Daily market analysis by NordFX

[Stan NordFX]

Forex and Cryptocurrency Forecast for 03 – 07 June 2024​

EUR/USD: Awaiting a Turbulent Week

Recall that Monday, 27 May was a holiday in the US. However, on Tuesday, dollar bulls took control, and the DXY Index started to rise, bolstered by a significant increase in the US Consumer Confidence Index (from 97.5 to 102.0 against a forecast of 96.0). Consequently, EUR/USD moved southward.

Pressure on the euro was also due to expectations that the European Central Bank (ECB) is likely to cut the key interest rate by 25 basis points (bps) from 4.50% to 4.25% at its meeting on 06 June. This intention was confirmed by the head of the Bank of Finland, Olli Rehn, who stated on Monday that he considered it timely to transition to dovish rhetoric in June. Similar opinions were expressed by his colleague François Villeroy de Galhau, head of the Bank of France, and on Tuesday, 28 May, by Robert Holzmann, head of the Bank of Austria.

Unlike the dovish stance of European officials, representatives of the Federal Reserve (Fed) take a more stringent position and want to ensure that US inflation is steadily moving towards the 2.0% target.

Recall that the report released on 15 May by the US Bureau of Labour Statistics (BLS) showed that the Consumer Price Index (CPI) decreased from 0.4% to 0.3% month-on-month (m/m) against a forecast of 0.4%. Year-on-year, inflation also fell from 3.5% to 3.4%. Retail sales demonstrated an even stronger decline, dropping from 0.6% to 0.0% m/m (forecast was 0.4%). These data indicated that although inflation is resisting in some areas, it is generally declining. If previously market participants expected the first rate cut at the end of 2024 or even early 2025, after the publication of this data, talks about a possible Fed rate cut already this autumn resumed. Before the release of the preliminary US GDP data, the probability of a rate cut in September was 41%.

The report published on Thursday, 30 May by the Bureau of Economic Analysis showed that, according to preliminary data, US economic growth in Q1 slowed significantly to an annualized rate of 1.3%, below the forecast of 1.6% and Q4 2023's figure of 3.4%.

Experts attribute the weak GDP growth at the beginning of this year mainly to the dynamics of consumer spending. In Q1, consumer spending increased by 2.0%, not the previously expected 2.5%. The US Department of Commerce's revised data also changed the assessment of the Core Personal Consumption Expenditures (PCE) index, which excludes energy and food prices. At the end of Q1, the figure was 3.6%, not 3.7%. Analysts believe that this decline in all indicators was caused by a combination of factors: the depletion of funds accumulated by the population during the COVID-19 pandemic, the Fed's cycle of monetary tightening, and restrained income growth.

Against this backdrop, the dollar weakened slightly, and EUR/USD moved north. It received another bullish impulse after Eurostat presented on Friday, 31 May, a preliminary estimate of inflation in the Eurozone, which accelerated for the first time this year. Thus, the annual growth rate of consumer prices (CPI) in May was 2.6% compared to 2.4% in April, the lowest since November last year. The consensus forecast expected inflation to accelerate only to 2.5%. Core inflation (CPI Core), which excludes energy and food prices, also increased from 2.7% in April to 2.9% in May (forecast was 2.8%). This was a wake-up call for investors who had hoped that the ECB would not only cut rates once this year but continue to do so.

Towards the end of the working week, market attention focused on US consumer market data. According to the Bureau of Economic Analysis, inflation in the country, measured by the Personal Consumption Expenditures (PCE) Price Index, remained stable in April at 2.7% y/y. The Core PCE, which excludes volatile food and energy prices, rose by 2.8% y/y, matching the forecast. Other report details showed that personal incomes rose by 0.3% m/m in April, while personal spending increased by 0.2%.

After these data, the DXY Dollar Index was under slight pressure, and EUR/USD received a third bullish impulse. However, it did not last long, and ultimately, after all these fluctuations, EUR/USD returned to the Pivot Point of the last two and a half weeks, finishing at 1.0848. Regarding the analysts' forecast for the near future, as of the evening of 31 May, all of them (100%) voted for the dollar to strengthen. This forecast is understandable given the expected ECB decision on a rate cut on 06 June. But what if it doesn't happen? Or perhaps this forecast has already been priced into the market? In that case, instead of the dollar strengthening, we could see the opposite reaction.

All trend indicators on D1 are 100% green, while only 50% of oscillators are green, with 15% red and 35% neutral-grey.

The nearest support for the pair lies in the 1.0830-1.0840 zone, followed by 1.0800-1.0810, 1.0725-1.0740, 1.0665-1.0680, 1.0600-1.0620. Resistance zones are in the regions of 1.0880-1.0895, 1.0925-1.0940, 1.0980-1.1010, 1.1050, 1.1100-1.1140.

The upcoming week seems to be very eventful and volatile. On Monday, 03 June, and Wednesday, 05 June, the US Manufacturing and Services PMI data will be released. On 04, 06, and 07 June, there will be a slew of statistics from the US labour market, including Friday's crucial data on the unemployment rate and the number of new non-farm jobs (NFP). The most turbulent day of the week, however, is likely to be Thursday, 06 June. On this day, retail sales data for the Eurozone will be released first, followed by the ECB meeting. The market will be focused not only on the ECB's rate decision but also on the subsequent press conference and comments on future monetary policy.

GBP/USD: Foggy Times, Foggy Forecasts

We've previously written that the prospects for the British currency, as well as the national economy, look rather foggy. The Business Activity Index (PMI) showed a decline, and not just it. Much of the pessimism is related to the sharp drop in retail sales in April, which fell by 2.7% y/y compared to the previous growth rate of 0.4%. Additional uncertainty comes from the fact that snap parliamentary elections are scheduled for 04 July. Prime Minister Rishi Sunak stated that "economic instability is just the beginning." This sounds frightening, doesn't it? If this is just the beginning, what lies ahead? Surprisingly, despite this situation, the pound has been strengthening since 22 April. During this period, GBP/USD rose by 500 points and on 28 May recorded a local maximum at the round figure of 1.2800.

Regarding the timing of the Bank of England's (BoE) interest rate cut, everything also seems as foggy as the Thames mist. JP Morgan (JPM) analysts, while adhering to their forecast for a rate cut in August, warn that "the risks have clearly shifted towards a later reduction. The question now is whether the Bank of England will be able to ease its policy at all this year." Goldman Sachs, Deutsche Bank, and HSBC strategists have also adjusted their rate cut forecasts, moving the date from June to August.

GBP/USD ended the week at 1.2741. Economists at Singapore's United Overseas Bank (UOB) believe that the current strengthening of the British currency has ended. UOB considers that over the next 1-3 weeks, "the pound is likely to trade with a downward bias, but a more significant pullback would require breaking below 1.2670. On the other hand, if the pound breaks above 1.2770 (the 'strong resistance' level), it would indicate that it will likely trade within a range rather than pulling back lower."

The median forecast of analysts for the near term is as follows: 75% voted for the pair to move south, while the remaining 25% voted for a northward movement.

As for technical analysis, unlike the experts, all 100% of trend indicators and oscillators on D1 point north, although 15% of the latter signal overbought conditions. If the pair continues to fall, support levels and zones are at 1.2670-1.2700, 1.2575-1.2600, 1.2540, 1.2445-1.2465, 1.2405, 1.2300-1.2330. If the pair rises, it will encounter resistance at levels 1.2760, 1.2800-1.2820, 1.2885-1.2900.

No significant economic statistics are scheduled to be released in the UK next week.

continued below...

 

[Stan NordFX]

USD/JPY: A Very Calm Week

The past week was surprisingly calm for the yen. USD/JPY moved within a super-narrow sideways channel of 156.60-157.00 for the first half of the week, but then, amid US data and Japanese macro statistics, the trading range expanded slightly to 156.36-157.70. Compared to the price swings at the end of April and early May, it's hard to believe this is the same currency pair. Interestingly, Japanese financial authorities have not officially confirmed whether they conducted intensive yen purchases on 29 April and 1 May to support its exchange rate. However, Bloomberg reports that comparing deposits at the Bank of Japan suggests that around ¥9.4 trillion ($60 billion) might have been spent on these currency interventions, a new monthly record for such financial operations.

However, if this $60 billion helped, it was only slightly – the dollar has already recovered half of its losses. Since interest rates in the US and Europe have not yet decreased, and the yen rate remains extremely low at 0.1%, officials from the Ministry of Finance and the Bank of Japan (BoJ) are trying to buy time until this gap starts to narrow. Comments from BoJ board member Seiji Adachi, who stated on 30 May that the Japanese central bank leaders could raise the interest rate, provided some support for the yen. However, the question of when this might happen remains open, and officials are reluctant to answer. In his traditional speech on Friday, 31 May, Japan's Minister of Finance, Shunichi Suzuki, reiterated that exchange rates should reflect fundamental indicators and that he would respond appropriately to excessive movements.

On Friday, 31 May, a block of important macroeconomic statistics on the state of the Japanese economy was released. The Consumer Price Index (CPI) in Tokyo showed that inflation rose to 2.2% y/y in May. In April, this figure was at 1.8%, matching a 26-month low. Core inflation in Tokyo also rose to 1.9% from 1.6% y/y, and the CPI excluding volatile food and energy prices increased from 1.8% to 2.2% y/y. (It should be noted that inflation in Tokyo is usually higher than the nationwide figures, which are published three weeks later. Therefore, the Tokyo CPI is a preliminary but not final indicator of inflation dynamics at the national level.)

The current rise in inflation could increase confidence in future BoJ monetary policy tightening. However, the fear of low inflation and a sharp yen appreciation deters the BoJ from raising the interest rate and narrowing the gap with other major global currencies' rates. A strong yen would harm national exporters. The decline in industrial production, which fell by -0.1% in April both month-on-month and year-on-year, does not encourage borrowing costs to rise.

The last note of the week for USD/JPY was struck at 157.25. United Overseas Bank (UOB) analysts believe that in the next 1-3 weeks, "the dollar has the potential for growth, but given the weak upward momentum, any advancement is likely to be slow. The 157.50 level might be difficult to overcome, and resistance at 158.00 is unlikely to be reached in the near future."

Speaking of the average forecast of experts, only 20% indicate a southward direction, while the remaining 80% adopt a neutral position and look east. Technical analysis tools show no such doubts or disagreements. Thus, 100% of trend indicators and oscillators on D1 point north, with 15% already in the overbought zone. It should be noted that if the green/north color of the indicators for the euro and the British pound indicates their strengthening, in the case of the yen, it conversely indicates its weakening. Therefore, traders may find it interesting to pay attention to the EUR/JPY and GBP/JPY pairs, whose dynamics have been impressive lately.

The nearest support level is in the area of 156.25-156.60, followed by zones and levels at 155.50-155.90, 153.10-153.60, 151.85-152.35, 150.80-151.00, 149.70-150.00, 148.40, 147.30-147.60, 146.50. The nearest resistance is in the 157.40 zone, followed by 157.70-158.00, 158.60, and 160.00-160.20.

No significant events or publications regarding the state of the Japanese economy are expected next week.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: Bullish and Bearish Ethereum Prospects

For the second week, market participants' attention has been focused on the main altcoin. On 23 May, the US Securities and Exchange Commission (SEC) approved 19b-4 applications from eight issuers of spot exchange-traded funds based on Ethereum. (According to JP Morgan experts, this was dictated not by a desire to support digital assets but by a political decision aimed at supporting Joe Biden ahead of the US presidential elections.) Whatever the true reason for this regulatory move, everyone is now interested in where Ethereum prices will go.

The newborn ETH-ETFs can only start trading after the SEC approves the S-1 applications. According to Bloomberg analyst James Seyffart, this could take "weeks or months," although it is very likely to happen in mid-June. According to DeFiance Capital CEO Arthur Cheong, Ethereum's price could rise to $4,500 even before trading begins. CCData analysts believe that within 100 days of the launch of ETH-ETFs, the price could reach $5,000 per coin. This forecast is based on linear regression and the price statistics of bitcoin after the launch of spot BTC-ETFs. CCData's analysis assumes that inflows into similar Ethereum funds will be at least 50% of inflows into Bitcoin-ETFs, which means about $3.9 billion over a 100-day period.

Popular analyst Lark Davis has forecasted future growth for bitcoin to $150,000 and Ethereum to $15,000, explaining such a sharp price increase by the emerging market dynamics. The main reason for growth, Davis also cites spot BTC-ETFs, to which ETH-ETFs will now join. This will further fuel the cryptocurrency market's enthusiasm. Currently, spot BTC-ETFs hold 1,002,343 coins (≈ $68 billion), which is about 5% of the circulating supply of the flagship asset. Davis believes this impressive figure clearly indicates growing recognition of cryptocurrency and interest from institutional investors, especially from the US.

Strike CEO Jack Mallers predicts that during the ongoing bull rally, bitcoin could reach $250,000 and possibly rise in price to $1 million. On a podcast with Pomp Investments founder Anthony Pompliano, Mallers explained his bold forecast by stating that bitcoin is still at an early stage of development. According to him, the bond market is currently facing problems, so central banks may inject a significant amount of liquidity into the financial system to stabilize it. This liquidity influx will trigger an increase in the value of risky assets, including the leading cryptocurrency.

Jack Mallers disagrees with the notion that bitcoin is a bubble or a tool for speculation. The asset is becoming increasingly popular among financial giants on Wall Street, and its limited supply of 21 million coins makes BTC highly resistant to inflation, unlike fiat currencies and gold. "Bitcoin can be called the hardest form of money – thanks to the fixed issuance schedule and halvings every four years. The release rate of new coins gradually decreases, thereby increasing bitcoin's long-term value," argued the Strike CEO.

Analysts from financial investment company Motley Fool also target a six-figure number. They suggested that bitcoin's rate could rise to $400,000 and possibly even reach $1 million. The reason, which has been mentioned many times, is the influx of money from institutional investors through spot ETFs. Motley Fool analysts noted that more and more pension funds and hedge funds, managing multi-billion dollar sums, are entering the bitcoin market. Thanks to cryptocurrency ETFs, they can easily include bitcoin (and soon Ethereum) in their investment portfolios.

According to analysts, around 700 investment companies have already invested in such funds. Nevertheless, the share of institutional investors in bitcoin-ETFs is currently only about 10% of the total. Motley Fool estimates that if financial institutions invest about 5% of their assets in bitcoin, the market capitalization of the first cryptocurrency could exceed $7 trillion, which explains its forecasted rate of $400,000.

Considerably less optimism was heard in the forecast of Bloomberg senior analyst Mike McGlone. According to him, bitcoin's volatility leaves it trailing gold and the US dollar in investment appeal. Furthermore, he believes that stocks will soon crash amid the expected recession, but BTC will suffer even more than the stock market. McGlone emphasized that the Tether (USDT) stablecoin, pegged to the US dollar, typically trades twice as much per day as bitcoin. "I can access the US dollar anywhere in the world from my phone using Tether. Tether is the number one trading token. It's the number one cryptocurrency for trading. It's the dollar. The whole world has moved to the dollar. Why? Because it's the least bad of all fiat currencies," the Bloomberg expert stated.

While Mike McGlone merely downgraded bitcoin's attractiveness, Cardano founder Charles Hoskinson simply buried it. He equated bitcoin to a religion and stated that the industry has outgrown its dependence on it. According to Hoskinson, "the industry no longer needs bitcoin to survive." He pointed out critical threats to the leading cryptocurrency, including insufficient adaptability and dependence on the Proof-of-Work algorithm.

Franklin Templeton analysts, on the contrary, consider L2 protocols, along with Ordinals, Runes, and DeFi primitives, as one of the main drivers of bitcoin's innovation revival. Strike CEO Jack Mallers defended the first cryptocurrency. According to him, the Lightning Network, created for instant and cheap transactions, a second-layer solution based on the BTC blockchain, can further increase the demand for the first cryptocurrency. Mallers believes that thanks to this, bitcoin can be used for everyday purchases, such as paying for a cup of coffee. Former BitMEX CEO Arthur Hayes called the native token of the Cardano blockchain (ADA) "dog shit" due to its low use in protocols.

As of the time of writing this review on the evening of Friday, 31 May, ADA is trading at 0.45 USD per coin, while bitcoin and Ethereum are faring significantly better: BTC/USD is trading at $67,600, and ETH/USD at $3,790. The total cryptocurrency market capitalization is $2.53 trillion ($2.55 trillion a week ago). The Bitcoin Fear & Greed Index remained almost unchanged over 7 days, staying in the Greed zone at 73 points (74 a week ago).

It should be noted that ETH/USD failed to break through the $4,000 resistance this past week. The local maximum was recorded on Monday, 27 May, at $3,974. The lack of an immediate pump is explained by the fact that everyone who wanted to buy Ethereum in anticipation of the SEC's historic decision already did so. Meanwhile, according to some analysts, there is a high probability that immediately after the launch of the long-awaited spot exchange funds, Ethereum will enter a deep drawdown, similar to what happened in January with bitcoin. Then, over 12 days, it fell by 21%.

One of the key reasons for BTC's drawdown at that time was the unlocking of GBTC fund assets from Grayscale, which was converted into a spot fund from a trust. It began losing investments daily at a rate of $500 million. It is possible that something similar could happen with Ethereum, where Grayscale's ETHE fund holds $11 billion worth of ETH. As soon as this fund is converted into a spot fund and its assets are unlocked, short-term investors might start taking profits, potentially causing ETH/USD to fall to the strong support zone of $2,900-3,200.

Pessimists among bearish factors also cite the uncertain legal status of the altcoin, as the SEC has not yet clearly defined whether ETH is a commodity or a security. Additionally, the regulator has many complaints about the staking program.

Staking is a way to earn cryptocurrency by "locking" a certain amount of coins in a wallet on the Proof of Stake (PoS) algorithm to support the network. In return, the user receives rewards in the form of additional coins. According to Wall Street legend Peter Brandt, "the biggest disasters in the cryptocurrency sphere that are yet to happen will be related to staking." The expert noted that such assets as Ethereum are often rented out to earn such income, often in the form of interest, which strongly reminds him of collapsed financial pyramids. As staking becomes more widespread, Brandt warned, it could attract increased attention from central banks, treasuries, and other authorities. This could lead to tighter regulation, significantly altering the crypto space and potentially resulting in the cessation of staking and bankruptcies for those involved.


NordFX Analytical Group


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

https://nordfx.com/

 

[Stan NordFX]

May Results: Top 3 NordFX Traders' Monthly Profit Approaches $200,000

The brokerage company NordFX has summarized the trading results of its clients for May 2024. The performance of social trading services, PAMM and CopyTrading, as well as the profit earned by the company's IB partners were also evaluated.

- The leading trader for the month is from Western Asia, account No. 1773XXX, with a profit of $86,999. This impressive result was achieved through gold (XAU/USD) transactions.
- The second place goes to another trader from Western Asia, account No. 1771XXX, who earned $78,556 not only from gold (XAU/USD) but also from EUR/USD trades.
- In third place is a trader from Southeast Asia, account No. 1734XXX, who earned $30,640 in May through transactions involving XAU/USD, EUR/JPY, and USD/JPY.

The following situation has developed in NordFX's passive investment services:

- In the PAMM service showcase, we continue to monitor the activity of the manager under the nickname KennyFXPRO. Their account, KennyFXPRO-The Multi 3000 EA, can be considered a veteran, having been opened in January 2021. Over 1,223 days, it has faced many serious challenges. A critical date was November 15, 2022, when the manager decided to close loss-making positions. The drawdown then was almost 43%, but the account was saved, and the profit now exceeds 100% again.

- In CopyTrading, we have repeatedly highlighted the signal yahmat-forex, which has shown a 353% return over 344 days with a maximum drawdown of 47%. Another signal, NordFXSrilanka, reached a 36% profit over 145 days. Although not as high, it significantly exceeds bank deposit rates. This signal stands out for its maximum drawdown, which has not exceeded 10% throughout its duration. Among startups in CopyTrading, the signal copyfx1 is noteworthy. In 49 days of operation, specifically since April 11, 2024, it has shown a 98% profit with a very moderate drawdown of less than 16%. Despite these impressive achievements, it is important to remind that past results do not guarantee future performance and that trading in financial markets is risky. Therefore, market participants should exercise extreme caution and always adhere to money management principles to avoid losing funds.

Among NordFX IB partners, the TOP-3 is as follows:

- The highest commission of the month, amounting to 22,795 USD, was awarded to a partner from Western Asia, account No. 1645XXX;
- The second place was taken by a partner from Southern Asia, account No. 1718XXX, who received 8,362 USD;
- Completing the top three is their compatriot, account No. 1682XXX, who earned 8,233 USD in May.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

https://nordfx.com/

 

[Stan NordFX]

CryptoNews of the Week

– The first cryptocurrency has once again risen above the $70,000 mark. The Hash Ribbons indicator is giving an “optimal signal” for buying digital gold in the coming weeks, suggesting a resumption of the asset’s rally, according to Capriole Investments founder Charles Edwards. The metric indicates miner capitulation that began two weeks ago, a period when the 30-day moving average hash rate falls below the 60-day average.
Edwards notes that miner capitulation occurs approximately once a year, usually linked to shutdowns, bankruptcies, acquisitions, or halving events. The recent miner capitulation was observed in 2023 when bitcoin traded around $20,000. If a new growth impulse occurs, the next medium-term target will be $100,000. However, entering the traditionally quiet summer financial market could delay this upward momentum, Edwards warns.

– The analyst known as Rekt Capital believes that to enter a “parabolic growth phase,” digital gold will need to confidently overcome the resistance zone of $72,000-$73,000. Popular cryptocurrency expert Ali Martinez predicts that BTC will likely test the price range of $79,600. The Artificial Intelligence tool PricePredictions has determined that in the coming days, bitcoin could not only firmly consolidate above the crucial $70,000 mark but also continue to rise, reaching $75,245 by the end of June. This forecast is based on technical analysis indicators such as the Relative Strength Index (RSI), Bollinger Bands (BB), and Moving Average Convergence Divergence (MACD).

– On 2 June, Dogecoin token graphic designer known as DogeDesigner discovered a live stream on YouTube featuring a deepfake of Tesla and SpaceX CEO Elon Musk promoting a cryptocurrency scam. The fake Musk offers users to scan a QR code on the screen leading to a giveaway site. "On the site, you can deposit any amount of bitcoin, Ethereum, and Dogecoin without any registration. Once you do, you'll receive double the amount of the deposited cryptocurrency," promises the fake entrepreneur. The scammers' channel closely resembles the official Tesla page and even has nearly 15,000 subscribers, while the original has 2.65 million.

– Venture investor Chamath Palihapitiya discussed one pathway for the mass adoption of bitcoin on the All-In podcast, predicting its price could rise to $500,000. The billionaire explained that the “powerful concept” of digital gold adoption was elucidated to him by Xapo CEO Wences Casares, an Argentine entrepreneur in venture investment.
Casares believes more countries will notice bitcoin while retaining their national currencies, effectively becoming dual-currency nations. One asset will be used for transactions with everyday goods and services, while the other – cryptocurrency – will act as a store of value. The United States could be among the first to follow this path, according to the entrepreneur.
Palihapitiya also noted that Casares suggested analysing bitcoin dynamics after halvings. The investor observed that the cryptocurrency's highest growth occurred 12-18 months post-event. Palihapitiya predicts that if the growth trajectory following the third halving repeats, bitcoin's price could reach $500,000 by October 2025. Taking the average of the last two cycles, the price target could be $1.14 million.

– According to a recent Harris Poll, geopolitical tension and inflation are prompting an increasing number of American voters to turn to bitcoin. The poll, sponsored by BTC-ETF issuer Grayscale, revealed that one in three U.S. voters will consider a Presidential candidate’s stance on cryptocurrencies before casting their vote. The survey polled over 1,700 potential U.S. voters, 77% of whom believe Presidential candidates should have at least some understanding of cryptocurrencies. Additionally, 47% of respondents plan to include cryptocurrency in their investment portfolios, up from 40% last year. Notably, following the approval of BTC-ETF, 9% of elderly voters also reported increased interest in investing in bitcoin or other crypto assets.

– The founder of the world's largest cryptocurrency exchange, Binance, Changpeng Zhao, has entered a federal high-security prison in California, where he will spend the next four months. The crypto community quickly expressed support for the former Binance CEO. A Reddit user, Ilsemprelaziale, commented that Zhao's imprisonment is a step to protect the crypto exchange and the entire industry from potential risks. "If the FTX collapse hit cryptocurrency hard, just imagine what would happen if Binance fell. But he pleaded guilty and stepped down as CEO," Ilsemprelaziale wrote.
After the sentencing, Changpeng Zhao shared plans for his post-prison life, stating he will continue to be actively involved in the crypto community. For instance, the former Binance head plans to engage in passive investing using his existing crypto assets.

– Mexican billionaire Ricardo Salinas urged his followers to buy bitcoin to protect against the devaluation of national currencies and preserve their savings. The owner of Salinas Group, whose wealth is estimated at over $14 billion, cited the fall of the Nigerian naira as an example.
Currently, Nigeria's official currency is experiencing a difficult period, prompting the local government to take several stabilization measures. The country's authorities have also tightened their stance on cryptocurrency companies – in March, the Nigerian Securities and Exchange Commission proposed increasing the registration fee by 400%. The head of Binance’s Financial Crimes Compliance unit, Tigran Gambaryan, is still imprisoned in Nigeria on charges of tax evasion.

– The crypto wallets of well-known personalities have long attracted the attention of curious community members. One of the largest holders of cryptocurrency, as it turns out, is the founder of Tron, Justin Sun, who, according to Arkham Intelligence, owns crypto assets worth $1.03 billion. His largest reserves are in USDD stablecoins, valued at $276 million. Additionally, Arkham calculated that he holds $240 million in TRX and about $100 million in BTC.
The wealth of Ethereum co-founder Vitalik Buterin is estimated to be a comparable amount at $935 million, with most of his holdings in ETH, valued at over $930 million. Pop stars' holdings are significantly smaller. For example, singer Justin Bieber owns ETH tokens worth about $575,000. Socialite Paris Hilton has digital assets worth only $53,000.

– Tether (USDT stablecoins) co-founder, former actor, and 2020 U.S. presidential candidate Brock Pierce is confident that Chinese authorities will lift the cryptocurrency ban. “Will China become open to cryptocurrencies? I can say it's inevitable. The main question is not whether it will happen, but when it will happen,” he stated.
In 2021, the Chinese government included the trading and mining of digital assets in the list of illegal activities. However, a grey crypto market has developed in the country. Pierce believes Hong Kong could become China’s cryptocurrency trading hub. However, this is not currently the case, as the Securities and Futures Commission (SFC) of this administrative region of China has prohibited local companies from providing digital asset services to mainland China residents. As a result, many firms have withdrawn their applications for virtual currency trading licenses submitted to the SFC.

– CEO of investment company Galaxy Digital, Mike Novogratz, predicted which crypto asset could become a serious contender for launching new cryptocurrency exchange-traded funds (ETFs) in the U.S. Over the past year, the most impressive results were shown by the cryptocurrency Solana. At the end of 2023, SOL was trading around $21, but by March 2024, it had exceeded $200, showing nearly tenfold growth. Currently, SOL is valued at around $172 and ranks among the top five cryptocurrencies by market capitalization. Given Solana's current status, Novogratz is confident that this altcoin has every chance to be included in the pool of spot ETFs. Recently, Brian Kelly, CEO of investment company BKCM, expressed a similar view.
Responding to Novogratz, the crypto enthusiast known as Digital Asset Investor suggested that SOL's price increase was due to the collapse of the FTX crypto exchange in autumn 2022 and “too many connections with the authorities.”


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

https://nordfx.com/

 

[Stan NordFX]

Forex and Cryptocurrency Forecast for 10 – 14 June 2024​

EUR/USD: Who Controls the Financial Market

It is clear that interest rates rule the markets, not only in terms of actual changes but also regarding expectations about the timing and magnitude of future changes. From spring 2022 to mid-2023, the focus was on raising rates; now, the expectation has shifted towards their reduction. Traders are still uncertain about the Federal Reserve's decisions and timing, leading them to scrutinize macroeconomic statistics primarily for their impact on the likelihood of monetary policy easing by the regulator.

At the beginning of last week, the dollar was under pressure due to weak data on business activity (PMI) in the US manufacturing sector. On Monday, 3 June, the Institute for Supply Management (ISM) reported that manufacturing activity in the country decreased in May from 49.2 to 48.7 points (forecast 49.6). As the index remained in contraction territory (below 50), there was renewed speculation among traders and investors about a possible Fed rate cut in September.

The US currency received some support from business activity data in the services sector. This time, the PMI was 53.8 points, higher than both the previous value of 49.4 and the forecast of 50.8, which slightly pleased the dollar bulls.

Thursday, 6 June, was relatively calm. The European Central Bank's Governing Council lowered the interest rate by 25 basis points (bps) to 4.25%, as expected. This step fully aligned with forecasts and was already factored into EUR/USD quotes. Notably, the ECB had not lowered rates since 2019, began raising them in July 2022, and kept them unchanged at the same level during the last five meetings. Since September 2023, inflation in the Eurozone has decreased by more than 2.5%, allowing the regulator to take this step for the first time in a long while.

The ECB's statement following the meeting indicated that despite the rate cut, its monetary policy remains restrictive. The regulator forecasts that inflation will likely remain above the 2.0% target this year and next. Therefore, interest rates will remain at restrictive levels as long as necessary to achieve the inflation goal. The ECB raised its forecast for inflation, now expecting CPI to average 2.5% in 2024, 2.2% in 2025, and 1.9% in 2026м.

As mentioned, the ECB's current decision was fully anticipated by the market, as predicted by all 82 economists surveyed by Reuters at the end of May. The more intriguing aspect is what will happen next. More than two-thirds of Reuters respondents (55 out of 82) believe that the ECB's Governing Council will cut the rate twice more this year – in September and December. This figure has increased compared to the April survey, where just over half of the economists made such a prediction.

A local triumph for the dollar bulls occurred on Friday, 7 June, when the US Department of Labour report was released. The number of new jobs in the non-farm sector (NFP) was 272K in May, compared to the expected 185K. This result was significantly higher than the revised April figure of 165K. The data also showed a more substantial than expected increase in the average hourly earnings, an inflationary indicator, which grew by 0.4%, double the previous value of 0.2% and one and a half times higher than the forecast of 0.3%. The only slight negative was the unemployment rate, which unexpectedly rose from 3.9% to 4.0%. However, overall, this data benefited the dollar, and the EUR/USD pair, having bounced off the upper boundary of the 3.5-week sideways channel at 1.0900, ended the five-day period at its lower boundary of 1.0800.

Regarding the analysts' forecast for the near future, as of the evening of 7 June, it is quite vague: 40% of experts voted for the pair's growth, and an equal number (40%) for its fall, with the remaining 20% maintaining neutrality. Technical analysis also provides no clear guidance. Among trend indicators on D1, 25% are green and 75% are red. Among oscillators, 25% are green, 15% neutral-grey, and 60% red, though a third of them signal the pair is oversold. The nearest support levels are 1.0785, then 1.0725-1.0740, 1.0665-1.0680, and 1.0600-1.0620. Resistance zones are at 1.0865-1.0895, then 1.0925-1.0940, 1.0980-1.1010, 1.1050, and 1.1100-1.1140.

The upcoming week also promises to be quite interesting. The key day will be Wednesday, 12 June. On this day, consumer inflation (CPI) data for Germany and the United States will be released, followed by the FOMC (Federal Open Market Committee) meeting of the US Fed. It is expected that the regulator will keep the key interest rate unchanged at 5.50%. Therefore, market participants will be more focused on the FOMC's Economic Projections Summary and the subsequent press conference by the Fed leadership. The next day, Thursday, 13 June, will see the release of US Producer Price Index (PPI) data and initial jobless claims numbers. At the end of the week, on Friday, 14 June, the Fed's Monetary Policy Report will be available for review.

USD/JPY: Finance Minister Responds to Questions

A week ago, we wrote that Japanese financial authorities had not confirmed whether they conducted intensive yen purchases on 29 April and 1 May to support its exchange rate. Bloomberg estimated that around ¥9.4 trillion ($60 billion) might have been spent on these currency interventions, setting a new monthly record for such financial operations. We questioned the long-term or even medium-term effectiveness of this expenditure.

It seems that Japan's Finance Minister, Shunichi Suzuki, read our review, as he hastened to provide answers to the questions posed. In his statement, he first confirmed that (quote): "the decline in Japan's foreign reserves at the end of May partially reflects currency interventions." This suggests that yen purchases indeed took place. Additionally, the minister noted, "the effectiveness of such interventions should be considered," indicating his doubts about their feasibility.

Suzuki refrained from commenting on the size of the intervention funds but mentioned that while there is no limit on funds for currency interventions, their use would be limited.

As previously mentioned, besides interventions (and the fear of them), another way to support the national currency is through tightening the monetary policy of the Bank of Japan (BoJ). Early last week, yen received support from rumours that the BoJ is considering reducing the volume of its quantitative easing (QE) programme. Such a decision could decrease demand for Japanese government bonds (JGBs), increase their yields (which inversely correlates with prices), and positively impact the yen's exchange rate. The Bank of Japan is expected to discuss reducing bond purchases at its meeting next Friday, 14 June.

On Tuesday, 4 June, BoJ Deputy Governor Ryozo Himino confirmed concerns that a weak yen could negatively impact the economy and cause inflation to rise. According to him, a low national currency rate increases the cost of imported goods and reduces consumption, as people delay purchases due to high prices. However, Ryozo Himino stated that the Bank of Japan would prefer inflation driven by wage growth, as this would lead to increased household spending and consumption.

The yen received another blow from the dollar after the publication of US labour market data on 7 June. The USD/JPY pair surged as wage growth in the US sharply contrasted with the 25th consecutive month of declining wages in Japan in April.

As the saying goes, hope dies last. Investors remain hopeful that the regulator will actively combat the yen's depreciation, creating long-term factors for USD/JPY to decline. For now, it ended the week at 156.74.

The median forecast of analysts for the near term is as follows: 75% voted for the pair's decline and yen strengthening ahead of the BoJ meeting, while the remaining 25% took a neutral stance. None favoured the pair's upward movement. Technical analysis, however, presents a different picture: 100% of trend indicators on D1 are green. Among oscillators, 35% are green, 55% neutral-grey, and only 10% red. The nearest support level is around 156.00-156.25, followed by zones and levels at 155.45, 154.50-154.70, 153.10-153.60, 151.85-152.35, 150.80-151.00, 149.70-150.00, 148.40, and 147.30-147.60, with 146.50 being the furthest. The closest resistance is in the zone of 157.05-157.15, then 157.70-158.00, 158.60, and 160.00-160.20.

Noteworthy events in the coming week include Monday, 10 June, when Japan's Q1 2024 GDP data will be released, and, of course, Friday, 14 June, when the Bank of Japan's Governing Council will make decisions on future monetary policy. However, like the Fed, the yen interest rate is likely to remain unchanged.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: What Drives and Will Drive Bitcoin Upwards

The launch of spot bitcoin ETFs in January caused an explosive price increase for the leading cryptocurrency. On 12 March, inflows into these funds reached $1 billion, and by 13 March, BTC/USD set a new all-time high, rising to $73,743. Then came a lull, followed by a post-halving correction, and finally, growth resumed in May. Early last week, net inflows into BTC-ETFs amounted to $887 million, the second largest in these funds' history. As a result, BTC/USD broke the $70,000 level and recorded a local high at $71,922.

Young whales (holding over 1,000 BTC) demonstrated noticeable accumulation, adding $1 billion daily to their wallets. CryptoQuant's head, Ki Young Ju, notes that their current behaviour resembles 2020. At that time, consolidation around $10,000 lasted about six months, after which the price increased 2.5 times in three months. Key representatives of these young whales include major institutional investors from the US, who accounted for a third of all capital inflows into spot BTC-ETFs in Q1 (about $4 billion) from companies with over $100 million in assets under management.

Besides BTC-ETFs, the recent growth was significantly influenced by April's halving. The Hash Ribbons indicator is giving an "optimal signal" to buy digital gold in the coming weeks, indicating a resumption of the asset's rally, according to Capriole Investments founder Charles Edwards. The metric shows miner capitulation that began two weeks ago. This period occurs when the 30-day moving average of the hash rate falls below the 60-day rate.

According to Edwards, miner capitulation happens roughly once a year, typically due to operational halts, bankruptcies, takeovers, or, as in this case, halving. The halving of the block reward makes equipment unprofitable, leading to its shutdown and hash rate decline. The last miner capitulation was in September 2023, when bitcoin traded around $25,000.

In the event of a new growth impulse, Edwards predicts the next medium-term target will be $100,000. However, he warns that summer traditionally sees a lull in financial markets, so the upward impulse might be delayed.

Wall Street legend and Factor LLC head Peter Brandt highlights the "remarkable symmetry" of market cycles, with halving halving the weeks between the bottom and the peak. If Brandt's model is correct, BTC should reach a peak between $130,000-160,000 by September next year.

Venture investor Chamath Palihapitiya offers a much more optimistic forecast. Analysing bitcoin's post-halving dynamics, he notes the cryptocurrency achieved its greatest growth 12-18 months after the event. Palihapitiya predicts that if the growth trajectory after the third halving is repeated, bitcoin's price could reach $500,000 by October 2025. Using the average figures of the last two cycles, the target is $1.14 million.

For the coming weeks, analyst Rekt Capital believes digital gold will need to confidently overcome the $72,000-$73,000 resistance zone to enter a "parabolic growth phase." Popular cryptocurrency expert Ali Martinez forecasts BTC will likely test the $79,600 price range. AI PricePredictions suggests that bitcoin could not only firmly establish above the critical $70,000 mark but also continue growing, reaching $75,245 by the end of June. This prediction is based on technical analysis indicators like the Relative Strength Index (RSI), Bollinger Bands (BB), and Moving Average Convergence Divergence (MACD).

Two catalysts could drive the upcoming growth of the crypto market: the launch of spot exchange-traded funds based on Ethereum after SEC approval of S-1 applications, and the US presidential elections. According to Bloomberg exchange analyst James Seyffart, the SEC might approve the applications by mid-June, although it could take "weeks or months." JPMorgan experts believe the SEC's decision on ETH-ETFs was politically motivated ahead of the US presidential elections. These elections themselves are the second catalyst for a bull rally.

A recent Harris Poll survey, sponsored by BTC-ETF issuer Grayscale, found that geopolitical tensions and inflation are prompting more American voters to consider bitcoin. The survey, which included over 1,700 potential US voters, revealed that 77% believe presidential candidates should at least have some understanding of cryptocurrencies. Additionally, 47% plan to include cryptocurrencies in their investment portfolios, up from 40% last year. Notably, 9% of elderly voters reported increased interest in bitcoin and other crypto assets following BTC-ETF approval. According to NYDIG, the total cryptocurrency community in the US currently numbers over 46 million citizens, or 22% of the adult population.

Evaluating this situation, Wences Casares, Argentine entrepreneur and CEO of venture company Xapo, believes the US could be one of the first to adopt a dual currency system. In this case, the dollar would be used for transactions with everyday goods and services, while cryptocurrency would be a store of value.

At the time of writing, the evening of Friday, 7 June, BTC/USD trades at $69,220. The total crypto market capitalisation stands at $2.54 trillion ($2.53 trillion a week ago). The Crypto Fear & Greed Index rose from 73 to 77 points over the week, moving from the Greed zone to the Extreme Greed zone.

In conclusion, the forecast for the next potential candidate for a spot ETF launch in the US after bitcoin and Ethereum. Galaxy Digital CEO Mike Novogratz believes it will be Solana, which showed impressive results over the past year. At the end of 2023, SOL was around $21 but exceeded $200 by March 2024, showing nearly tenfold growth. Currently, SOL is around $172 and ranks fifth in market capitalisation. Given Solana's current position, Novogratz is confident this altcoin has a good chance of being included in the pool of spot ETFs. Recently, BKCM investment company CEO Brian Kelly expressed a similar view.


NordFX Analytical Group


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

https://nordfx.com/

 

[Stan NordFX]

CryptoNews of the Week

– The Republican candidate for the upcoming US elections, Donald Trump, has declared his intention to become the "cryptocurrency president." Speaking in San Francisco, he presented himself as a defender of digital assets and criticized Democrats' attempts to regulate the industry.
According to Reuters, Trump raised $12 million for his campaign at an event for venture capitalists from Silicon Valley, organized by Chamath Palihapitiya and David Sacks at Sacks' mansion in the Pacific Heights area. Media reports indicate that executives from the crypto exchange Coinbase, the founders of the Gemini trading platform, Cameron and Tyler Winklevoss, and other industry representatives were present at the event.
Intercom CEO Eoghan McCabe shared on X about his participation: "I spoke with six people there. None identified as Republicans. All had voted for or donated to Democrats in the past. Now they support this guy [Trump] for his policies on war, immigration, cryptocurrency, and more. These elections are a referendum on these issues."

– The attitude towards cryptocurrencies will be a key difference between the candidates for the US presidency, Donald Trump and Joe Biden, though neither understands the topic. Billionaire Mark Cuban stated this: "Do you really think [Trump] understands anything about cryptography beyond making money from selling NFTs? Neither candidate understands. But I've often said that Biden will have to choose between [SEC Chairman] Gary Gensler and crypto voters, or it could cost him the White House."
Discussing the upcoming elections on X, ASI crypto-lawyer Preston Byrne noted that Trump's crypto policy is "actually very substantial and well thought out, while Biden's approach is insane and punitive."

– The "Intelligence Authorization Act for Fiscal Year 2025" was submitted to the US Senate on 3 June 2024. On 5 June, Senator Mark Warner's strategic amendment to this bill was published on the social network X, granting the US president new broad powers. This allows the president to "prohibit any transactions between any person under US jurisdiction and foreign intermediaries in digital asset transactions."
Financial lawyer Scott Johnsson criticized the law due to its wide scope. He sees it as an attempt to control digital assets under the guise of fighting terrorism, as the amendments added by Warner are borrowed from the Anti-Terrorism Financing Act.

– Late in the evening (CET) on 12 June, the FOMC (Federal Open Market Committee) of the US Federal Reserve will decide on the dollar interest rate. Historically, such decisions have always significantly impacted bitcoin's price. In this regard, ChatGPT-4o AI was tasked with forecasting BTC's price based on technical analysis and financial analysts' assumptions.
According to the AI, bitcoin will trade in the $68,000-73,000 range. However, a rate cut or hints of an upcoming reduction could push BTC beyond this range. In this unlikely economic scenario, ChatGPT-4o predicts the leading cryptocurrency will trade between $73,000 and $75,000 or higher.

– Over the past few days, the crypto market leader has lost nearly 10% in value. Many experts believe this is due to investors' concerns that US inflation will remain high for a long time. Under such conditions, a quick easing of the Federal Reserve's monetary policy is unlikely. Enthusiasm was also dampened by the fact that spot bitcoin ETFs broke a 19-day streak of investment inflows. On 11 June alone, industry funds lost nearly $65 million. MN Capital founder and analyst Michaël van de Poppe noted that investors are acting more cautiously ahead of the FOMC meeting on 12 June. He does not rule out that seller pressure will persist in the near term. Under such conditions, bitcoin could correct to $65,000. However, van de Poppe does not expect a deep price drop, as significant liquidity is concentrated around the $60,000 mark, indicating strong support, and positive dynamics could be supported by geopolitical instability.

– Traders note that "digital gold" has recently been trading within a narrow range of $66,000 to $72,000. One popular market participant considers the lower boundary an ideal entry point, while entry at the upper boundary carries high risk.
Despite recommended caution, over 70% of the crypto community participants in several surveys believe BTC is on the verge of continued growth. For example, a trader nicknamed Captain Faibik is confident that bitcoin is preparing to break out of the "expanding wedge" technical analysis pattern. Breaking above its upper boundary, in his opinion, will open the way for the cryptocurrency to rise above $94,000. Trader Titan of Crypto, in turn, expects bitcoin to reach $100,000 this summer.
Community participants also point to the activity of large investors as a sign of BTC's growth potential. Whales, according to crypto industry representatives, are actively taking long positions in bitcoin. Cryptoquant CEO Ki Young Ju noted that the $69,000 level has become particularly attractive for large investors.

– By the end of 2024, the first cryptocurrency will be worth between $125,000 and $135,000, according to BitGo CEO Mike Belshe. He believes that one of the catalysts for bitcoin's growth will be the high level of US national debt. "Our macroeconomic climate continues to confirm the necessity of bitcoin. Without a doubt, the US national debt is out of control. […] This situation supports the idea that bitcoin is the gold of the new generation," Belshe said.
He also noted that the US dollar is losing its position as the world's reserve currency due to US foreign policy. The BitGo CEO believes that the country uses the dollar as a weapon and a tool for manipulation. "Thus, the US national debt crisis is one thing, foreign policy and sanctions control is another. And BRICS is providing alternative payment systems. […] This is the story of why bitcoin exists," he concluded.

– The new Binance CEO Richard Teng, who succeeded Changpeng Zhao, believes that bitcoin will soon exceed $80,000. Teng associates the potential new high with the launch of spot BTC-ETFs traded on stock exchanges. This has strengthened trust in the asset, and retail traders and institutions no longer perceive it as risky. The Binance CEO also suggests that cryptocurrency legalization is possible if Donald Trump is elected president of the United States. Declaring himself a "crypto president," Trump stated in May that the US should lead the global crypto industry.

– The self-proclaimed first resident of Bitcoin City, American Corbin Keegan, left El Salvador without seeing his dream city begin to take shape. In November 2021, El Salvador's President Nayib Bukele announced plans to establish a crypto settlement. Upon hearing this news, Keegan left Chicago and headed to the South American country to become Bitcoin City's first resident. However, his patience eventually ran out, and he returned home.
The project's implementation was likely frozen due to a lack of funding. Bukele wanted to raise the necessary funds through the sale of "Volcano Bonds." These securities were planned for release in Q1 this year, but for various reasons, they did not see the light of day.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

https://nordfx.com/

 

[Stan NordFX]

Forex and Cryptocurrency Forecast for 17 – 21 June 2024​

EUR/USD: Hawkish Sentiments of the Fed

As expected, the key day of last week was Wednesday, 12 June. After the publication of inflation data in the USA, the dollar came under strong pressure. Fresh figures showed that in May, the overall inflation rate (CPI) in annual terms decreased to 3.3% compared to the expected 3.4%. On a monthly basis, the indicator dropped from 0.3% to 0% against the forecast of 0.1%. The Core Consumer Price Index (Core CPI), which does not take into account food and energy prices, was 0.2% (m/m) compared to April, which was below the forecast of 0.3%. Annually, this index grew by 3.4%, showing the slowest growth rate in the last three years (previous value 3.6%, forecast 3.5%).

This cooling of inflation increased market participants' expectations that the Fed might lower the interest rate twice this year, with the first stage of monetary policy easing occurring as early as September. As a result, the Dollar Index (DXY) fell from 105.3 to 104.3, and EUR/USD soared by more than 100 points, reaching a local high of 1.0851.

However, the bears' joy regarding the dollar was short-lived. The results of the FOMC (Federal Open Market Committee) meeting of the US Federal Reserve returned the DXY to its starting point. The key interest rate was predictably left unchanged at 5.50%. At the same time, the new median forecast of FOMC members showed that the regulator confidently expects only one rate cut in 2024. Recall that in March, the Fed predicted three cuts in 2024 and three in 2025. Now, 15 out of 19 Fed leaders expect at least one or two cuts this year (7 for 25 basis points, 8 for 50 basis points), while the remaining 4 forecast the start of easing (QE) no earlier than 2025. Currently, CME Group's FedWatch indicates almost a 70% probability of the start of QE at the September FOMC meeting.

Fed Chair Jerome Powell noted at the post-meeting press conference that the US labour market remains generally strong, although not overheated. The US economy continues to grow at a confident pace. According to him, further actions will depend on the balance of risks at each meeting. The Fed does not intend to allow a labour market collapse as a means of reducing inflation. If the economy remains resilient and inflation stable, the Fed is ready to maintain the current rate level for as long as necessary. If the labour market weakens or inflation falls faster than expected, the US central bank is ready to respond with a rate cut. At the same time, Powell noted that the regulator needs to see more "good data" to be confident in the sustainable movement of inflation towards the target level of 2.0%. Additionally, he warned markets against excessive expectations regarding the supposed monetary policy easing, adding that a single rate cut of 25 basis points will not have a significant impact on the economy.

Powell's rather hawkish rhetoric was reinforced by the publication of new medium-term economic forecasts presented by the Fed following the meeting. Thus, the regulator raised the inflation forecast for 2024 to 2.6% from 2.4%, and for 2025 to 2.3% from 2.2%. The Fed hopes to return inflation to the target 2.0% only in 2026. The US GDP growth forecast remained unchanged throughout the forecast horizon – at 2.1% in 2024-2026. The Fed also kept the unemployment forecast in the US at 4.0% in 2024, increasing it to 4.2% from 4.1% in 2025, and to 4.1% from 4.0% in 2026.

Besides this hawkish revision of the US central bank's economic forecasts, the dollar's further strengthening was facilitated by its role as a safe-haven currency. The future of the euro remains in question against the backdrop of political uncertainty in the Eurozone. On Sunday, 9 June, the results of the European Parliament elections, which shocked many, were announced: in Germany, France, and Belgium, far-right parties won while ruling parties suffered defeats. In France, President Emmanuel Macron's party garnered only 14.5% of the votes, resulting in the dissolution of the National Assembly and the appointment of early elections. Some market participants believe that political risks may send EUR/USD to the 1.0600 area or even lower in the coming weeks.

The weakening of the euro will also be facilitated by the fact that the European Central Bank has already begun a cycle of rate cuts. On Thursday, 6 June, the ECB Governing Council cut the key interest rate by 25 basis points to 4.25%. Since September 2023, inflation in the Eurozone has decreased by more than 2.5%, allowing the regulator to take such a step for the first time in a long while. Additionally, fresh macroeconomic data show that the target level of 2.0% may be achieved quite soon. For instance, the German CPI, the locomotive of the European economy, published on Wednesday, 12 June, showed a decline from 0.5% to 0.1% (m/m). ECB representative Bostjan Vasle stated on Thursday that "further rate cuts are possible if the disinflation process continues."

The last chord of the past week saw EUR/USD at 1.0702. As for the forecast of analysts for the near future, as of the evening of 14 June, 60% of their votes were given for the pair's decline, 20% for its rise, and 20% remained neutral. As for technical analysis, 100% of trend indicators and oscillators on D1 sided with the dollar, all coloured red, although 20% of the latter are in the oversold zone. The nearest support for the pair lies in the 1.0670 zone, followed by 1.0600-1.0620, 1.0560, 1.0495-1.0515, 1.0450, 1.0370. Resistance zones are in the areas of 1.0740, then 1.0780-1.0810, 1.0865-1.0895, 1.0925-1.0940, 1.0980-1.1010, 1.1050, 1.1100-1.1140.

In the coming week, on Tuesday, 18 June, it will be known what is happening with inflation (CPI) in the Eurozone, and statistics on the US retail market will also be released. On Wednesday, 19 June, it will be a holiday in the United States: the country celebrates Juneteenth. On Thursday, 20 June, the number of initial jobless claims in the US will be known, and the Philadelphia Fed Manufacturing Index will also be published. And at the very end of the workweek, on Friday, 21 June, a whole series of preliminary business activity (PMI) data will be received in various sectors of the German, Eurozone, and US economies. The publication of the Fed's Monetary Policy Report on the same day will also attract considerable interest.

continued below...

 

[Stan NordFX]

GBP/USD: What Will the Bank of England Decide on 20 June?

In autumn 2023, the BoE concluded that its monetary policy should remain tight for a prolonged period until inflation confidently stabilises at the target level of 2.0%. Based on this, despite a decrease in price pressure, at its meeting on 8 May, the Bank of England's Monetary Policy Committee (MPC) decided by a majority vote (seven to two) to keep the key interest rate at the previous level of 5.25%. (Two MPC members voted for a reduction to 5.0%).

According to the country's Office for National Statistics (ONS), since November 2022, the Consumer Price Index (CPI) has fallen from 11.1% to 2.3% – the lowest level since July 2021. The British central bank expects this figure to return to the target level in the near future but to increase slightly to around 2.5% in the second half of the year due to rising energy prices. Additionally, according to the May forecasts, CPI will be 1.9% in two years (Q2 2026) and 1.6% in three years (Q2 2027).

British inflation expectations for the near future have also decreased to the lowest level in almost three years, indicating a return to historically average levels. In May, the country's residents on average expected consumer prices to rise by 2.8% over the next 12 months, compared to a forecast of around 3% in February. This is stated in the results of the British central bank's quarterly survey.

Data on business activity (PMI) published in the first week of June indicated that the economy in the United Kingdom is relatively well. Activity in the manufacturing sector rose to 51.2 from 49.1 earlier. Some slowdown was shown by the PMI for the services sector – from 55.0 to 52.9, and the composite PMI – from 54.1 to 53.0. However, despite this, all these indicators remain above the 50.0 mark, separating growth from a slowdown in activity.

Certain concerns are raised by the UK labour market. Statistics published in early June showed a spike in jobless claims – by 50.4K in May after 8.4K the previous month. This is the largest monthly increase since the first COVID lockdowns. Before the pandemic, the last such spike was during the 2009 recession. Moreover, the unemployment rate for the February-April 2024 period rose to 4.4%. Of course, historically, this is a low level, but it is the highest in three years.

The next Bank of England meeting will be held on Thursday, 20 June. Analysts generally forecast that the interest rate will remain unchanged at 5.25%. This forecast is supported by the slowdown in inflation decline rates. Additionally, there is a significant increase in UK wages (+6.0%), which could push prices up. This, in turn, reduces the likelihood of the British central bank transitioning to a softer monetary policy in the near future. The start of QE may be delayed until September or later.

The BoE's tight monetary policy creates prerequisites for future demand for the pound. Meanwhile, last week, GBP/USD was driven by overseas data. On US inflation data, it broke through the upper boundary of the 1.2700-1.2800 channel and rose to 1.2860, then, following the FOMC meeting results, it fell and broke through the lower boundary, dropping to 1.2656. The week ended at 1.2686.

The median forecast of analysts for the near term is somewhat similar to the forecast for the previous pair. In this case, 50% of specialists voted for dollar strengthening, 25% for a northern trajectory, and 25% remained neutral. As for technical analysis on D1, the picture is also mixed. Trend indicators are evenly split 50:50 between red and green. Among oscillators, 60% point south (a quarter signal oversold), 20% look north, and the remaining 20% remain neutral. In case of further pair decline, support levels and zones are 1.2575-1.2600, 1.2540, 1.2445-1.2465, 1.2405, 1.2300-1.2330. In case of pair growth, resistance will be encountered at 1.2760, 1.2800-1.2820, 1.2865-1.2900.

Besides the mentioned Bank of England meeting on 20 June, including its interest rate decision and subsequent press conference, it is necessary to note Wednesday, 19 June, when fresh consumer inflation (CPI) data for the UK will be released. Friday, 21 June, also promises to be interesting. On this day, retail sales volumes and preliminary business activity (PMI) indicators in various sectors of the UK's economy will be known.

USD/JPY: BoJ Changed Nothing but Promised Changes in the Future

Unlike the Bank of England, the Bank of Japan (BoJ) meeting has already taken place, and its results were announced last Friday, 14 June. The yen's weakness in recent months has negatively impacted Asian currencies. In March, the central bank made its first move – raising the rate for the first time since 2007 (since 2016, it had kept it at a negative level of -0.1%). The regulator also abandoned the targeting of 10-year government bond yields. Investors closely watched the Japanese central bank for hints on whether it would further unwind monetary stimulus.

But for now, the BoJ decided not to change its accommodative monetary policy, maintaining the current pace of bond purchases at around 6 trillion yen ($38 billion) per month. However, it promised to present a plan for their gradual reduction at the next meeting in July. "We decided to subsequently reduce the volume of our purchases [within one to two years] to ensure more free formation of long-term interest rates in financial markets," the central bank statement said. At the same time, the regulator announced that it would gather market participants' opinions before making a specific decision.

The deposit rate for commercial banks was also left unchanged – officials unanimously voted to keep it in the range of 0.0%-0.1%, as expected. From this, experts once again concluded that the BoJ would not rush to tighten its quantitative easing (QT) monetary policy.

The French bank Societe Generale believes that given the pressure from the government due to the weak yen, the most likely scenario will be a reduction in bond purchases starting in August, with their purchases decreasing every three months and reaching zero by November 2025. Additionally, according to Societe Generale economists, the BoJ may raise the discount rate in September this year.

Of course, USD/JPY could not ignore such events of the past week as the US CPI figures and the Fed meeting: its fluctuation range exceeded 240 points (155.71 at the low, 158.25 at the high). However, the five-day result was not so impressive: starting at 156.75, it ended at 157.37.

Experts' forecasts for the near term look like this: not a single vote was given for the pair's southern movement and yen strengthening, while the remaining votes were evenly split: 50% pointed north, and 50% remained neutral. As for technical analysis, all trend indicators on D1 are coloured green. The nearest support level is in the 156.80-157.05 zone, followed by 156.00-156.10, 155.45, 154.50-154.70, 153.10-153.60, 151.85-152.15, 150.80-151.00, 149.70-150.00, 148.40, 147.30-147.60, 146.50. The nearest resistance lies in the 157.70 area, followed by 158.25-158.60, 160.00-160.20.

No significant economic statistics releases for Japan are scheduled for the upcoming week.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: The Present and Future of Bitcoin Depend on the USA

In the absence of independent drivers, the crypto market has recently followed the dollar, which in turn follows the Fed, which follows the macro statistics from the USA. BTC/USD is like scales, with the main cryptocurrency on one side and the US dollar on the other. The dollar became heavier – bitcoin became lighter, and vice versa. On Friday, 7 June, strong statistics on the US labour market were released – the dollar became heavier, bitcoin lighter. On Wednesday, 12 June, it turned out that inflation in the USA was decreasing – the dollar weakened, bitcoin became heavier. And in the evening, the Fed calmed the markets regarding the interest rate – and the scales swung back. Just look at the BTC/USD and Dollar Index (DXY) charts – the inverse correlation leaves no doubt.

In recent days, the flagship of the crypto market has lost about 7% in price. And the reason for this is the aforementioned monetary policy of the US Fed. Enthusiasm was not added by the fact that bitcoin-ETF inflows broke a 19-day streak. On 11 June alone, industry funds lost almost $65 million. The reasons are the same. They can be supplemented by the upcoming summer holiday season – a period of correction and lull in financial markets.

Traders note that recently, "digital gold" has been trading in a narrow range between $66,000 and $72,000. One of the popular market participants considers the lower mark an ideal entry point, while entry at the upper boundary of the range, in his words, carries high risk. MN Capital founder and analyst Michael van de Poppe does not rule out that pressure from sellers will persist in the near future. In such conditions, bitcoin may correct to $65,000 and even lower. However, van de Poppe does not expect a deep price drop. According to him, a large amount of liquidity is concentrated around the $60,000 area. This suggests that this level now acts as a strong support area, and positive dynamics can be supported by geopolitical instability.

According to surveys, more than 70% of the crypto community believe that BTC is on the verge of further growth. For instance, trader Captain Faibik is confident that bitcoin is preparing to break through the "expanding wedge" technical analysis pattern. According to him, breaking its upper boundary will open the path for the cryptocurrency to rise above $94,000. Trader Titan of Crypto, in turn, expects bitcoin to reach $100,000 this summer. The growth prospects of BTC are also indicated by the activity of large investors. According to industry representatives, whales are actively entering long positions on bitcoin. Cryptoquant CEO Ki Young Ju clarified that the $69,000 level has become particularly attractive for large investors.

New Binance CEO Richard Teng, who replaced Changpeng Zhao, believes that bitcoin will soon exceed $80,000. Teng associates the potential new high with the work of spot BTC-ETFs, which have strengthened trust in the asset. The Binance CEO also allows for the legalisation of cryptocurrency if Donald Trump is elected President of the United States. Declaring himself the "crypto president," Trump said in May that the USA should lead the global crypto industry.

However, at present, cryptocurrency regulation measures are in the stage of development and implementation, which restrains investments. According to experts, current investments should be considered test cases. It should also be noted that spot ETFs have attracted significant liquidity only in the USA – there is no similar interest in most countries.

According to billionaire Mark Cuban, the attitude towards cryptocurrencies will be a key difference between US presidential candidates Donald Trump and Joe Biden, although neither understands this issue. "Do you really think [Trump] understands anything about cryptography other than making money from selling NFTs?" Cuban asked. And he answered himself: "Neither of [the candidates] understands. But I've said many times that Biden will have to choose between [SEC Chair] Gary Gensler and crypto-voters, otherwise it could cost him the White House."

According to Bitfinex crypto exchange analysts, bitcoin's price could rise to $120,000-125,000 within a few months to half a year. Similar figures are named by BitGo crypto trust company CEO Mike Belshe. In his opinion, by the end of 2024, the first cryptocurrency will cost $125,000-135,000, and one of the catalysts will be the high level of US government debt. "Our macroeconomic climate continues to confirm the need for bitcoin. Undoubtedly, US government debt is out of control. [...] This situation supports the idea that bitcoin is the gold of the new generation," Belshe said.

He also noted that the US dollar is losing its position as the world reserve currency due to US foreign policy. The BitGo CEO believes that the country uses the dollar as a weapon and a means of manipulation. "Thus, the US debt crisis is one, foreign policy and sanction control is two. And BRICS offers alternative payment systems. [...] This is the story of why bitcoin exists," he concluded.

At the time of writing this review on the evening of Friday, 14 June, BTC/USD is trading at $65,800. The total crypto market capitalisation is $2.38 trillion ($2.54 trillion a week ago). Bitcoin's capitalisation has reached a solid $1.30 trillion, which, as experts warn, reduces the effect of future inflows. Pessimists say the asset is already "overheated," and to reach $125,000, its capitalisation must almost double. In their opinion, such a colossal influx during the overbought period is unlikely, so one should expect a correction and subsequent consolidation. The possibility of such an outcome is also hinted at by the Bitcoin Fear & Greed Index: over 7 days, it fell from 77 to 70 points and moved from the Extreme-Greed zone to the Greed zones.


NordFX Analytical Group


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

https://nordfx.com/

 

[Stan NordFX]

CryptoNews of the Week

– Bernstein analysts have raised the target price for the first cryptocurrency to $200,000 by the end of 2025, up from $150,000. This forecast is driven by expectations of "unprecedented demand from bitcoin-based spot exchange-traded funds managed by BlackRock, Fidelity, Franklin Templeton, and others." "We believe that ETFs have become a turning point for cryptocurrencies, triggering structural demand from traditional capital pools. Together, ETFs have attracted about $15 billion in new net funds," Bernstein stated in a memo.
Experts at the company believe bitcoin is in a new bull cycle. They described halving as a unique situation where the natural selling pressure from miners is halved or more, creating new demand catalysts for cryptocurrency, "leading to exponential price movements."
Analysts pointed to previous cycles: in 2017, digital gold peaked at about five times the marginal cost of production and then fell to a low of 0.8 of this figure in 2018. "During the 2024-2027 cycle, we expect bitcoin to rise to 1.5 times the metric, implying a cyclical high of $200,000 by mid-2025," Bernstein concluded.

– For many years, there have been ongoing debates about the imperfections of the first cryptocurrency's concept. Some criticise its creator, Satoshi Nakamoto, for lack of foresight, while others point to the project's technical shortcomings. To uncover what exactly is wrong with bitcoin, BeInCrypto asked the latest version of ChatGPT to analyse the cryptocurrency's whitepaper, which Nakamoto published in October 2008. The AI identified several flaws and errors in the key document of the crypto industry, including:
1. The 51% Rule. The whitepaper claims the network is secure if more than 50% of the power is controlled by honest participants. However, practice has shown that attacks are possible under certain conditions with fewer resources.
2. Anonymity. The document speaks of user anonymity, but bitcoin only offers pseudonymity. Transactions can be traced to specific users.
3. Scalability. The document does not predict the scalability issues that became apparent with the network's growing popularity. High transaction volumes lead to delays and increased fees.
4. Mining Difficulty. The author did not foresee the significant increase in mining difficulty and the impact of changes on the process's energy intensity. Modern mining requires enormous computing power and electricity.
5. Software Updates. The document does not address the need for regular software updates to maintain network security and implement new features.
6. Fork Resilience. The document does not consider the risks associated with network hard forks. Forks such as Bitcoin Cash polarise the community, potentially devaluing the network.
7. Regulation and Legal Issues. The document does not mention possible legal and regulatory obstacles for bitcoin. Since its publication, many countries have already introduced or are considering regulatory measures.

– Speaking at the BTC Prague 2024 conference, MicroStrategy head Michael Saylor stated that everyone gets bitcoin at the price they deserve. The entrepreneur admitted he once made a mistake by thinking bitcoin's days were numbered and that the coin was merely an asset for online gambling. According to Saylor, when bitcoin reaches $900,000, there will be those who claim the cryptocurrency is overbought and its price will crash, but then, when BTC reaches $8 million, they will buy at that price because they deserved it due to their disbelief in the main cryptocurrency's prospects.
The billionaire stated that bitcoin should be considered one of the safest assets today. He reiterated his view that the launch of spot ETFs-ETH provided strong support for the first cryptocurrency.
When asked by journalists whether it is worth selling bitcoins now, the entrepreneur replied that the asset currently lacks fundamental growth catalysts, but a price rise is expected soon. According to Michael Saylor, those who show patience will subsequently receive huge profits from holding digital gold.
For reference: MicroStrategy is the largest holder of bitcoins among public companies, with 205,000 BTC (over $13 billion) on its balance sheet.

– Euro Pacific Capital president and fierce cryptocurrency critic Peter Schiff outlined a possible hedge fund strategy that could lead to the collapse of bitcoin and MicroStrategy. He believes investors in spot BTC ETFs view digital gold as a speculative asset. In a new tweet, Schiff noted that bitcoin has been in a "sideways" trend for the third month, trading below the March high. With such dynamics, investors may lose patience and at some point decide to close their positions, causing a BTC price collapse amid a lack of liquidity.

– Analysts at IntoTheBlock are puzzled by the current situation surrounding bitcoin. According to experts, usually bull markets for cryptocurrencies are fuelled by widespread enthusiasm around the digital coin. However, despite a surge in activity among large holders (whales), there is no influx of new market participants. In fact, the number of primary BTC users has plummeted to multi-year lows, falling to levels seen during the 2018 bear market. This lack of retail user growth creates a critical misunderstanding of why investors are not buying bitcoins.
"The current situation with bitcoin is characterised by high transaction volumes of $79.2 billion over the last 7 days and significant exchange flows ($6.0 billion inflows and $6.53 billion outflows for the week). Nevertheless, retail investors remain on the sidelines," noted IntoTheBlock. The explanation could be that 87% of them remain profitable at the current price and do not want to risk increasing their positions.

– US presidential candidate Donald Trump confirmed his intention to take a more favourable stance on cryptocurrencies compared to the current Biden administration. "Crooked Joe Biden, the worst president in our country's history, wants it to die a slow and painful death. Under my watch, this will never happen," he said. "I will end Joe Biden's war on cryptocurrencies and ensure that the future of cryptocurrencies and the future of bitcoin are secured in America!"
Trump expressed support for the mining industry, stating he wants all remaining bitcoins to be mined in the US. He also promised to make Florida the central hub for cryptocurrencies. This assurance came after Florida was recognised as the best state for digital asset taxes in the US, according to CoinLedger data. New York State was named the worst.

– General Partner at venture fund a16z and former Coinbase executive Balaji Srinivasan believes that in the foreseeable future, cryptocurrency will become a fundamental financial instrument and a core component of all economic transactions. In his opinion, the combination of advances in crypto technologies and artificial intelligence capabilities will lead to a new stage of the industrial revolution and the evolution of money. AI and robotics will generate industrial abundance, changing the paradigm of how we perceive and use money.
According to Srinivasan, the most important form of scarcity in the age of artificial intelligence will be private keys for managing robots, and Web3 technologies such as the Bitcoin and Ethereum ecosystems will be the transport system for their payment and security management.

– Renowned investor and author of finance books Robert Kiyosaki strongly opposes fiat money, considering it "fake." He claims that wealthy individuals buy and save "real assets" such as cryptocurrencies like bitcoin, Ethereum, and Solana, as well as gold and silver. To evaluate this investment philosophy, one can calculate the current value of $1,000 invested on January 1, 2024. This amount, as Kiyosaki recommends, is divided into five different assets, $200 each.
Starting with the king of cryptocurrencies, which has shown the most significant growth (53%), $200 invested in bitcoin would be worth $307.29 by June 13. Next among the growth leaders is Ethereum, which has risen by 49% since the beginning of 2024, increasing its value to $298.18. The third in the list is Solana, which grew by 48.39%. Initial investments in SOL of $200 as of June 13 are valued at $296.78.
Precious metals have shown more modest growth. Silver has risen by 22% in the first five and a half months, and gold has added only 12%. Thus, $200 invested in these assets on January 1 would now be worth $244.91 and $223.72, respectively. Therefore, the total value of Kiyosaki's portfolio would have increased by 37% by June 13, making the initial $1,000 worth $1,370.

– The international environmental group Greenpeace provided fresh data showing that bitcoin mining has become an industry dominated by traditional financial companies. They "buy and operate large, energy-consuming facilities." Greenpeace identified the five largest companies financing mining in 2022: Trinity Capital, Stone Ridge Holdings, BlackRock, Vanguard, and MassMutual. According to environmentalists, they are collectively responsible for more than 1.7 million metric tons of CO2 emissions, equivalent to the annual electricity consumption of 335,000 American households.
In 2023, global bitcoin mining consumed approximately 121 TWh of electricity, comparable to the energy consumption of a country like Poland. This led to significant carbon dioxide emissions, according to the Greenpeace report.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

https://nordfx.com/

 

[Stan NordFX]

Forex and Cryptocurrency Forecast for June 24 - 28, 2024​

EUR/USD: Eurozone - Rising Inflation, Falling Economy

As revised Eurostat data published on Monday, June 17, showed, inflation (CPI) in the 20 Eurozone countries accelerated to 2.6% (y/y) in May, compared to 2.4% in April when it was at its lowest since November 2023. The consumer price index in the services sector increased annually from 3.7% to 4.1%. Core inflation, excluding the cost of food and energy (CPI Core), accelerated to 2.9% in May, compared to 2.7% in April - the lowest since February 2022.

Such growth in consumer prices gave euro bulls a faint hope that the European Central Bank (ECB) would slow down the rate cut. Against this backdrop, EUR/USD went up, reaching a local high of 1.0760. However, the business activity statistics (PMI) in the Eurozone, released on June 21, showed that to support the economy, the rate needs to be reduced further, not frozen at the current level of 4.25%.

In Germany, the locomotive of the European economy, the PMI index in the manufacturing sector was 43.4 points in June, worsening compared to the May figure of 45.4 and significantly below the forecast of 46.4. The PMI index in the services sector fell from 54.2 to 53.5, failing to meet market expectations of 54.4. The preliminary Composite PMI index for Germany also declined in June to 50.6 points, against the forecast of 52.7 and 52.4 in May. It is worth noting that all three indicators were the weakest in the last two months.

Eurozone statistics, in general, were not very encouraging. According to preliminary data, the PMI index in the manufacturing sector fell from 47.3 in May to 45.6 in June, missing the forecast of 47.9. The PMI index in the services sector decreased from 53.2 to 52.6 (forecast 53.5). The Composite PMI fell from 52.2 to 50.8 (forecast 52.5) and nearly reached the critical mark of 50.0 points, separating progress from regression.

After these data were released, market participants awaited similar statistics from the USA, which were to be published at the end of the workweek. The Composite PMI showed that business activity in the US private sector, unlike the Eurozone, continues to grow confidently. According to preliminary estimates, this indicator increased from 54.5 in May to 54.6 in June. The PMI in the manufacturing sector grew from 51.3 to 51.7 over the same period, while the services sector business activity index increased from 54.8 to 55.1. All these indicators exceeded analysts' expectations (51.0 and 53.4, respectively).

In addition to PMI data, the Fed's monetary policy report at the end of Friday also drew significant interest. Following its publication, EUR/USD ended the week at 1.0691. Regarding the analysts' forecast for the near term, as of the evening of June 21, it remained unchanged from seven days ago. Thus, 60% of experts voted for the pair's decline, 20% for its growth, and another 20% remained neutral. In technical analysis, 100% of trend indicators and oscillators on D1 sided with the dollar and turned red, although a quarter of the latter are in the oversold zone. The nearest support for the pair is in the 1.0665-1.0670 zone, followed by 1.0600-1.0615, 1.0565, 1.0495-1.0515, 1.0450, and 1.0370. Resistance zones are located at 1.0760, then at 1.0810, 1.0890-1.0915, 1.0945, 1.0980-1.1010, 1.1050, and 1.1100-1.1140.

Next week, there is plenty of interesting and important information expected from the USA. On Tuesday, June 25, the US Consumer Confidence Index will be published. On Wednesday, June 26, we will learn the results of the US bank stress test. On Thursday, June 27, data on the US GDP for Q1 2024 and the number of initial jobless claims in the country will be released. Finally, at the end of the workweek, on Friday, June 28, data on the US consumer market, including such an important inflation indicator as the Core Personal Consumption Expenditure Index, will be published.

GBP/USD: How the Interest Rate Will Fall

On Wednesday, June 19, a day before the Bank of England (BoE) meeting, consumer inflation (CPI) data was published in the UK. Overall, the picture was quite good. The consumer price index remained at the previous level of 0.3% month-on-month, lower than the projected 0.4%. Year-on-year, the CPI fell from 2.3% to 2.0%, reaching the central bank's target for the first time since October 2021. The core index (Core CPI), excluding volatile components such as food and energy prices, also showed a noticeable decrease from 3.9% to 3.5% (y/y).

The still high level of inflation in the services sector was disappointing. This indicator was higher than forecasted in the central bank's May report and amounted to 5.7% (y/y) against the expected 5.3%. "Indicators such as rent growth remain quite high. [...] These data confirm that the Bank of England will not lower rates at tomorrow's meeting," commented ING Bank strategists on the published statistics on June 19, and they were right.

At its meeting on Thursday, June 20, the Bank of England left the key interest rate unchanged for the seventh consecutive time, at 5.25%. Seven members of the Monetary Policy Committee voted for such a decision, two votes were cast for lowering the rate, and zero votes for increasing it. According to several policymakers, such a decision by the regulator was "finely balanced."

The latest data on inflation in the services sector is unlikely to prevent the BoE from starting a cycle of easing its monetary policy (QE) in the second half of the year. Especially since, according to the Committee members, the higher-than-expected CPI was due to one-off wage payment factors.

If the parliamentary elections in the UK on July 4 and the inflation report on July 17 do not present significant surprises, the Bank of England is expected to begin lowering rates as early as August. As ING Bank strategists write, "markets are pricing in a 43% probability of the first rate cut in August and expect easing by 46 basis points (bps) by the end of the year." TDS analysts, in turn, give the following forecast: "We expect a 15 bps rate cut by the August meeting and around 50 bps in total for 2024." Several other market participants' forecasts also suggest a reduction of about 30 bps by November.

On the day after the BoE meeting, Friday, June 21, the Office for National Statistics (ONS) published fresh data on retail sales in the UK, which were significantly higher than forecasted. In May, they increased by 2.9% (m/m) after falling by -1.8% in April, with markets expecting a growth of 1.5%. The core retail sales index, excluding automotive fuel, also grew by 2.9% (m/m) against a previous decline of -1.4% and a market forecast of 1.3%. Year-on-year, retail sales increased by 1.3% compared to April's decrease of -2.3%, while core retail sales rose by 1.2% (y/y) against -2.5% a month earlier.

Preliminary business activity (PMI) data were mixed. However, overall, they showed that the UK's economy is on the rise. PMI in the manufacturing sector increased from 51.2 to 51.4 points (forecast 51.3). Business activity in the services sector amounted to 51.2, below the previous value of 52.9 and the forecast of 53.0. The Composite PMI showed a slight decline to 51.7 against the forecast of 53.1 and 53.0 a month earlier. Despite the last two indicators being below previous values, they still remain above the 50.0 horizon separating economic growth from decline.

Against this backdrop, the pound attempted to recoup some losses but failed, and GBP/USD ended the week at 1.2643, turning strong support in the 1.2675 zone into resistance.

The analysts' forecast for the near term looks neutral: 50% of experts voted for the dollar to strengthen, while the same number (50%) preferred the British currency.

As for technical analysis on D1, the advantage is on the dollar's side. Among trend indicators, the ratio of forces between red and green is 75% to 25% in favour of the former. Among oscillators, 85% point south (a quarter signals the pair is oversold) and only 15% look north. If the pair continues to fall, it will encounter support levels and zones at 1.2575-1.2610, 1.2540, 1.2445-1.2465, 1.2405, and 1.2300-1.2330. In the event of the pair's growth, it will face resistance at levels 1.2675, 1.2740-1.2760, 1.2800-1.2820, 1.2850-1.2860, 1.2895-1.2900, 1.2965-1.2995, 1.3040, and 1.3130-1.3140.

As for the events of the coming week, not many are expected. Among the most important is the publication of the UK's GDP data on Friday, June 28.

continued below...

 

[Stan NordFX]

USD/JPY: BoJ Rate Hike Chances Close to Zero

At its meeting on June 13-14, the Bank of Japan (BoJ) kept the interest rate unchanged at 0.1%. Recall that in March this year, the central bank made a "bold" move by raising the rate for the first time since 2007 (it had been at a negative level of -0.1% since 2016). However, after this single rate hike in 17 years, the BoJ is unlikely to continue raising it in the foreseeable future, no matter how much some analysts and investors might want it.

Such desires and forecasts are popular due to the very low level of the Japanese currency. In early 2011, USD/JPY traded around 76.00, and since then, the yen has weakened more than twofold – on April 29, 2024, the pair reached a level of 160.22, the highest since 1986. This negatively affects national businesses. The benefits of a weak yen for exports do not cover the negatives for imports, as the trade balance is negative; the country imports more than it exports. Expensive imports, primarily raw materials and energy, reduce production profitability. GDP growth rates are falling – in Q1 2024, this indicator showed an economic contraction to -1.8% (y/y) compared to +0.4% in the previous quarter. Additionally, the national debt relative to GDP is approaching 265%.

In such a situation, the economy needs support, not restraint by raising the key interest rate. Moreover, compared to other G10 countries, inflation in Japan is low and has been steadily declining in recent months. According to fresh data, the national CPI index, excluding food and energy prices, fell from 2.4% to 2.1%. Moreover, in June, it could fall below the BoJ's target level of 2.0%. Thus, combating inflation by raising rates is unnecessary and even harmful. But how can the yen's position be strengthened then?

Another method besides tightening monetary policy (QT) is currency interventions. Japan's top currency diplomat Masato Kanda stated on June 20 that the government "will respond carefully to excessive currency movements" and that he "has never felt limited in the potential for currency interventions" and that the interventions conducted in May "were quite effective in combating excessive currency movements caused by speculators."

The words are beautiful. However, looking at the chart, one would argue with the official about the effectiveness of the interventions. Of course, USD/JPY retreated from the 160.00 mark for a while. But this period was quite short, and now it is again approaching this height. One can also recall similar actions in previous years, which only temporarily restrained the national currency's weakening.

This time, it seems officials have come up with another way to increase the effectiveness of monetary policy without changing rates. According to Reuters, the Ministry of Finance's commission is likely to urge the government to issue shorter-maturity debt obligations to reduce the risk of interest rate changes. (For reference, the yield on 10-year Japanese government bonds currently exceeds 0.9%, nine times the central bank's rate).

The last chord of the past week for USD/JPY was set at 159.79. The continuation of the Fed's tight policy, confirmed at the June meeting, and the BoJ's ongoing soft policy still play in favour of the dollar. (Although, of course, new currency interventions are not excluded). Economists from Singapore's United Overseas Bank (UOB) believe that only a breakthrough of support at 156.50-156.80 will indicate that the pair's current upward momentum has faded.

The median forecast of experts for the near term is as follows: 75% of them voted for the pair's move south and the yen's strengthening (apparently expecting new interventions), while the remaining 25% pointed north. Indicators show the opposite picture; they have not even heard about interventions. Therefore, all 100% of trend indicators and oscillators on D1 are green, although 20% of the latter are in the overbought zone. The nearest support level is around 158.65, followed by 157.60-158.20, 156.80-157.05, 156.00-156.10, 155.45-155.80, 154.50-154.70, 153.60, 152.85, 151.85, 150.80-151.00, 149.70-150.00, 148.40, 147.60, and 146.50-147.10. The nearest resistance is in the 160.00-160.20 zone, followed by 162.50.

The upcoming week looks busy on Friday, June 28. On this day, data on consumer inflation (CPI) in the Tokyo region will be published, as well as data on industrial production volumes and the labour market situation in Japan. No other important economic statistics are planned for the coming days.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: Patience, Patience, and More Patience

In the last review, we published a forecast by MN Capital founder Michael van de Poppe, who expected BTC/USD to fall to the $60,000-65,000 range. The analyst was essentially correct – the week's low was recorded on Friday, June 21, when the price dropped to around $63,365.

This time, we want to draw attention to the forecast of another influencer, the president of Euro Pacific Capital and a fierce opponent of cryptocurrencies, Peter Schiff. We have quoted his apocalyptic predictions multiple times. This time, the financier outlined a possible hedge fund strategy that would lead to bitcoin's collapse. According to him, investors in exchange-traded BTC spot ETFs treat digital gold as a speculative asset. Schiff noted that bitcoin has been in a "sideways" trend for the third month, trading below the March high. With such dynamics, investors might lose patience and decide to close positions at some point, causing BTC quotes to collapse amid a lack of liquidity.

It must be said that Schiff's negative forecast has some basis – in recent days, American spot Bitcoin ETFs have indeed shown an outflow of funds. Since June 7, their cumulative balance has decreased by $879 million to $15 billion. Over the past two weeks, long-term whale holders have sold digital gold worth $1.2 billion, with more than $370 million attributed to GBTC. Thus, whales and ETFs have collectively created downward pressure worth $1.7 billion during this time.

Of course, a cryptocurrency market crash is unlikely, no matter how much Peter Schiff might want it. However, the current situation raises concerns among many specialists. Usually, bullish cryptocurrency markets are fueled by general enthusiasm around the digital coin. However, analysts at IntoTheBlock observe that despite a surge in activity among major holders (whales) earlier this year, there is no influx of new participants in the market. In fact, the number of primary BTC users has sharply dropped to multi-year lows, falling to levels seen during the bear market of 2018. This lack of growth creates a critical misunderstanding of why investors are not buying bitcoins. "Retail investors remain on the sidelines," IntoTheBlock notes.

Perhaps it is all due to the relaxed summer mood, general macroeconomic gloom, lack of sources of fresh money inflow, and other drivers. But everything can change, of course. Speaking at the BTC Prague 2024 conference, MicroStrategy CEO Michael Saylor reiterated that bitcoin should be considered one of the safest assets today. When asked by journalists whether it is time to sell BTC, the entrepreneur replied that the asset currently lacks fundamental growth catalysts, but a price rise should be expected soon. According to Michael Saylor, those who show patience will later receive enormous profits from owning digital gold. (For reference: MicroStrategy is the largest holder of bitcoins among public companies, with 205,000 BTC on its balance sheet, worth over $13 billion).

Analysts at the financial company Bernstein have raised the target price of the first cryptocurrency to $200,000 by the end of 2025. The forecast is driven by expectations of "unprecedented demand from spot bitcoin ETFs managed by BlackRock, Fidelity, Franklin Templeton, and others." "We believe that ETFs have become a turning point for cryptocurrencies, causing structural demand from traditional pools of capital. In total, ETFs have attracted around $15 billion in new net funds," Bernstein's explanatory note reads.

According to the company's experts, bitcoin is in a new bullish cycle. They called the halving a unique situation where natural selling pressure from miners is halved or more, and new demand catalysts for cryptocurrency appear, leading to exponential price movements. Analysts pointed to previous cycles: in 2017, digital gold rose to a high roughly five times the marginal production cost and then fell to a low of 0.8 of this figure in 2018. "During the 2024-2027 cycle, we expect bitcoin to rise to 1.5 times this metric, implying a cycle high of $200,000 by mid-2025," Bernstein believes.

For now, at the time of writing, on the evening of Friday, June 21, the BTC/USD pair is far from $200,000 and trades at $64,150. The total cryptocurrency market capitalization stands at $2.34 trillion ($2.38 trillion a week ago). The Bitcoin Fear & Greed Index dropped from 70 to 63 points over 7 days but remains in the Greed zone.

To conclude the review, here's news from the world of Artificial Intelligence. For many years, there have been ongoing debates about the imperfections of the first cryptocurrency's concept. Some accuse the coin's creator, Satoshi Nakamoto, of shortsightedness, while others criticize the project's technical execution. To find out what's wrong with bitcoin, the editorial team at BeInCrypto asked the latest version of ChatGPT to analyze the cryptocurrency's whitepaper published by Nakamoto in October 2008. As a result, Artificial Intelligence found several shortcomings and errors in the main document of the crypto industry, some of which seem quite serious:

1. The 51% rule. The whitepaper claims that the network is secure if more than 50% of the power is controlled by honest participants. However, practice has shown that under certain conditions, attacks are possible with fewer resources.

2. Anonymity. The document mentions user anonymity, but bitcoin provides only pseudonymity. Transactions can be traced back to specific users.

3. Scalability. The document did not foresee scalability issues that became apparent with the network's popularity growth. High transaction volumes lead to delays and increased fees.

4. Software updates. The document does not address the need for regular software updates to maintain network security and implement new features.

5. Fork resistance. The document does not consider risks associated with network hard forks. Forks like Bitcoin Cash polarize the community, potentially reducing the network's value.

6. Regulation and legal issues. The document does not mention potential legal and regulatory obstacles for bitcoin. Since its publication, many countries have introduced or are considering regulatory measures.

7. Mining difficulty. The document's author did not foresee the significant increase in mining difficulty and the energy consumption changes. Modern mining requires enormous computing power and electricity. According to Greenpeace, in 2023, global bitcoin mining consumed approximately 121 TWh of electricity, comparable to the energy consumption of a country like Poland. This has led to significant CO2 emissions and serious atmospheric pollution, as stated in Greenpeace's report.


NordFX Analytical Group


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

https://nordfx.com/

 

[Stan NordFX]

CryptoNews of the Week

– On Monday, 24th June, for the first time since 3rd May, the price of bitcoin fell below $60,000, reaching $58,468 at one point. Ethereum, meanwhile, dropped below $3,250. “The market is struggling to digest large sales,” Bloomberg quoted Caroline Mauron, head of Orbit Markets. Although it is difficult to pinpoint the exact source of the current selling pressure, several contributing factors can be identified. The issues in the crypto market reflect the overall instability in global financial markets and uncertainty regarding monetary and regulatory policies in several leading countries, particularly China and the USA. Moreover, in mid-June, the German government began selling a large quantity of bitcoin (approximately 50,000 BTC) that was confiscated in January.
Bearish sentiments intensified following reports of imminent payments of about 140,000 BTC to creditors of the bankrupt crypto exchange Mt. Gox, which are set to begin in July. Popular trader Bob Loukas believes that in anticipation of this event, the flagship crypto asset’s prices reached their lowest level in the last eight weeks yesterday. Additionally, it became known that bitcoin miners' reserves reached a 14-year low as they were forced to sell a significant amount of coins to cover operational expenses due to the halving.

– In the absence of positive signals, the demand for spot bitcoin ETFs continues to decline, with major market participants slowing their activity in the derivatives market, further creating downward pressure. According to 10x Research, throughout the past week, US spot BTC-ETFs recorded investor outflows, with net outflows exceeding $105 million on 21st June. Earlier, Ki Young Ju, CEO of the investment company CryptoQuant, calculated that over the past two weeks, bitcoin whales and miners reduced their positions on over-the-counter platforms by $1.2 billion. 10x Research analysts believe that bitcoin will now need to find a new price range to stabilize the fall and then look for growth catalysts. In the medium term, according to 10x Research analysts, BTC is unlikely to return above $70,000.
It should be noted that according to JPMorgan analysts, the cost of bitcoin mining is $53,000. This support could become the lower boundary of the price range. However, back in March, JPMorgan did not rule out that after the April halving, bitcoin might temporarily drop to even $42,000.

– Popular analyst Matthew Hyland noted that the total balance of bitcoin on centralized exchanges has reached a multi-year low. In theory, this could be seen as a bullish signal, but the flagship of the crypto market is not yet showing upward momentum. It is expected that the publication of key US economic data in the coming week could serve as a vector for the further movement of cryptocurrencies. If macro statistics increase the likelihood of the Fed starting to ease monetary policy and the first interest rate cut as early as September, this could support risky assets, including bitcoin. Experts from Cryptology believe that the chances of bitcoin hitting an all-time high by the end of September are quite high and that the current situation is a phase of accumulation.

– Andrew Kang, co-founder of the venture company Mechanism Capital, stated that Ethereum’s price could correct by 30%, falling to $2,400 after spot ETFs for ETH are approved. In his opinion, at this stage, the main altcoin attracts much less attention from institutional investors compared to bitcoin. Based on this, ETH-ETFs will be able to attract only 15% of the funds compared to what BTC-ETFs received at launch. Kang noted that to increase Ethereum's attractiveness to investors, its ecosystem needs to be positioned as a decentralized financial settlement layer, a global computer, or a Web3 application store. At the same time, selling funds on new uses for Ethereum will be difficult since the asset is perceived by investors as an overvalued stock of one large tech company.

– Unlike Andrew Kang, SkyBridge Capital CEO Anthony Scaramucci believes that Ethereum's price could reach $10,000-12,000. As for bitcoin, the entrepreneur anticipates it could grow to $170,000-250,000. The main driver here will be the institutional adoption of cryptocurrency. Scaramucci called the approval of spot exchange-traded ETFs a significant regulatory barrier breakthrough for attracting new capital. According to him, this will soon result in digital gold comprising about 3% of large players’ portfolios.

– Cryptocurrency exchange Coinbase has been listed among American brands most often impersonated by scammers to deceive their victims. According to analysts at Mailsuite, from January 2020 to March 2024, the Coinbase brand was used in 416 scam schemes and phishing attacks.
Mailsuite studied 1.14 million incidents in total, in which scammers impersonated a well-known company or organisation more than 249,000 times. Among traditional firms, Facebook/Meta was the most popular American brand among scammers, mentioned in 10,457 recorded fraud cases. Next were the US Internal Revenue Service (9,762 incidents), Apple (9,110), Amazon (8,919), Steam (4,833), and Microsoft (4,518). Internationally, scammers prefer Japanese firms, with mobile operator au (18,964 cases) and railway company JR East (18,250) leading the list.

– The US Federal Bureau of Investigation has issued a warning about fake law firms promising to recover lost crypto assets from scammers or government agencies.
Scammers pose as authorised lawyers from government departments, including the FBI, and offer assistance in recovering previously lost or confiscated digital assets. The FBI recommended being wary of such service advertisements, especially when pseudo-lawyers demand advance payments and request sensitive financial information and personal data.

continued below...

 

[Stan NordFX]

– Former Goldman Sachs CEO Raoul Pal predicted significant growth for bitcoin and the cryptocurrency market in Q4 2024. Speaking on the podcast "The Wolf Of All Streets," the financier noted that risky assets like bitcoin usually rally during US presidential elections. "The final quarter of an election year is a real ‘banana zone’ for all assets. It’s always like that," Pal optimistically stated, adding that the ‘banana zone’ for cryptocurrencies in the autumn is much more pronounced than, for example, for the Nasdaq index.

– MicroStrategy founder Michael Saylor is convinced of the potential for the first cryptocurrency to grow to $10 million, supported by China and other factors.
He believes that in the future, governments, especially China, will fully accept the first cryptocurrency and integrate it into state infrastructure.
Calling bitcoin a "perfect asset," the entrepreneur explained that digital gold acts as a "corporate machine" that will allow companies to "live forever." He is confident that firms investing in bitcoin can last longer than those "mired in corporate ailments of the past." "The average lifespan of a corporation is about 10 years. […] We’re talking about eliminating corporate mortality; we’re talking about easily increasing economic viability by ten, a hundred, or maybe a million times," added the MicroStrategy founder.
Saylor also called all economic tools that appeared before bitcoin outdated. "Before Satoshi Nakamoto, economics was a pseudo-science. All economists before Satoshi tried to develop economic laws using shells, glass beads, bits of paper, and credit instruments," the businessman emphasized.
Recall that MicroStrategy is one of the world's largest holders of bitcoin. In June 2024 alone, it purchased 11,931 BTC.

– Founder and CEO of tech giant Dell Group Michael Dell expressed interest in bitcoin in correspondence with Michael Saylor. The situation has caused a stir in the cryptocurrency community for several reasons. Dell was among the top 10 richest people in the world in 1999 and 2000. He periodically appeared in the top 20 afterward. At the same time, the entrepreneur himself has positively commented on the digital industry. In 2021, he publicly stated that blockchain technology is highly undervalued. His company, Dell Technologies, accepted bitcoin as a payment method from 2014 to 2017. However, this option was later removed due to "low demand," as explained by the company. Now, the billionaire posted a statement on his page regarding the value of bitcoin and published another note on this topic.

– Ahead of the US presidential election, former cryptocurrency advisor Carole House has returned to work with Joe Biden’s team. "It is an honour for me to return to the Biden administration, where I hold the position of special advisor on the White House National Security Council," House wrote on her LinkedIn. In 2022, Carole House co-authored Biden’s executive order on cryptocurrencies and digital assets. Her return to the White House signals an improvement in the US president’s attitude towards cryptocurrencies.

– Matt Hougan, CIO of Bitwise, which manages cryptocurrency funds, cited three reasons why long-term investments in both bitcoin and ethereum have advantages over investments in bitcoin alone. These are: 1. portfolio diversification, 2. the ability to profit from vastly different ecosystems, and 3. economic benefits.
Given the difference in capitalization levels between bitcoin and ethereum, Matt suggests investing 75% of capital in BTC and 25% in ETH. According to the report, from May 2020 to May 2024, the return on such an investment portfolio was 3% higher annually than one in which bitcoin alone accounts for 100%.
However, Hougan acknowledges that in the short term, a portfolio consisting solely of bitcoin outperforms a diversified one. Additionally, investing solely in bitcoin carries less risk due to its higher market capitalization and features such as limited coin issuance and gradual reduction of inflation to zero.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

#eurusd #gbpusd #usdjpy #btcusd #ethusd #ltcusd #xrpusd #forex #forex_example #signals #cryptocurrencies #bitcoin #stock_market

https://nordfx.com/

 

[Stan NordFX]

Forex and Cryptocurrency Forecast for 01 – 05 July 2024​

EUR/USD: Inflation in the US – Everything is Going According to Plan

Last week, specifically on Thursday, 27 June, the dollar received support from positive macroeconomic data from the US. The Department of Commerce reported that according to the final estimate, the US GDP grew by 1.4% in Q1, against the forecast of 1.3%. (According to the current Fed forecast, the country's real GDP will expand by 2.1% in 2024). Labour market statistics were also optimistic – the number of initial jobless claims in the US amounted to 233K, lower than both the forecast of 236K and the previous figure of 239K. Durable goods orders did not disappoint either, rising by 0.1% in May against the forecast of a decline of -0.1%. Against this backdrop, the DXY dollar index rose to 106.10, approaching April highs, and EUR/USD dropped to 1.0685.

However, the main events of the week were scheduled for Friday, 28 June, the last trading day of Q2. It is worth noting that the cash flows typical for the end of the quarter and the adjustment of trading positions at this time usually increase market volatility and can even cause chaotic movements in major currency pairs. Additionally, intrigue was added by the fact that on this day, the Bureau of Economic Analysis of the USA was to publish data on the Personal Consumption Expenditure (PCE) index for May. This indicator is the Fed's preferred inflation gauge and therefore influences decisions regarding interest rate changes.

According to preliminary estimates, the markets expected that the core index would decrease from 2.8% to 2.6% year-on-year and from 0.3% to 0.1% month-on-month. If this forecast were to come true, it would have strengthened expectations of an imminent easing of the American regulator's monetary policy. On the eve of the publication, market participants predicted that the first Fed rate cut would occur in September, with another one in November or December.

However, there was also an alternative scenario. On Wednesday, 26 June, Fed Board member Michelle Bowman stated that if the disinflation process in the US stalls, the regulator would have no choice but to resume tightening policy (QT).

The actual figures matched the forecasts exactly – core PCE decreased from 2.8% to 2.6% year-on-year and from 0.3% to 0.1% month-on-month. It is obvious that this result was already priced in, so it did not produce a "wow" effect on market participants, and after a brief dip, DXY returned to current levels.

The dollar was also supported by the President of the San Francisco Federal Reserve Bank, Mary Daly, who commented on the PCE data: "The Fed has not yet made a decision, but the PCE data is good news. [...] There is evidence that policy is sufficiently tight. [...] It takes more time for the policy to work. [...] If inflation remains stable or decreases slowly, rates will have to be raised longer."

As for the European Central Bank (ECB), unlike its overseas counterpart, it has already started the easing process (QE). At its meeting on 06 June, it already lowered the euro rate by 25 basis points (b.p.) to 4.25%. And as ECB representative Olli Rehn stated on 26 June, the market forecast for two more rate cuts in 2024 seems "reasonable". These words from Rehn signalled tolerance towards inflation spikes in the Eurozone, which is a negative factor for the common European currency.

The final point of the week, month, and quarter was set by the EUR/USD pair at 1.0713. The analyst forecast for the near future as of the evening of 28 June is as follows: 65% of expert votes were given for the pair's decline, 20% for its growth, and another 15% remained neutral. In technical analysis, 80% of trend indicators on D1 sided with the dollar and turned red, while 20% preferred the euro. Among oscillators, 75% were on the dollar's side, with the remaining 25% taking a neutral position. The nearest support for the pair is located in the zone of 1.0665-1.0670, followed by 1.0600-1.0615, 1.0565, 1.0495-1.0515, 1.0450, and 1.0370. Resistance zones are found around 1.0740-1.0760, then 1.0815, 1.0850, 1.0890-1.0915, 1.0945, 1.0980-1.1010, 1.1050, and 1.1100-1.1140.

The upcoming week will be rich in macroeconomic statistics. On Monday, 01 July and Tuesday, 02 July, preliminary data on such an important indicator as the consumer price index (CPI) in Germany and the Eurozone will be released, respectively. Speeches by ECB President Christine Lagarde and Fed Chair Jerome Powell are also scheduled for 01 and 02 July. In addition, on Monday and Wednesday, business activity indicators (PMI) in various sectors of the US economy will be known. But this is not the end of the flow of important information. Late in the evening of 03 July, the minutes of the last FOMC (Federal Open Market Committee) meeting of the Fed will be published. On Wednesday, 03 July, and Friday, 05 July, we will be flooded with statistics from the US labour market, including the unemployment rate and the number of new jobs created outside the agricultural sector (NFP). Traders should also keep in mind that 03 July is a short day in the US, and 04 July is a full holiday as the country celebrates Independence Day. And looking a bit further ahead, we remind you that early parliamentary elections will be held in France on Sunday, 07 July, the result of which could greatly affect the common European currency.

GBP/USD: Focus – On 04 July Elections

General parliamentary elections will be held not only in France but also in the United Kingdom, scheduled for Thursday, 04 July. Announcing this event, Prime Minister Rishi Sunak stated that he is proud of the "achievements of his government [Conservatives]". "Economic stability is the foundation of any success," he added, noting that the UK economy is still growing and inflation has returned to normal levels.

Despite Sunak's assurances, in May 2024, the monitoring company Ipsos reported that 84% of the population are "dissatisfied with how the government is managing the country". Current election forecasts based on public opinion polls show that 21.3% may vote for the Conservatives, 41.9% for their opponents, the Labour Party, and the rest for other parties.

It must be noted that the government of Rishi Sunak has several real achievements. On 19 June, data on consumer inflation (CPI) was published, and overall, the picture turned out to be quite good. The consumer price index month-on-month remained at the previous level of 0.3%, lower than the forecasted 0.4%. Year-on-year, the CPI decreased from 2.3% to 2.0%, reaching the Bank of England's (BoE) target for the first time since October 2021. The core index (Core CPI), which excludes volatile components such as food and energy prices, also showed a significant decrease from 3.9% to 3.5% year-on-year.

According to the report from the Office for National Statistics (ONS), presenting the final data on 28 June for Q1 2024, the UK economy grew by 0.7%, higher than the previous value and forecast of 0.6%. Year-on-year, real growth was 0.3%, exceeding the previous value and expectation of 0.2%. This was the best dynamic since Q4 2021.

If the UK parliamentary elections on 04 July and the inflation report on 17 July do not bring significant surprises, the markets predict that the BoE will start lowering rates at its nearest meeting on 01 August. According to ING bank strategists, "we still forecast that the Bank of England will start lowering rates in August and will begin to signal this in its speeches as soon as the general elections on 04 July are over". In their opinion, the likelihood of rate cuts by the Bank of England is much higher than those by the Fed, which will put pressure on the pound sterling. TDS company analysts, on the other hand, give the following forecast: "We believe a rate cut of 15 b.p. is expected in August, and about 50 b.p. in total for 2024". In several other market participant forecasts, it is also mentioned that by November, the reduction could be around 30 b.p.

GBP/USD ended the past five-day period exactly where it started – at 1.2644. The analyst forecast ahead of the parliamentary elections is unequivocal – 100% side with the dollar and expect the British currency to weaken. Regarding technical analysis on D1, there is also a clear advantage on the dollar's side. Trend indicators are in favour of the dollar at 65% to 35% red to green. Oscillators are 100% pointing south, with 20% signalling the pair is oversold. In case of further decline, the pair's levels and support zones are 1.2610-1.2620, 1.2540, 1.2445-1.2465, 1.2405, 1.2300-1.2330. In case of the pair's growth, it will meet resistance at levels 1.2675, 1.2700, 1.2740-1.2760, 1.2800-1.2820, 1.2860-1.2895, 1.2965-1.2995, 1.3040, and 1.3130-1.3140.

As for the events of the upcoming week, all investor attention is focused on the elections on 04 July. The next important event, as mentioned, will be the publication of the fresh inflation report in the United Kingdom on 17 July.

continued below...

 

[Stan NordFX]

USD/JPY: Another Peak Conquered

Last week, 75% of analysts expecting new currency interventions voted for the USD/JPY pair's retreat south, while the remaining 25% pointed north. The minority, as is often the case with the Japanese currency, turned out to be right: no interventions occurred, and the pair reached another peak – 161.28.

Frankly, there's nothing to comment on here – everything has been discussed dozens and hundreds of times. The problem of the yen's weakening lies in the ultra-loose monetary policy of the Bank of Japan (BoJ). And as long as it does not decisively turn towards tightening, the national currency will continue to lose its positions. Of course, for a while, the Ministry of Finance and the Central Bank can support its exchange rate with currency interventions. But spending billions and billions on something that disappears like ripples on water after a few days – is there any point in that? Can this be called monetary policy?

If inflation falls in major competing countries, in Japan, it rises. According to data published on Friday, 28 June, the Consumer Price Index (CPI) in Tokyo for the year ending in June rose to 2.3% compared to 2.2% for the previous period. The core CPI inflation (excluding volatile food prices) also increased to 2.1% year-on-year, which is higher than both the forecast of 2.0% and the previous value of 1.9%. Another core CPI index for Tokyo (excluding food and energy prices) decreased in June to 1.8% year-on-year compared to the previous value of 2.2%.

Of course, these are not jumps that warrant sounding a loud alarm – all indicators are "hovering" around the target 2.0%. This allows Japanese officials to pause, without changing the vector of their monetary policy, and to limit themselves to verbal "interventions". Thus, Japan's Finance Minister Shunichi Suzuki once again stated that he is "deeply concerned about excessive and unilateral movements in the Forex market" and expressed hope that "trust in the Japanese currency is maintained". Suzuki's colleague, Cabinet Secretary Yoshimasa Hayashi, delivered almost the same speech word for word. However, he added that the authorities "will take appropriate measures regarding excessive currency movements", hinting at another currency intervention.

This hint from Yoshimasa Hayashi scared 60% of experts who voted for the pair's southward movement and yen strengthening, 20% pointed north, and 20% took a neutral position. The opinion of the indicators is unambiguous, as they have never heard of interventions. Therefore, all 100% of trend indicators and oscillators on D1 are green, although a quarter of the latter are in the overbought zone. The nearest support level is around 160.25, followed by 159.20, 158.65, 157.60-157.80, 156.60, 155.45-155.70, 154.50-154.70, 153.60, 153.00, 151.90-152.15, 150.80-151.00. The nearest resistance is in the 160.85 zone, followed by 161.30 and 162.50.

In the upcoming week, the calendar highlights Monday, 01 July. On this day, the Tankan Large Manufacturers Index will be published. No other important macro statistics regarding the state of the Japanese economy are planned for the coming days.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: Causes and Consequences of "Black Monday" on 24 June

Monday, 24 June, presented investors with a very unpleasant surprise – on this day, bitcoin's price fell below $60,000 for the first time since 03 May, reaching $58,468 at one point. Ethereum, in turn, fell below $3,250. Analysts highlight several reasons for the active sell-offs, noting that they reflect overall instability in global financial markets and uncertainty about monetary and regulatory policies in several leading countries, especially China and the US. However, there are also more specific factors that contributed to the development of the bearish trend.

In mid-June, the German government began selling off a huge amount of bitcoins (about 50,000 BTC) confiscated in January. Panic sentiment sharply intensified after the announcement on 24 June that creditor payments for the bankrupt crypto exchange Mt.Gox would begin in early July. The total amount of funds to be distributed among former clients is 162,100 BTC, roughly $10 billion. Bitcoin responded to this news with an 8% drop. It’s no surprise – such a volume of coins flooding the free market can seriously knock down prices. In the derivatives market, long positions worth $177 million were forcibly liquidated, and the total financing rate for futures contracts turned negative for the first time in June, indicating that sales exceeded purchases.

It is precisely on the expectations of Mt.Gox debt payments that the flagship crypto asset's quotes reached the lowest level in the past eight weeks last Monday. In this situation, two things are encouraging. Firstly, the deadline for repayment falls on 31 October, and it's possible that payments will be made in parts over four months rather than all at once. And secondly, there is hope that not all creditors will rush to convert their bitcoins into fiat, but will hold onto them, hoping for price growth.

In addition to the above, BTC miners exerted some downward pressure on the market. It became known that their coin reserves reached a 14-year low, as they had to sell a significant amount of BTC due to the April halving to cover operational expenses. Recall that the cost of mining bitcoin, according to JPMorgan analysts, is $53,000. Historically, this cost level is a strong support for BTC/USD. However, even in March, JPMorgan did not rule out that after the halving, bitcoin could temporarily fall to $42,000.

In the absence of positive signals, the demand for spot bitcoin ETFs continues to decline, major market participants slow down their activity, and start to take profits. This also pressures the prices. CEO of investment company CryptoQuant Ki Young Ju calculated that over the past two weeks, bitcoin whales and miners set a record by selling coins worth $1.2 billion.

According to 10x Research, all last week, US spot BTC ETFs recorded investor outflows, and on 21 June, net outflow exceeded $105 million. 10x Research believes that bitcoin will now need to find a new price range to stabilize the decline and then find growth catalysts. In the medium term, according to 10x Research analysts, it is not worth expecting BTC to return above $70,000.

Popular analyst Matthew Hyland noted that the combined bitcoin balance on centralized exchanges reached a multi-year low. In theory, this could be seen as a bullish signal, but the crypto market leader is not yet eager to show an upward trend. Naturally, the publication of key US economic data could serve as a vector for further cryptocurrency movements. If the Fed takes its first step in easing its monetary policy in September, it could support risky assets, including bitcoin. According to Cryptology experts, the chances of bitcoin reaching a new all-time high by the end of September are quite high, and what is happening now is a phase of accumulation.

Despite the current decline, many investors remain optimistic, citing the cyclical nature of the crypto market. They also do not forget about the US elections. For example, former Goldman Sachs CEO Raoul Pal predicted significant bitcoin and cryptocurrency market growth in Q4 2024. In an episode of The Wolf Of All Streets podcast, the financier noted that risky assets like bitcoin usually rally against the backdrop of US presidential elections. "The final quarter of an election year is a real 'banana zone' for all assets. It always is," Pal optimistically stated, noting that the "banana zone" for cryptocurrencies in autumn is much more pronounced than, for example, for the Nasdaq index.

Bitcoin was also supported by billionaire Michael Saylor. His company, MicroStrategy, is one of the largest bitcoin holders in the world, with 205,000 BTC on its balance sheet. Despite the negative trend, it increased its reserves by another 11,931 BTC (over $700 million) in the past month alone. Saylor is convinced of the first cryptocurrency's ability to grow to $10 million with support from China and other factors. He believes that in the future, governments, especially China, will fully embrace the first cryptocurrency and integrate it into the state infrastructure. The entrepreneur declared all pre-bitcoin economic instruments obsolete. "Before Satoshi Nakamoto, economics was a pseudoscience. All economists before Satoshi tried to develop economic laws with shells, glass beads, pieces of paper, and credit instruments," the businessman wrote, calling bitcoin a "perfect asset."

In previous reviews, we already wrote that the launch of exchange-traded spot ETFs on Ethereum could give a certain boost to the digital asset market. On 25 June, SEC (US Securities and Exchange Commission) Chairman Gary Gensler noted that the registration process for new ETFs is "going smoothly," and the approval date depends on how quickly applicants submit adjusted S-1 forms. Bloomberg analysts call 02 July the expected approval date for new products. Reuters, citing anonymous sources, reports that a consensus has been reached between fund managers and the SEC in negotiations, and only the "final touches" remain.

Co-founder of venture company Mechanism Capital Andrew Kang stated that after the approval of ETH-ETF, Ethereum's rate could correct by 30%, falling to $2,400. In his opinion, at this stage, the main altcoin attracts much less attention from institutional investors compared to bitcoin. Based on this, ETH-ETF will attract only 15% of funds compared to what BTC-ETF received at the start.

Kang noted that to increase Ethereum's attractiveness among investors, its ecosystem needs to be positioned as a decentralized financial settlement layer, a global computer, or a Web3 application store. At the same time, it will be difficult to sell new ideas for Ethereum's application to funds, as the asset is perceived by investors as an overvalued stock of a large technology company.

Significantly more positively views the future of Ethereum Matt Hougan, CIO of Bitwise, a company managing cryptocurrency funds. In his opinion, the appearance of a long-awaited exchange product is undoubtedly a positive factor, and the net inflow of investments into ETH-ETF over the first 18 months will amount to $15 billion. In his analysis, he relies on the experience of Canada and the EU, where in similar products the inflow ratio for Ethereum and Bitcoin is approximately 1 to 4 (i.e., 25%). In other words, if in the first quarter of work for spot Bitcoin-ETF the total inflow was $26.9 billion, for Ethereum it is expected to be at the level of $6.7 billion. In this case, in three months of work, the leading altcoin could rise to $4,400-5,000.

CEO of SkyBridge Capital Anthony Scaramucci believes that the price of Ethereum could rise even higher, reaching $10,000-12,000. Regarding bitcoin, the entrepreneur allows for its growth to $170,000-250,000. The main driver, in his opinion, will be the further institutional acceptance of cryptocurrency. Scaramucci called the approval of spot exchange ETFs an important regulatory barrier breakthrough for attracting new capital. Thanks to this, in his opinion, the share of digital gold in the portfolios of major players will soon be about 3%.

As of the evening of Friday, 28 June, BTC/USD is trading at $60,190, and ETH/USD is in the $3,390 zone. The total crypto market capitalization is $2.24 trillion ($2.34 trillion a week ago). The bitcoin Fear & Greed Index (Crypto Fear & Greed Index) has dropped from 63 to 47 points over the past 7 days, moving from the Greed zone to the Neutral zone.

In conclusion, here is another observation from Matt Hougan. The CIO of Bitwise presented three reasons why long-term investments in both bitcoin and Ethereum are more advantageous compared to investing only in bitcoin. These are: 1. portfolio diversification 2. the opportunity to earn on very different ecosystems and 3. economic benefit.

Considering the difference in the capitalization levels of bitcoin and Ethereum, Hougan believes that 75% of the capital should be invested in BTC and 25% in ETH. According to calculations, over the period from May 2020 to May 2024, the yield of such an investment portfolio is 3% per annum higher than one that only contains bitcoin. However, Hougan acknowledges that in the shorter term, a portfolio including 100% BTC outperforms a diversified one. Moreover, investing only in bitcoin carries fewer risks due to its higher market capitalization and features such as limited coin issuance and a phased reduction in the inflation rate to zero.

NordFX Analytical Group


Notice: These materials are not investment recommendations or guidelines for working in financial markets and are intended for informational purposes only. Trading in financial markets is risky and can result in a complete loss of deposited funds.

https://nordfx.com/