Sample Category Title

Bitcoin resilient in the face of Trump opposition

It seems nothing can escape the attention and criticism of the US President, with Trump tweeting about Libra and cryptocurrencies as a whole on Thursday evening, warning that Facebook and others will need a banking charter and be subject to all regulations.

He also claimed not to be a fan and lauded the US dollar as the most dependable and dominant in the world, which suggests the road ahead is not going to be easy for these assets in the US.

Bitcoin has proven to be very resilient to the attacks though, dropping around $500 following the tweets – a drop in the ocean by its standards – before rebounding today.

I doubt this will be Trump’s final intervention on the subject though so there’ll be plenty more tests for the cryptocurrency space which is probably being helped by the fact that it’s going through a good moment right now thanks to the Libra announcement.

General Trend:

• China June trade balance expected to be released at approx. 700 GMT (3:00 AM EST)
• China Q2 GDP and June data (including industrial production) due for release on July 15th (Monday)
• Singapore GDP unexpectedly contracted in Q2
• Asian government bond yield track Thursday’s rise in US Treasury yields
• Government officials from Japan and South Korea due to meet on July 12th amid trade dispute

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened flat
• (NZ) New Zealand Jun Business Manufacturing PMI: 51.3 v 50.4 prior

China/Hong Kong

• Shanghai Composite opened -0.1%, Hang Seng -0.1%
• (CN) China Vice Premier Liu He: Pressures on economy are 'normal;' China to further expand its opening up - Chinese press
• (US) June Los Angeles and Long Beach port complex inbound containers handled were -5.1% y/y, US/China trade dispute noted – financial press
• (CN) China local government financing vehicle (LGFV) Tianjin Binhai said to delay sale of US dollar denominated bonds - US financial press
• (CN) China PBoC Open Market Operation (OMO): Skips for the 15th consecutive; Net drain CNY100B v drain CNY100B prior
• (CN) China PBOC sets yuan reference rate: 6.8662 v 6.8677 prior
• (CN) China June Smartphone Shipments Y/Y: -5.0% v +1.3% prior - China Industry Academy

Japan

• Nikkei 225 opened +0.4%
• (JP) Japan Cabinet Sec Suga: Will review facts with South Korea at meeting [on July 12th] but will not negotiate
• (JP) DRAM prices rebound citing Japan export curbs - Yonhap

Korea

• Kospi opened +0.1%

Other

• (TH) Thailand Central Bank confirms it will issue measures on short-term capital flows: Increases reporting requirements for non-residents' holdings of debt securities
• (SG) SINGAPORE Q2 ADVANCE GDP Q/Q: -3.4% V +0.5%E (largest contraction in ~ 7 yrs); Y/Y: 0.1% V 1.1%E (slowest annual growth since 2009)

North America

• (US) Fed’s Williams (moderate, voter): the economy is in a good place; recent data is more mixed amid slower job gains and still low inflation
• (US) Fed's Quarles (hawk, voter): US economy is in a strong position based on data; there are some significant risks out there- CNBC interview
• (US) Fed's Brainard (voter, dove): Supports softening the rate path due to risks and low inflation

Europe

• Thomas Cook [TCG.UK]: Announces injection of £750M from Fosun Tourism
• (IR) US has decided not to impose sanctions on Iran at this time, no reason has been initially given for the decision - US Press

Levels as of 1:20 ET

• Nikkei 225, +0.1%, ASX 200 -0.3%, Hang Seng +0.3%; Shanghai Composite +0.4%; Kospi +0.2%
• Equity Futures: S&P500 +0.2%; Nasdaq100 +0.2%, Dax +0.3%; FTSE100 +0.3%
• EUR 1.1273-1.1249 ; JPY 108.61-108.31 ; AUD 0.6994-0.6970 ;NZD 0.6683-0.6657
• Gold +0.2% at $1,409/oz; Crude Oil +0.6% at $60.56/brl; Copper +0.4% at $2.698/lb

All eyes now on earnings

We're trading in the green again on Friday, with US futures pointing to fresh record highs on Wall Street after a satisfying testimony from Jerome Powell earlier in the week.

Powell testified on the semi-annual monetary policy report and Wednesday and Thursday and, safe to say, he passed with flying colors as far as investors are concerned. His downbeat tone when reflecting on the economic outlook and inflation combined with his complete lack of desire to correct market expectations, despite a cut being 100% priced in this month, gave investors exactly what they wanted.

Trade talks are continuing between the US and China although Trump's tweet about Chinese purchases of agricultural products yesterday further highlighted how more speed bumps may remain in the road ahead. The G20 was a positive development but there's still a long way to go and while a deal makes sense for both sides this year, it's far from guaranteed and could hit many more snags.

Still, with talks ongoing and the Fed soon to be back in easing mode, attention can now shift to earnings season which gets underway next week. It's expected to be a tough season for companies with a large number have offered negative guidance in the run up to it. An earnings recession looks on the cards, with earnings expected to have declined by a little below 3% in the second quarter, further fueling the case for rate cuts.

Bitcoin resilient in the face of Trump opposition

It seems nothing can escape the attention and criticism of the US President, with Trump tweeting about Libra and cryptocurrencies as a whole on Thursday evening, warning that Facebook and others will need a banking charter and be subject to all regulations. He also claimed not to be a fan and lauded the US dollar as the most dependable and dominant in the world, which suggests the road ahead is not going to be easy for these assets in the US.

Bitcoin has proven to be very resilient to the attacks though, dropping around $500 following the tweets - a drop in the ocean by its standards - before rebounding today. I doubt this will be Trump's final intervention on the subject though so there'll be plenty more tests for the cryptocurrency space which is probably being helped by the fact that it's going through a good moment right now thanks to the Libra announcement.

WTI holding above $60

Oil is trading higher again on Friday, with WTI on course to close the week out above $60 a barrel which could technically be quite a bullish signal. Numerous factors have contributed to oil's rally since the start of last month - restart of sino-US trade talks, OPEC+ deal being two important ones - but the recent inventory data has played a big role recently.

Another large inventory drawdown this week has propelled WTI back above $60, before finding some resistance around $61, which has been a notable level this year. If it can break above here then it would be a very bullish signal, with the next notable level being around $63.50-64.

Gold fails to make new highs again

Gold is a little higher again on Friday but we've seen further signs this week that the run may be experiencing some exhaustion. Last week a strong rally ended just short of the previous peak and the same happened yesterday, raising the question of whether it has the legs to see it higher in the near-term, or if the correction flags are waving.

The key level below remains $1,380, which it's seen support around on a couple of occasions recently. A break below here may signal that a sharper correction is on the cards. It may not be straightforward though as we failed to break this earlier this week also, suggesting there is some indecision and possible consolidation on the cards.

ECB Governing Council member Ignazio Visco said the central bank "will need to adopt further expansionary measures if the euro zone economy does not pick up." And, "in the coming weeks the ECB will continue to assess how to adjust the instruments at its disposal". This is in-line with market expectations that ECB is ready ramp up monetary stimulus either on July 25 or later in September.

Being Governor of Bank of Italy too, Visco expected the Italian economy to grow just 0.1% this year, marginally below the government's 0.2% official forecast. Though, he also expected growth to pickup to just slightly below 1% in 2020 and 2021. He urged the government to adopt "prudent" budget deficit targets for the coming years. But he also welcomed recent fall in Italian yields, after EU averted the Excessive Deficit Procedure on the country.

GBPAUD slid into a four-month trading range on February 19, with lower boundary of 1.8115 and an upper boundary of 1.8865, which two weeks ago, was broken aggressively to the downside, initially finding support at 1.7870. A pullback last week has sellers again reloaded for another test.

The short- and medium-term simple moving averages (SMAs) of 14 -, 21- and 40-day SMAs, have widened, confirming the negative trend which is restarting. The MACD flattened on the pullback, though has not crossed above the trigger line. Likewise, the RSI is in tandem with the down move and nears the 30 level, pointing down. The ADX stands at 29 concurring with the bearish bias trend.

If sellers persist to take control, an immediate test of the support of 1.7870 would need to be broken for the bearish momentum to keep on. Enduring such behavior would prompt a test of the uptrend line around 1.7700, ahead of the 1.7610 support. Added negative momentum could invoke losses towards the eleven-month low of 1.7207, shifting the long-term ascending movement to descending.

However, congested resistances do exist on the way back up. For chances of a shift to the upside in the short-term, buyers would need to push the pair ultimately above 1.8040 – 1.8115 to rest near the 1.8420 resistance, taken from the latest high.

In conclusion, GBPAUD has been in the short-term, negative, but nevertheless, the medium- and long-term outlook remains positive.

In June, in USD terms, US imports dropped -7.3% yoy to USD 16.19B. Exports dropped -1.3% yoy to 21.28B. Both import and exports were worse than expectation of -4.6% yoy and -0.6% yoy respectively. Trade surplus came in at USD 51.0B above expectation of USD 45.2B.

The results clearly showed some impacts in trade after US imposition on higher tariffs on USD 200B of Chinese goods came into effect. But so far, there was no notably improvement in US-China trade balance. US trade deficit with China came in at USD -140.5B in the first half, worse than USD -133.8B in first half of 2018.

Here are some details:

From Jan to Jun, with US:

• Total trade dropped -14.2% yoy to USD 258.3B.
• Exports dropped -8.1% yoy to USD 199.4B.
• Imports dropped -29.9% yoy to USD 58.9B.
• Trade surplus was at USD 140.5B.

From Jan to Jun, with EU:

• Total trade rose 4.9% yoy to USD 338.0B.
• Exports rose 6.0% yoy to USD 202.8B.
• Imports rose 3.3% yoy to 135.2B.
• Trade surplus was at USD 67.6B

From Jan to Jun, with AU:

• Total trade rose 6.3% yoy to 78.7B.
• Exports rose 2.0% to USD 22.1B.
• Imports rose 8.1% to USD 56.7B.
• Trade deficit was at USD -34.6B.

The US dollar is consolidating against a basket of major currencies. Investors took statements by Fed Chairman, Jerome Powell, on Wednesday as a signal for a further sharp fall in the key interest rate. However, a positive report on US inflation was published yesterday. Thus, according to the report, inflation accelerated by 0.3% (m/m) in June, while experts expected an increase by 0.2% (m/m). Also, the number of initial jobless claims dropped to 209K instead of 220K. Optimistic data that indicated a good state of the labor market weakened financial market expectations for a more aggressive rate cut by 50 basis points at the Fed meeting on July 30-31.

The European Commission has lowered the 2020 Eurozone GDP growth forecast to 1.4% from 1.5%. For 2019, the economic recovery estimate remains unchanged at 1.2%. The EC also lowered its growth forecast in the EU economy next year. The estimate of GDP growth in 27 countries for 2020 has been revised to 1.6% from 1.7%. According to the forecast, consumer prices in the Eurozone will increase by 1.3% in 2019-2020 against the forecasted 1.4%. The European Commission believes that duties imposed by the United States and China, may adversely affect the entire global economy. The slowdown in economic growth in the next two years may turn out to be even more significant if the United States and China continue to increase duties on each other’s goods. According to the minutes of the last meeting of the ECB, the regulator does not exclude the introduction of additional stimulus measures amid growing risks in the global economy.

The "black gold" prices continue to rise. At the moment, futures for the WTI crude oil are testing the mark of $60.70 per barrel.

Market Indicators

• Yesterday, there was a variety of trends in the US stock markets: #SPY (+0.23%), #DIA (+0.83%), #QQQ (-0.07%).
• The 10-year US government bonds yield has been growing. At the moment, the indicator is at the level of 2.10-2.11%.

The News Feed on 2019.07.12:

• Producer price index in the US at 15:30 (GMT+3:00).

Yesterday, the EUR/USD currency pair traded sideways between the psychological levels, located at 1.1250 and 1.1280 respectively. During Friday's morning, the pair continued to trade within the given cluster.

Note, that the exchange rate is supported by the 55– and 200-hour moving averages, currently located circa 1.1255. Thus, it is likely, that some upside potential could prevail in the market. However, note, that the rate has to surpass the weekly PP at 1.1269.

If the given support does not hold, it is expected, that the pair could decline to the support level formed by the 100-hour moving average, currently located at the 1.1235 mark.

During the previous trading session, the GBP/USD exchange rate tested the weekly PP at 1.2574. During today's morning, the pair was testing the resistance level formed by the 200-hour SMA and the monthly S1 at 1.2545.

If the given resistance holds, it is expected, that a reversal south could occur in the nearest future. However, note, that the currency pair could be supported by the 55– and 100-hour SMAs, currently located circa 1.2500.

If the given support does not hold, the rate could decline to the psychological level at 1.2480.

Otherwise, it is likely, that the pair could try to surpass the weekly PP within the following trading hours.

On Thursday, the USD/JPY currency pair tried to surpass the resistance formed by the 55– and 100-hour SMAs, located circa 108.50. During today's morning, the rate was testing the support formed by the 200-hour SMA at 108.28.

Given, that the exchange rate is squeezed by the given moving averages, it is likely, that it could trade sideways in the nearest future.

On the other hand, if the given resistance does not hold, it is expected, that the rate could target the psychological level at 108.80.

It is unlikely, that bears could prevail in the market, and the pair could drop lower than the 108.00 mark due to the lower boundary of the short-term ascending channel.