Ripple
Cryptocurrency RIPPLE gains 5% as fintech lawyers await to get access to internal SEC correspondence in court later today. Ripple has been fighting the SEC for nearly 2 years according to which the cryptocurrency is a security, and the company behind it has committed illegal sales. The cryptocurrency has proved surprisingly resilient to the crypto crisis of recent days.
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The dossier due to arrive in court today is expected to include messages exchanged by SEC members after former director Hinman’s speech. The one contrary to Gensler’s position indicated that cryptocurrencies could be commodities. Potentially inconsistent comments could undermine the SEC’s authority and increase Ripple’s chances of winning in court.
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The Federal Trade Commission (CFTC) has long been in dispute with the U.S. Securities and Exchange Commission (SEC) over whether cryptocurrencies should be considered commodities or securities. Over the years, there has still been no consistent position on the issue. This regulatory mess could be exploited by lawyers;
A look at the chart
In recent weeks, which have been very weak for crypto, the price of Ripple has managed to rise unexpectedly. The chart below shows the divergence between Binancecoin (yellow chart) testing the December minima, and Ripple - this one has been gaining since late May. In contrast to Bitcoin and most cryptocurrencies. The market is taking a positive view of the chances of winning in court, with the judge allowing evidence of the Commission’s internal correspondences into the case despite the SEC’s protest.
RIPPLE is climbing in the vicinity of 0.56 USD, and potentially breaking the psychological resistance of previous peaks at 0.57 USD may open the way to 0.68USD where the price may encounter the first significant resistance (past price action).
Gold - Chart of the Day
Gold traded lower yesterday after the publication of CPI data, with its price falling to $1941 per ounce. Today, gold traded calmly as investors await the Fed’s interest rate decision later today. While many expect the rates to remain unchanged, some anticipate a more hawkish stance given the high core CPI, prompting some to exit the gold market. This has added to the caution in the market, causing a slide in gold prices.
From a technical standpoint, gold is still viewed as being in a bullish uptrend channel, suggesting also a potential upward movement in the medium time frame. However, recent price action has been rejected several times from a short-term descending trend line, suggesting that gold might be at a crucial turning point. Support is around the 1920 - 1940 area, where the 100-day SMA currently lies. A break below these levels could unfold further bearish momentum. On the upside, if gold can manage to move above the 2000 level, it could suggest a resumption of bullish momentum.
USDJPY
USDJPY is on the move today with Japanese yen being the worst performing G10 currency while US dollar is one of the top performers. USDJPY is up almost 1% on the day. USD strengthening is driven by yesterday’s FOMC meeting, which in spite of a pause in rate hikes, turned out to be very hawkish. This is because the new dot-plot showed a median rate expectation at 5.6% for end-2023, an increase from 5.1% in March dot-plot. This also means that FOMC members see two more 25 basis point rate hikes this year while market expectations prior to the meeting were for one more hike yesterday or at the July meeting before ending the cycle. Hawkish message sent by Fed led to a major repricing in market expectations with swap market no longer pricing in Fed rate cuts this year.
This hawkish turn from Fed is not only supporting USD but also putting pressure on JPY. This is because it signals that divergence between Fed and BoJ policies will continue to grow. Bank of Japan will announce its next monetary policy decision on Friday but no change to the level of rates or other monetary policy settings is expected.
Taking a look at the USDJPY chart at D1 interval, we can see that the pair is trading in an upward channel. Pair broke above a local high from late-May 2023 and is now trading at the highest level since late-November 2022. USDJPY is approaching a mid-term resistance zone in the 142.00 area. Note that the upper limit of the channel can be found slightly above this resistance.
Bitcoin Below $25,000
The mood of the cryptocurrency market is weak today, with Bitcoin starting to fall after yesterday’s Fed decision and slipping from the $26,000 level to $24,800. Unlike the Nasdaq, crypto was unable to make up for the sell-off during Jerome Powell’s conference.
Industry portals also point out that Binance’s exchange-traded security fund-the so-called SAFU-has suffered significant losses because Binancecoin (BNB) and Bitcoin were the main components of its reserves-that have recently fallen sharply (especially BNB). Since the beginning of June, the value of SAFU was said to have fallen from $950 million to $861 million. The fund is to be used only in extreme situations for the exchange according to WSJ sources the exchange makes sure that its value is at an all-time high. Binancecoin is also losing today and has not been able to stay above $240.
Investors continue to withdraw their funds from the Binance exchange due to regulatory uncertainty and concerns about systemic risk. Since the Fed announcement, nearly one-fifth of the reserves in stablecoins (cryptocurrencies tracking mainly USD, used for purchases) have disappeared from the exchange.
The Bitcoin sell-side risk index is near all-time lows now. The indicator calculates the market’s unrealized gains and losses to the so-called realized asset size, i.e. the prices investors paid for the BTC they bought. Relative to the total realized value, the total value of gains and losses is $391 billion, which is historically very low. The low level of the ratio has historically occurred during periods of depleting supply pressure and total market abandonment. In addition, Glassnode reported that the indicator was supported by a low reading of the volume index - RVT.
BITCOIN, D1 interval. The price has fallen below $25,000 and if the level is not recovered relatively quickly a test of the 61.8 Fibonacci retracement, around $21,300, will not be ruled out - in the vicinity of these runs also the so-called Realized Price average, i.e. the average of purchases of all BTC since the beginning of the trading history - this average has served as an important trend indicator in many previous cycles.
US100
US100 index, currently trading at 15354 points, has shown strong bullish momentum by breaking a significant resistance level at 15220 points seamlessly. This upward movement also led to a break above the upward trending channel, indicating a potential continuation of the bullish trend. The next significant resistance level is around 15654 points. However, traders should be cautious as the recent rally may trigger profit-taking activities. In that case the index may decline to the last consolidation zone between 14500-14600 points.
Oil
Brent (OIL) launched new week’s trading with a bearish price gap as new on rising Iranian exports as well as cuts to Chinese growth forecasts created downward pressure on prices. OIL tested 200-period moving average at H4 interval this morning (purple line) but bulls managed to defend the area.
AUDUSD
The Australian dollar is one of the worst performing G10 currencies at the beginning of a new week. While there was no major news coming out from Australia over the weekend, there was some worrisome news relating to China - Australia’s largest trading partner. A number of large financial institutions - including Goldman Sachs, UBS and Nomura - decided to cut their 2023 GDP growth forecasts for China. Goldman Sachs explained its decision saying that fiscal and monetary stimulus in China will not be enough to generate a strong growth impulse.
China, 2023 GDP growth forecasts
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Goldman Sachs: 5.4% vs 6.0% previously
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Nomura: 5.1% vs 5.5% previously
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UBS: 5.2% vs 5.7% previously
RBA minutes are scheduled for release tomorrow at 2:30 am BST and will be a potential mover for AUD. RBA delivered an unexpected rate hike at its latest meeting and traders will look for a hints on whether this means that more rate hikes are coming. There is a feeling that recent upbeat data as well as the more hawkish stance of other central banks will encourage RBA to deliver another rate hike at July meeting as well.
Taking a look at AUDUSD at D1 interval, we can see that the pair halted an advance after reaching the 0.6885 resistance zone recently. Pair experienced a massive, almost-7% rally in the first half of June and given how steep those gains were, a correction or a period of profit taking cannot be ruled out. However, should the ongoing pullback deepen, the first support level to watch will be zone marked with 38.2% retracement of the upward impulse launched in October 2022.
Will ECB end rate hikes in July?
EURUSD is pulling back today, following a steep rally that took place last week. Last week’s advance was driven by ECB rate hike on Thursday. ECB President said at a post-meeting press conference that further tightening will likely be needed.
According to Gediminas Simkus, chief of Lithuanian central bank and ECB member, a rate hike in July should be delivered and it is not a matter of discussion. However, Simkus also said that ECB is nearing rate peak and it is too early to declare what decision will the Bank make at a meeting in September.
Money markets are almost fully pricing-in a July rate hike and an over-60% chance of a similar move in September.
EURUSD is pulling back noticeably today and is looking towards an important support zone, marked with 61.8% retracement of the last major downward impulse. This area was tested on Friday already but bears failed to break below. Moreover, a lower limit of the Overbalance structure can be found slightly below and further strengthens a support in the area.
AUDUSD
- The Reserve Bank of Australia (RBA) considered its last interest rate hike as a finely balanced decision.
- There is increasing frustration due to the lack of stimulus in China.
The Australian dollar (AUD) has become more volatile following the release of RBA minutes and the People’s Bank of China (PBoC) interest rate decision. The RBA’s minutes revealed a balanced stance in votes regarding interest rates, which dampened expectations of further tightening in the near future. However, the RBA remains committed to achieving its target range for inflation. Furthermore, the AUD’s performance has been influenced by concerns about the Chinese economy’s recovery after the COVID-19 pandemic. As investors worry about China’s economic outlook, the Australian dollar, often seen as a liquid proxy for the Chinese yuan, has declined. The absence of new policy stimulus from Beijing has led to frustration in the markets, affecting the AUD’s performance alongside a drop in the Chinese yuan.
From the technical perspective, AUDUSD price is 0.6% lower at 0.6810. The price attempted to break above a resistance level at 0.6887 but faced rejection, resulting in a retracement towards the support zone around 0.6793. Currently, the price consolidates and if it fails to hold above this 0.6793 level, the next support zone can be found around 0.6707. On the other hand, if the price manages to bounce back, it can potentially come back towards 0.6887.
Silver
USD strengthening and ETF outflows pressure silver prices
Silver is trading over 2% lower today, with the move being driven by significant strengthening of the US dollar triggered by better-than-expected US housing market data for May. Solid data makes the market think that another rate hike may be looming in July, given recent hawkishness of the Federal Reserve.
Apart from the strong US dollar and high US yields, we are also observing ETFs selling out their gold holdings. Silver ETFs sold more than 650 thousand ounces of silver yesterday while gold ETFs sold almost 30 thousand gold ounces, what was the fifteenth consecutive day of ETF sales. ETF sold almost 1% of their total silver holdings since the beginning of the year.
From a technical point of view, we can see that silver price has been pulling back since June 9, 2023 when price tested 50% retracement and 50-session moving average. Local lows from June 5 and June 15, which can be found slightly below 23.6% retracement, are being tested today. Next important supports in-line can be found in the $22.60 area, or local lows from May 25, 2023, as well as in $22.20 area, marked with 200-session moving average. Divergence with EURUSD points to silver being excessively oversold but it should be said that silver tends to be an underperformer at times precious metals struggle.
USDCHF Technical Analysis
USDCHF pair is currently rising and is expected to breach the 0.8996 (50 SMA in Yellow) level and attack 0.9093. However, caution is advised for upcoming trading as breaching the last level will cancel the negative effect of the double top pattern and lead the price to start a new bullish wave. The targets for this wave begin at 0.9032.
Therefore, due to the contradiction between the technical indicators, it is recommended to stay aside until the price confirms breaching 0.8996 resistance or breaking 0.8956 (25 SMA in Blue) support. It should be noted that breaking this support will push the price to resume the bearish trend and head towards 0.89071 followed by 0.88869 areas mainly.
Price action signal
Bitcoin near 29,000
“Bulls” return to crypto. The market is reacting to more moves by financial institutions📈
The cryptocurrency market has had some really good days. Fear over the Binance exchange and regulations has given way to positive sentiment due to the recent actions of investment funds. It’s thanks to them that the market is reassured that cryptocurrencies ‘won’t disappear’ from Western financial markets, and Bitcoin can finally count on interest from institutions. As a result, the largest cryptocurrency is struggling to break through $29,000 today.
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Following news of a Bitcoin Trust ETF from BlackRock and a similar fund application from Fidelity Investments, investors were optimistic about Deutsche Bank’s application to provide digital trust services.
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In the evening, the market also reacted to news of the opening in the US of a new crypto exchange EDX Markets. For the moment, however, the entity will specialize in serving institutions and cannot be compared to Binance or Coinbase
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EDX is backed by Citadel Securities and Virtu Financial, among others, some of the largest market makers in the world, as well as Charles Schwab , Fidelity Investments fund and other Wall Street institutions.
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Today’s reports from the US indicate that another institution, Invesco, has once again applied to the SEC for approval of a spot Bitcoin ETF
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A Nomura survey indicated that 96% of professional institutional investors managing nearly $5 trillion (303 institutions) are willing to invest in cryptocurrencies, and 82% had a positive view of the long-term prospects of Bitcoin and Ethereum
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As a result of Bitcoin’s sudden rise in the market, the largest wave of short position liquidations since May 28 took place (Approx. $40 million liquidation in the last 24 h according to CoinGlass)
On-Chain data shows the fastest increase in Bitcoin flows to institutions with very little or even zero trading history in more than 6 months. This behavior of the network may indicate an accumulation trend on the part of long-term investors.
Bitcoin (BITCOIN) stock chart, W1 interval. The largest cryptocurrency has rebounded from the lower limit of the uptrend sustained since the beginning of this year and is currently heading towards the upper resistance barrier, set by the zone of local peaks from April this year.
GBPCAD
Looking at the daily chart, the GBPCHF pair consequently dropped value from 1.6917. We have the “upper long wick” candle in the daily time frame suggesting possible decrease in the price with SL above the wick.
Zooming to the 4H time frame, the price reacted to 1.67992 - 1.67921 support area. The market for this instrument is considered bullish as long as this level is intact, and another rise to 1.6917 would be possible.
Trigger chart is the 1H time frame. Entry price is 1.6806 with the first target at 1.6847 followed by 1.6917.
US500
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Wall Street trades slightly lower on the opening
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Investors eagerly await the results of Powell’s testimony
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FedEx declined due to lower-than-expected forecasts for the year 2024
Investors remained cautious after a pause in interest-rate hikes, as Federal Reserve Chair Jerome Powell’s remarks indicated the expectation of higher interest rates to control inflation and reduce US growth. The second-quarter stock rally appeared to be fizzling out due to factors such as crowded bullish positioning, high valuations and a growth outlook.
Wall Street opened with losses as investors showed concern over signs of rampant inflation in major economies, indicating that central banks may not be close to winding down their tightening cycles. The S&P 500 and Nasdaq 100 both fell 0.4%, while the Dow Jones Industrial Average declined 0.5%.
A surge in US housing starts in May indicated strong demand outstripping supply, potentially fueling economic growth. Citigroup analysts believe core inflation is unlikely to return to target in such an environment.
The S&P 500 (US500), with the current price at 4,415 points, has experienced a 0.4% decline today. The price retraced from a resistance level of 4,500 points, which was approximately 6.5% below the all-time high. As the market undergoes a correction, the next level to monitor is at 4,400 points. If this level is broken, the subsequent support level to watch is at 4,300 points.
The recent strong gains in the market suggest that it may be overheated, as indicated by the Relative Strength Index (RSI) around 70. Therefore, a period of consolidation and correction is deemed reasonable under these circumstances.
USDJPY
The USDJPY is forming a double top pattern on the 1H chart, reacting to the resistance at 142.24. The pair couldn’t close above the aforementioned level.
By zooming out to the 4H chart, we see an “upper long wick” candle giving a signal with a risk of getting stopped above the last high and a 1 to 1 ratio reward around 141.27.
EURUSD Confirms the Breach
EURUSD pair confirmed breaching 1.0966 after ending yesterday above it, starting today with more positivity to reach 1.1000 barrier, which supports the continuation of the expected bullish trend on the intraday and short term basis, and the way is open to achieve our next main target at 1.1072.
The positive effect of the inverted head and shoulders’ pattern still active, and supports the continuation of the bullish wave, which gets continuous support by the EMA 25 and EMA50, noting that the continuation of the bullish wave requires holding above 1.0940.
UK100
Britain’s main benchmark UK100 is the weakest European index today, losing more than 1%. The upcoming - likely hawkish - decision by the Bank of England by no means signals the end of tightening in the British economy. While it is uncertain whether rates will rise by 25 or 50 bps, the market will almost certainly have to swallow a higher 50 bps BoE hike - today or in August. Yesterday’s reading indicated that UK inflation in May appears to have stabilized at excessively high levels. Core CPI was unchanged at 8.7% y/y - the market had expected 8.4% y/y. Also, the core CPI , which was expected to remain unchanged at 6.8% y/y, accelerated to 7.1% y/y - the highest level in 30 years.
The difficult situation could prompt the Bank of England to an extremely restrictive cycle if the BoE prioritizes the fight against inflation. In such a situation, the baseline scenario seems to be economic damage, which is generally not good for the performance of firms and consequently the stock market. With inflation anchored too high and a period of below-trend growth, a stagflationary scenario is a sizable threat to the British economy. As long as the labor market remains relatively strong, the market has no reason to be overly concerned, however, macro uncertainty has been reflected in the quotations of British indices recently.
Looking at the chart of FTSE (UK100) contracts, however, we see that the upward trend line is maintained although the index has dropped below the SMA200 (red line) indicating a possible further weakening of momentum. In addition, looking at the index’s quotations since February, this year, we can juxtapose them with the technical formation of a rising wedge from which a breakout usually takes place at the bottom. RSI indicators near oversold and MACD confirm considerable weakness in the bulls - further decline without an upward correction would therefore have to be outright ‘capitulation’. The market’s reaction to the BoE minutes and decision may prove crucial.
DE30
Release of flash PMIs for June from France and Germany turned out to be a disappointment. French data showed a slump in service gauge from 52.0 to 48.0, meaning that the sector was contracting. Meanwhile, German data showed a plunge in the manufacturing index from 43.2 to 41.0 - the lowest level since May 2020 when sentiment in the industry was slumping amid Covid-19 pandemic and resulting lockdowns. While DE30 saw a positive reaction to French data and moved slightly higher, the index took a hit following release of German data as it hinted at continued struggles of the German economy’s main motor - manufacturing.
Taking a look at the DE30 chart at the H4 interval, we can see that the index is currently trading near a psychological 16,000 pts level. A point to note is that the index plunged back into the recently broken 15,810-16,085 trading range. Nevertheless, the ongoing pullback has not yet exceeded the range of the correction that occurred in the second half of May 2023 and, according to the Overbalance methodology, remains in an uptrend. Should declines deepen traders should watch the 15,850 pts area, where the lower limit of the Overbalance structure can be found.
Oil - Morning Wrap
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Feud between Russian Ministry of Defense and PMC Wagner escalated into a rebellion over the weekend with the latter taking control of a few Russian cities and marching an armored convoy towards Moscow
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However, a deal between Kremlin and PMC Wagner was brokered by Belarusian president Lukashenko and the short-lived rebellion was ended
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Given lack of any significant resistance from the Russian army against Wagner’s advance on Moscow, war analysts wonder whether the uprising was staged
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As Wagner’s mutiny started and ended before the opening of markets, we do not see any major reaction to the events. Oil and precious metals opened slightly higher
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Indices from Asia-Pacific traded mixed during the first session of a new week. Nikkei dropped 0.1%, S&P/ASX 200 declined 0.4%, Kospi gained 0.4% and Nifty 50 gained 0.1%. Indices from China traded 0.3-1.5% lower
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European index futures point to a more or less flat opening of the cash session on the Old Continent
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SNB Chairman Jordan said that recent rate hikes were likely not enough to bring inflation down
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Chinese travel activity has still not recovered after a pandemic. Data for recent Dragon Boat Festival holiday (June 22-24) showed travel was 22.8% below pre-pandemic 2019
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Summary of Opinions from BoJ June meeting showed that CPI inflation is not expected to drop below target towards the end of the year. On top of that, one member saw it as appropriate to make changes to yield curve control mechanism
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OPEC expects global oil demand to reach 110 million barrels per day by 2045
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Saudi Aramco head said that China and India account for over 2 million barrels of oil demand growth
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S&P Global lowered its Chinese GDP growth forecast for 2023 from 5.5 to 5.2%
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Cryptocurrencies are trading lower - Bitcoin drops 0.6%, Ethereum trades 0.9% lower and Dogecoin slumps 1.6%
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Energy commodities gain - oil trades 0.2% higher while US natural gas prices jump 2%
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Precious metals advance - gold trades 0.4% higher, silver jumps 1.6% and platinum adds 1.4%
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GBP and NZD are the best performing major currencies while USD and CHF lag the most
OIL.WTI opened higher following a short-lived Russian coup but all of the gains have been erased already.
GBPUSD
GBPUSD pair’s decline halted at the 1.2675 level, where it found solid support. It then began to rise and attempt to recover on an intraday basis, which suggests that it is heading towards building a new bullish wave. The targets of this wave begin with testing the broken support of the main bullish channel that has now turned into resistance at 1.2815. It is worth noting that breaching this level will push the price back to the mentioned channel and achieve additional gains that reach 1.2900 areas.
Therefore, we expect to witness more bullish bias in the upcoming sessions, supported by the technical indicators’ positivity. It is important to consider that breaking 1.2675 will stop the bullish wave and push the price to achieve bearish correction on an intraday and short-term basis.