EU leaders to come up with an unwavering response to Trump’s protectionism policies
The crypto king, Bitcoin is trading nearly one-third of its December 2017 price, clearly a very strong bear. The futures market for Bitcoin has brought one thing for Bitcoin, reduction in the volatility and it can be argued that Bitcoin may not see the kind of volatility it used to see it. Traders have been selling the crypto-currency king for the past 4 consecutive weeks. Switching it to the monthly chart, the picture shows that we have two consecutive months of selling, a trend which is not witnessed all the way back to mid-2016.
When it comes to the oil market, one element is pretty much clear that OPEC has started to bow to the US. We have doubts if Iran won’t be able to sell the oil in the market despite the US pressure. It is possible that the Iranian oil customers may start to flee sooner just to be on the right side of the US and this is despite the fact the US has adopted its hardest stance when it comes to the protectionist policies. However, Iran only needs to convince only one major buyer, China to keep its oil flow going and given the US-China trade war situation, it may not be hard at all.
If there is one thing on which many can agree on is this that China hasn’t adopted its aggressive stance yet, it has many other high yielding option if the Trump administration continues to pressure China. Buying oil from Iran stands tall among other options. Thus, Iran is not in a horrible position at all. American allies do not hold the kind of relationship with Trump administration that they had during President Obama’s term. Thus, bringing the Iranian oil export to zero may not be possible at all.
The Euro is the winner currency for us when we look at the G-10 currency table. It spiked against the dollar on the back of the news that the euro leaders have shown a united front. The EU came together and it resolved important issues such as trade and immigration. Together they have sketched a plan which would resolve the root cause of many of the qualms which traders are facing. Investors wanted the EU leaders to come up with an unwavering response to Trump’s protectionism policies and show that they stand together. Italy refused a ship of immigrants recently and that rattled many in the EU. However, the country promised to speed up the migrant process and distribute them evenly.
As for Sterling, the currency is down nearly -3% YTD. The upcoming current account number and final GDP q/q/ data would be watched closely. The Q1 GDP is expected to come in at 0.1% and this would confirm some improvement but for the bank of England, it is more of a consumer spending, mortgage approval, inflation and unemployment story which matters the most. Any weakness in the consumer credit from previous month’s reading of £1.8m would be deemed as an adverse element for the economy. As for the technical analysis, we are looking at the 1.30 level for the GBP-USD pair, and if this support holds, the odds would be skewed in favour of the uptrend. Under that scenario, it may not be any harm to target the level of 1.40 for the GBP-USD pair.
The precious metal is on track to record its worst quarterly loss since the end of 2016 and third consecutive weekly loss. The SPDR gold trust’s holding shows that investors are still dumping the precious metal. The data shows the holding stood at 820.51 or in other words down by 1.18 tonnes from the previous business day. The dollar index has lost some of its strength but we have not seen any meaningful move for the precious metal. Given that we have broken the 1250 support, it is likely that the price may test 1235 mark, the 50-day moving average on a quarterly chart.
