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Russian Economic Development Minister Maksim Oreshkin has stated that while bitcoin has deflated like a “soap bubble,” it has impacted the world positively by boosting investment in new technologies. Speaking to the media on Wednesday at Russia Calling, an investment forum organised by VTB Capital, Oreshkin said that despite the woes of the crypto market, the conversation around it has successfully driven significant international interest in a vast number of projects in new fields, principally blockchain technology.

Giving his comments at the event, he said: “You may recall what I said, for example, last year, when Bitcoin’s price jumped up to $20,000, and now it is lower than $4,000, we said very simple things. Bitcoin itself is a soap bubble, it deflated, that’s what happened. […] Unfortunately, many people were affected [because of their investments in cryptocurrency], but again, in terms of new technologies, new businesses, it gave a positive impetus.”

His line is in keeping with the general Russian state reaction to the growth of cryptocurrency. Until now, the legal status of crypto trading, ICOs, and mining has not been firmly established in the country, with Russian authorities doing little more than issuing vague disclaimers and investment advisories from time to time.

While a number of prominent voices have advocated blockchain adoption for reasons as varied as using a gold-linked cryptocurrency to protect its arms export industry to adopting DLT to eliminate customer abuse in the pension fund industry, this still remains far from happening. Thus far, the Russian state’s interest in bitcoin has been largely restricted to facilitating foreign missions in need of hard-to-trace cash.

In March, three draft bills aimed at correcting the regulatory gap were submitted of reading in Russia’s parliament, although the proposed laws included a clause that stipulated that Russia does not recognise digital financial assets as legal tender in the country. Despite this, it has been reported in the past that the country is examining the possibility of skirting US-imposed sanctions using cryptocurrency as a primary solution.

• The Trump-Xi meeting is due tomorrow; whether a “ceasefire” is agreed may determine the near-term direction of the dollar and equities
• Market reaction to FOMC minutes was muted. Attention turns to a speech by NY Fed President Williams today at 1400 GMT
• Oil rebounds after posting fresh one-year lows, eyes next week’s OPEC meeting

Trump and Xi to meet, outcome may shape risk appetite

Movements in the FX market were largely subdued, with investors increasingly turning their attention to the Trump-Xi Jinping meeting tomorrow. The focus will be on whether a “ceasefire” on further tariffs will be agreed, which may set the stage for a gradual de-escalation in tensions. While signals by various US officials initially pointed to a decent likelihood for a truce, the rhetoric has toughened somewhat in recent days. The question is whether this is part of “the plan”, in the sense of the US posturing ahead of the talks to gain negotiating leverage, or whether the American delegation will truly seek major and perhaps unrealistic concessions.

The outcome will probably be crucial for risk appetite over the short term. A potential “truce” could lift sentiment, propelling riskier assets such as stocks, the aussie, and the kiwi higher. As for the dollar, considering that it has acted as a safe-haven in the midst of this dispute, gaining when tensions escalated, it will probably edge lower if markets get the sense a ceasefire is looming. A failure to reach a consensus though, or even worse, renewed threats for further tariffs, would likely trigger the opposite reactions; namely a stronger dollar and lower equities.

Dollar unimpressed by Fed minutes, looks to Williams’ remarks

The dollar index remains on a soft footing amid elevated concerns the Fed may pause its hiking cycle next year. The minutes of the latest FOMC meeting yesterday did not reveal anything particularly new. “Almost all” members judged another hike is warranted “fairly soon”, solidifying expectations for a December action. Adding credence to the theme a pause may be looming though, “many” participants considered it appropriate to gradually shift to language that places greater emphasis on incoming data.

Looking at market pricing, only a single quarter-point rate hike is factored in for 2019, versus the three the Fed itself indicated in its latest “dot plot”. Considering the strength of the US economy though, even accounting for signs it may be slowing, this pricing seems overly pessimistic – especially since there hasn’t been any clear signal so far pointing to a pause. This doesn’t go to say there won’t be one, but rather that it’s probably too early to tell at this point, and that is why the Fed is trying to keep its options open as well. Remarks by New York Fed President Williams today at 1400 GMT may shed some more light on the matter.

Oil rebounds after touching new lows, eyes next week’s OPEC summit

Crude prices fell to fresh one-year lows yesterday, before rebounding on a report that Russia is becoming “increasingly convinced” it needs to cut its output alongside OPEC. Indeed, markets are looking towards next week’s OPEC meeting (Dec. 6) as a potential source of support for oil prices, hoping the cartel will make a credible commitment to curb its output and stabilize prices. Heading into the meeting, it wouldn’t be a surprise to see crude prices stabilize or even recover as speculation for a cut grows, particularly if the relevant officials continue to strike an optimistic tone.

Other highlights for today

In the Eurozone, preliminary inflation data for November (1000 GMT) are expected to show that headline inflation cooled somewhat in yearly terms, though the core rate that excludes volatile energy and food items is forecast to tick higher. The ECB tends to focus more on the core figure, where a potential acceleration may help the euro to recover a little.

In Canada, GDP for Q3 is due out (1330 GMT).

Besides the Fed’s Williams, ECB members Mersch (1015 GMT) and Coeure (1215 GMT) will speak. ECB President Draghi will also deliver remarks, though there’s no fixed time for his appearance.

Swiss KOF economic barometer dropped to 99.1 in November, down from 100.2 and missed expectation 99.8. It's the second consecutive month of decline and is now below long term average again.

KOF noted that "this month's decline was in particular due to less favourable export prospects. The impetus from foreign demand is likely to weaken somewhat in the coming months." Also, "the development in the banking and insurance sector may lose some of its momentum." On the other hand, there's "slight support" from construction sector and private consumption. And, manufacturing is also "resisting downward tendency".

Full release here.

Pivot (invalidation): 2698.00

Our preference Long positions above 2698.00 with targets at 2785.00 & 2815.00 in extension.

Alternative scenario Below 2698.00 look for further downside with 2683.00 & 2655.00 as targets.

Comment The RSI advocates for further advance.

Pivot (invalidation): 11355.00

Our preference Short positions below 11355.00 with targets at 11230.00 & 11190.00 in extension.

Alternative scenario Above 11355.00 look for further upside with 11410.00 & 11488.00 as targets.

Comment The RSI is bearish and calls for further downside.

Pivot (invalidation): 5.1850

Our preference Short positions below 5.1850 with targets at 5.1300 & 5.0860 in extension.

Alternative scenario Above 5.1850 look for further upside with 5.2080 & 5.2410 as targets.

Comment As Long as the resistance at 5.1850 is not surpassed, the risk of the break below 5.1300 remains high.

Pivot (invalidation): 0.7295

Our preference Long positions above 0.7295 with targets at 0.7345 & 0.7360 in extension.

Alternative scenario Below 0.7295 look for further downside with 0.7275 & 0.7250 as targets.

Comment The RSI is above its neutrality area at 50%.

Pivot (invalidation): 1.3255

Our preference Long positions above 1.3255 with targets at 1.3315 & 1.3340 in extension.

Alternative scenario Below 1.3255 look for further downside with 1.3235 & 1.3205 as targets.

Comment The RSI is above its neutrality area at 50%.

Pivot (invalidation): 0.9940

Our preference Long positions above 0.9940 with targets at 0.9975 & 1.0005 in extension.

Alternative scenario Below 0.9940 look for further downside with 0.9915 & 0.9900 as targets.

Comment Technically the RSI is above its neutrality area at 50.

Pivot (invalidation): 113.20

Our preference Long positions above 113.20 with targets at 113.55 & 113.70 in extension.

Alternative scenario Below 113.20 look for further downside with 113.00 & 112.80 as targets.

Comment A support base at 113.20 has formed and has allowed for a temporary stabilisation.