversed from resistance level 0.6490
Likely to support level 0.6410
CADCHF currency pair recently reversed down from the strong resistance level 0.6490 (former strong support from October) intersecting with the upper daily Bollinger Band.
The downward reversal from the resistance level 0.64879 stopped the previous minor correction ii.
Given the predominant daily downtrend, CADCHF currency pair can be expected to fall further to the next support level 0.6410 (low of the previous impulse wave i).
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#CADCHF reversed from resistance level 0.6490
Likely to support level 0.6410
CADCHF currency pair recently reversed down from the strong resistance level 0.6490 (former strong support from October) intersecting with the upper daily Bollinger Band.
The downward reversal from the resistance level 0.64879 stopped the previous minor correction ii.
Given the predominant daily downtrend, CADCHF currency pair can be expected to fall further to the next support level 0.6410 (low of the previous impulse wave i).
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#WaveAnalysis
#EURAUD reversed from key support level 1.6300
– Likely to rise to resistance level 1.6500
EURAUD currency pair recently reversed up from the key support level 1.6300 intersecting with the lower daily Bollinger Band and the support trendline of the weekly down channel from August.
The upward reversal from the support level 1.6300 stopped the previous impulse waves iii and 3.
Given the bullish divergence on the daily Stochastic, EURAUD currency pair can be expected to rise further to the next resistance level 1.650 (which stopped the earlier minor correction ii).
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#EURAUD reversed from key support level 1.6300
– Likely to rise to resistance level 1.6500
EURAUD currency pair recently reversed up from the key support level 1.6300 intersecting with the lower daily Bollinger Band and the support trendline of the weekly down channel from August.
The upward reversal from the support level 1.6300 stopped the previous impulse waves iii and 3.
Given the bullish divergence on the daily Stochastic, EURAUD currency pair can be expected to rise further to the next resistance level 1.650 (which stopped the earlier minor correction ii).
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The UK Needs Lower Rates and a Weaker Currency
A series of macro statistics continue to be published to help build a picture of the economy ahead of the Bank of England's final decision on Thursday. The economy is reported to have lost 0.3% for October, pulling back in volume to July levels.
This is a wake-up call from industrial production and construction, which are considered leading indicators of the business cycle. The index of industrial production fell immediately by 0.8% in October (-0.1% was expected), and the nominal index rolled back close to plateau levels from the final quarter of last year. Industrial production is only 0.6% above post-pandemic lows. If we exclude the lockdown period, UK industrial production last saw such a low back in 2017.
High interest rates are putting pressure on the industry.
A series of macro statistics continue to be published to help build a picture of the economy ahead of the Bank of England's final decision on Thursday. The economy is reported to have lost 0.3% for October, pulling back in volume to July levels.
This is a wake-up call from industrial production and construction, which are considered leading indicators of the business cycle. The index of industrial production fell immediately by 0.8% in October (-0.1% was expected), and the nominal index rolled back close to plateau levels from the final quarter of last year. Industrial production is only 0.6% above post-pandemic lows. If we exclude the lockdown period, UK industrial production last saw such a low back in 2017.
High interest rates are putting pressure on the industry.