Daily Market Analysis and News From NordFX

[Stan NordFX]

GBP/USD: Bank of England – Are Surprises Expected on 1 August?

Our previous review of GBP/USD was titled "Pound Wins with Labour," and indeed, it has. Over the past week, the pair reached a high of 1.3043, rising to levels last seen a year ago in July 2023. In our view, this surge was driven more by political speculations surrounding the opposition's rise to power and the change of government in the UK than by economic indicators. What this reshuffle will actually deliver remains to be seen and assessed. For now, it is merely an opportunity to profit from new Prime Minister Keir Starmer's promises of a "national renewal."

The current macroeconomic statistics for the United Kingdom, published over the past week, did not provide much cause for optimism. Inflation data released on Wednesday, 17 July, was slightly higher than expected. The headline CPI came in at 2.0% year-on-year (market expectations were 1.9%), and the core CPI reached 3.5% (forecast was 3.4%). Although these figures are close to forecasts, they show that UK inflation remains stubborn and is resisting the Bank of England's (BoE) efforts.

On Friday, 19 July, the Office for National Statistics (ONS) published retail sales data for the UK, which also turned out to be disappointing. On a monthly basis, sales fell by -1.2% in June, following a rebound of 2.9% in May. Markets had predicted a decline of only -0.4%. The core retail sales indicator, excluding automotive fuel sales, fell by -1.5% month-on-month, compared to the previous jump of 2.9% and a forecast of -0.5%. The annual volume decreased by -0.2% in June, against a May growth of +1.3%, while the core figure declined by 0.8% year-on-year, compared to +1.2% the previous month.

In light of these data, the British currency began to lose ground, and GBP/USD ended the past week at 1.2912. Specialists at Singapore's UOB Bank believe that "the upward momentum has significantly weakened, and the pair's growth has come to an end." In their opinion, "the pound has likely entered a consolidation phase and will trade between 1.2850 and 1.3020 for some time."

Of course, much will depend on what happens at the BoE meeting on 1 August. The last rate change was a year ago, on 3 August 2023, when it was raised by 25 basis points to 5.25%. Now, according to analysts at Commerzbank, "the next Bank of England decision should be very interesting." They write, "We still lean towards the Bank of England soon making its first rate cut. However, whether this happens in August or September, the key point is that with the persistently high levels of core inflation and inflation in the services sector, a significant rate cut is unlikely. Therefore, in the medium term, the pound sterling should continue to receive good support.".

For now, the median forecast of experts for the near term is as follows: only 20% of analysts expect further strengthening of the pound and a rise in the pair, 60% predict a decline, and the remaining 20% have taken a neutral stance. As for the technical analysis on D1, 75% of trend indicators are green, and 25% are red. Among oscillators, 75% are green, 10% are neutral grey, and only 5% are red.

In the event of further declines, the pair will encounter support levels and zones at 1.2850-1.2860, followed by 1.2780-1.2800, 1.2610-1.2625, 1.2540, 1.2445-1.2465, 1.2405, and 1.2300-1.2330. In the case of a rise, resistance levels are expected at 1.2990-1.3005, followed by 1.3040, 1.3100-1.3140, 1.3265-1.3300, 1.3375, 1.3315, 1.3555-1.3640, and 1.3750.

The release of preliminary business activity (PPI) data for the UK economy on Wednesday, 24 July, stands out among the events of the upcoming week. No other significant macroeconomic data releases are expected in the coming days. The next important event, as previously mentioned, will be the Bank of England meeting on Thursday, 1 August.

USD/JPY: Bank of Japan – Are Surprises Expected on 31 July?

According to strategists from ING, USD/JPY "delivered a bundle of surprises this week, retreating to the 155/156 area." Frankly, the surprise for us was not the yen's strengthening, but these words from ING experts. After all, what's so surprising about it? In our reviews, we have repeatedly warned about possible currency interventions by Japan's financial authorities. And here they are.

Economists estimate that on Thursday and Friday, 11 and 12 July, the Bank of Japan (BoJ) purchased about 6.0 trillion yen to support the national currency. On Wednesday, 17 July, USD/JPY came under pressure again, likely due to another currency intervention. Analysing the BoJ's account movements, economists believe that the intervention on that day amounted to around 3.5 trillion yen. Whether this will have a lasting effect is a big question. Recent years' experience with similar actions shows that the effect is only short-term. This time, specialists from Germany's Commerzbank called the BoJ's interventions "spitting against the wind." Just two days later, on 19 July, after bouncing off a local low of 155.35, the pair surged to 157.85, jumping by 250 points.

"Aside from the disappointing business activity index in the services sector," analysts at Commerzbank observe, "which showed a reduction in activity in May, the foreign trade data was also unconvincing. One of the reasons for this was the weakening of imports, which does not bode well for the domestic economy."

"Bank of Japan must continue to hope that the unfavourable factor related to US interest rates will significantly weaken in the coming months, allowing the yen to stabilize without the need for constant defensive measures," the economists at Commerzbank conclude, likely referring to regular currency interventions as the "defensive measures."

In Tokyo, calls are growing louder that a weak yen has long outlived its usefulness. Investors trading short yen in carry trade strategies also have to contend with unwelcome currency interventions. Moreover, while the Bank of Japan's resources to support the yen are substantial, they are not unlimited. With this in mind, BoJ Governor Kazuo Ueda stated last month that the regulator might raise interest rates at the meeting on 31 July. Additionally, the Japanese currency received unexpected support from US presidential candidate Donald Trump, who stated in an interview with Bloomberg that an undervalued yen exerts negative pressure on the US manufacturing sector.

On 31 July, both the Fed and the BoJ will hold meetings. If the actions or accompanying comments from the Bank of Japan are more hawkish, it could provide a new driver for USD/JPY to decline. For instance, ING does not rule out the possibility that the pair could reach 153.00 by the end of the year.

The pair ended the past week at 157.45. Evaluating the near-term prospects, 40% of experts voted for the pair moving south and the yen strengthening, while the remaining 60% took a neutral stance. Among oscillators on the D1 chart, 100% are in favour of the Japanese currency, although 15% are in the oversold zone for the pair. The trend indicators present a more mixed picture: 60% point to the yen's strengthening, while 40% suggest an upward rebound.

The nearest support level is located around 155.35-155.70, followed by 154.50-154.70, 153.60, 153.00, 151.85-152.15, and 150.80-151.00. The nearest resistance is in the 158.25 zone, followed by 158.75, 160.20, 160.85, 161.80-162.00, and 162.50.

In the upcoming week, Friday, 26 July, stands out on the calendar. On this day, the Consumer Price Index (CPI) values for the Tokyo region will be published. No other significant macroeconomic statistics related to the state of the Japanese economy are scheduled for release in the coming days.

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[Stan NordFX]

CRYPTOCURRENCIES: Surprise – Market Capitalisation Increases by $370 Billion in a Week

This week, bitcoin surged above $65,000, reaching a high of $67,490. This is the level it traded at on 17 June. Subsequently, the German government began liquidating crypto holdings confiscated by its police, causing BTC/USD to plummet. Over the past few days, Germany sold 50,000 BTC for approximately $3 billion, with the latest tranche of 3,846 BTC sold on 12 July.

Now, the market has digested the negative impact of this sell-off. The price of BTC is recovering amidst renewed capital inflows into spot bitcoin ETFs. According to Coinshares, from 8 to 14 July, about $1.7 billion flowed into all cryptocurrency investment products, including US spot ETFs. Of this, $260 million went to BlackRock's IBIT fund. Since the beginning of 2024, funds have received $17.8 billion, surpassing the total for 2021, which was the peak year for the previous crypto bull cycle. Not only American but also Hong Kong bitcoin ETFs are seeing inflows, attracting a record $37 million on 15 July alone.

Evaluating the inflow into spot ETFs, BlackRock CEO Larry Fink declared on CNBC that bitcoin is a legitimate financial instrument suitable for investment during times of heightened fear. Fink admitted that he "was a proud skeptic, but I’ve studied [bitcoin], and learned about it," and now acknowledges that he was wrong about the asset in the past.

The head of BlackRock emphasized that the first cryptocurrency offers an opportunity to invest "in something that is outside of any country’s control." He noted, "I’m not saying that there aren’t abuses, like in anything else, but it’s a legitimate financial instrument that can potentially provide non-correlated, unconnected types of returns."

The next phase following the sale of 50,000 German BTC will be the return of 142,000 BTC to former clients of the bankrupt crypto exchange Mt. Gox, which collapsed 10 years ago. Concerns arise from the fact that bitcoin has increased in value 130-fold during this time, and naturally, many recipients may want to convert their tokens to fiat immediately. However, not all Mt. Gox coins will be distributed to creditors in July. According to Arkham Intelligence, the first tranche of 45,000 BTC will be distributed to creditors through the Kraken exchange in the next one to two weeks. Overall, the pressure from Mt. Gox sales is not expected to exceed 75,000 coins by the end of the year.

Thanks to this information, panic among market participants has subsided. However, some analysts still believe that these payouts could push bitcoin's price down to $50,000. CoinShares predicts that if all 45,000 BTC are sold within 24 hours, the price could drop by 19% from current levels. Well-known analyst Alex Krüger estimates that the maximum price drop will not exceed 10%.

CryptoQuant CEO Ki Young Ju argues that fears about seller pressure are overestimated and will not disrupt the ongoing bull rally. He suggests that if the same volume is released over 30 days, the market will hardly notice it. Analysts at CoinMetrics also believe that the market should "absorb" the Mt. Gox creditors liquidating their assets if the sales are spread out over time, taking into account the current market depth and trading volumes.

At present, it is difficult to predict how aggressively former Mt. Gox clients will dispose of their unexpected digital windfall. However, most influencers agree that even if there is a negative effect, it will be short-lived. Katie Stockton, managing partner at Fairlead Strategies, confirmed in a CNBC interview that the long-term upward trend remains intact, and that bitcoin should be viewed as a long-term investment with significant growth potential.

Michael Saylor, co-founder and former CEO of MicroStrategy, stated that a decline in the value of the first cryptocurrency will not affect its attractiveness to investors. As evidence, he presented a table comparing the price dynamics of various asset classes over several years, including bitcoin, gold, emerging market stocks, emerging market bonds, and treasury bonds. The best performers were bitcoin, young company stocks (U.S. Growth index), and the Nasdaq 100 index. From 2011 to 2024, bitcoin's value increased by 18,881%, while the Nasdaq 100 index grew by 931% and gold by 59%. Michael Saylor has previously predicted that bitcoin could reach $10 million in the future.

Analyst Benjamin Cowen also conducted a historical analysis. He examined the key parameter for investors: bitcoin's dominance level (percentage of the total market capitalization of all cryptocurrencies). Cowen notes a significant trend: since the end of 2022, the dominance of the flagship cryptocurrency has been steadily increasing. From 38% in late November 2022, it rose to 54% by July 2024. Cowen believes that stricter government control over spending in the U.S. favours bitcoin compared to riskier altcoins. While potential approval of an ETH-ETF might provide Ethereum with short-term growth, bitcoin will continue to increase its share of the overall crypto market capitalization, potentially reaching 60% by December 2024.

The highly anticipated launch of spot Ethereum ETFs is undoubtedly expected to be a significant event for the industry. Bloomberg's senior exchange analyst Eric Balchunas reported that these trades will begin in the US on 23 July. "The SEC (Securities and Exchange Commission) finally approached issuers on Wednesday [17 July], requesting them to return final [forms] S-1 and then request effectiveness [approval] for a Tuesday, 23 July launch," the expert wrote. He did caution, however, that this is contingent upon the absence of any "last-minute unforeseen issues." Balchunas' information was confirmed by sources at two potential issuers of the ETH-ETFs.

Peter Brandt, head of Factor LLC, has provided a forecast for Ethereum ahead of the launch of ETH-ETF trading. Previously, this legendary trader and analyst, known for accurately predicting the crypto winter of 2018 and many other market movements, has often criticized ETH. However, now he believes this altcoin is on the brink of significant growth. Brandt suggests that Ethereum has found support near the lower boundary of a rectangle formation, which took over four months to develop, and its next target will be levels above $5,600.

This positive outlook is supported by the trader known as Yoddha. He noted that the prolonged consolidation could provide the main altcoin with the strength needed for active growth. According to his calculations, Ethereum has the potential to move to levels above $10,000. Yoddha believes the peak growth for Ethereum will be recorded in 2025. As for the current all-time high (ATH), it was recorded on 7 November 2021, at $4,856.

Despite Ethereum's prospects, the leader in growth over the past few days has been Ripple (XRP). From 5 to 17 July, the coin saw an increase of approximately 47%. The catalyst for this surge was the traditional derivatives trading centers – CME and CF Benchmarks – announcing indices and reference rates for Ripple, which could facilitate institutional acceptance of this token.

In such a situation, the decision of OpenAI's ChatGPT-4o artificial intelligence, which was tasked with selecting three digital assets worth buying in 2024 for long-term investment, was surprising. The AI was guided by key factors such as "price dynamics over time, technological innovations, market adoption, and potential for future growth." Based on these criteria, ChatGPT created a relatively conservative long-term portfolio that included Bitcoin (BTC), Ethereum (ETH), and not Ripple, but Polkadot (DOT).

According to the AI, Bitcoin is a worthy candidate due to its price dynamics, technological progress, relatively broad adoption, and certain recognition by regulators. Ethereum was chosen for its technological innovations, particularly its transition to proof-of-stake (PoS), the growth of its ecosystem, and the network effects arising from the blockchain's popularity. Polkadot made it into the top three based on the network's interoperability and scalability, a strong development team, and a dedicated community. The AI model highlighted Polkadot's active work on parachain technology, emphasizing its high utility.

As of the evening of Friday, 18 July, BTC/USD is trading at $66,940, ETH/USD is around $3,505, and XRP/USD is at 0.5745. The total crypto market capitalization stands at $2.43 trillion, up from $2.06 trillion a week ago. The Crypto Fear & Greed Index has surged from 29 to 60 points over the past 7 days, moving from the Fear zone to the Greed zone.


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.

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[Stan NordFX]

CryptoNews of the Week

– The rise in cryptocurrency prices is likely to be tactical and is not expected to mark the beginning of a prolonged upward trend, according to JPMorgan. The bank's experts noted that the current price of bitcoin significantly exceeds its mining cost ($43,000) and, compared to gold, appears overvalued relative to the "fair" price adjusted for volatility ($53,000). A significant upward deviation of prices from this latter parameter "limits the potential for long-term growth."
Analysts forecasted positive market dynamics in August, owing to the reduced impact of the sale of coins confiscated by German police and the distribution of coins among clients of Gemini and Mt.Gox. In this case, the price of bitcoin is expected to align with the trend in gold futures, where a recent rise has been observed. Experts also noted that both assets would benefit in the event of Donald Trump's victory in the upcoming U.S. presidential election.

– Bloomberg also reports that bitcoin miners and crypto companies, previously hindered from going public in the U.S., would benefit from a second term of Donald Trump’s presidency. The agency cites Christian Catalini, founder of the Cryptoeconomics Lab at the Massachusetts Institute of Technology, who stated, "Almost everyone in America would benefit if they chose to operate under the new rules once implemented."
In June, Trump met with miners, stating that bitcoin mining should become the "last line of defense against CBDCs." He added that he wants all remaining bitcoin to be "made in the USA."
Following Joe Biden's poor performance in the debates and a failed assassination attempt on Trump, the price of bitcoin rose by 10%, and shares of the two largest public miners, Marathon Digital and Riot Platforms, increased by 30%. Cipher Mining’s shares surged by nearly 50%. For the first time since the crypto market crash in 2022, industry companies are planning initial public offerings. USDC stablecoin issuer Circle filed for an IPO in January with a valuation of $33 billion. Crypto miner Northern Data, which is actively developing AI computing capabilities, is considering a U.S. listing, with a potential valuation of $16 billion. Kraken, the country's second-largest exchange, is also preparing for a stock market listing.

– U.S. President Joe Biden shocked the markets on Sunday, 22 July, when he announced his withdrawal from the presidential race. Some analysts suggested that this move could benefit bitcoin and other crypto assets, while others warned that investors should temper their excitement.
Analyst Josh Gilbert stated that Trump's increased chances of re-election represent "a huge boost for the asset class": "The longer we see Trump leading in the election odds, the more crypto assets will be worth following his victory." Gilbert explained, "It is hard to imagine Kamala Harris or another Democratic candidate overthrowing Trump's lead in the polls just three months before the end of this electoral race," but added, "a lot can happen during this period, so nothing can be ruled out."
Gary Black, managing partner of The Future Fund, shares a similar view. He warned his 433,000 followers on X that a Trump presidency victory is still far from certain. "Those who think that Trump/Vance will secure a decisive victory are getting ahead of themselves," Black wrote.

– Markus Thielen, the founder of 10x Research, suggested that the crypto-friendly Donald Trump might announce at the upcoming Bitcoin-2024 conference that he will make bitcoin a strategic reserve asset for the U.S. government. Currently, the government holds only 212,800 BTC, worth approximately $15 billion, whereas its gold reserves are around $600 billion. If the government were to double its bitcoin holdings, this would be "almost equivalent" to the price impact of the net inflow into bitcoin exchange-traded funds (ETFs) since the beginning of the year.

– U.S. Senator and Republican Party member Cynthia Lummis highlighted that during a recent major system outage at Microsoft, caused by a software update error from CrowdStrike, the bitcoin network remained unaffected, while other industries experienced complete chaos. The bitcoin blockchain and associated cryptocurrency services continued to operate without disruptions. The senator quoted the Latin phrase "Vires in Numeris," meaning "strength in numbers," underscoring that the primary cryptocurrency's network employs complex mathematical algorithms to ensure security and stable operation even in unpredictable technical circumstances.
Senator Lummis recently proposed backing the U.S. dollar with bitcoin to improve the country's financial system. She also voiced opposition to the introduction of a digital dollar, fearing it could compromise citizens' privacy..

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[Stan NordFX]

– Arthur Hayes, the former CEO of the cryptocurrency exchange BitMEX, warned that voters supporting cryptocurrencies may lose their influence on politicians after the presidential elections in November 2024. He suggested that if a regulatory framework for digital assets is not established before the elections, the newly elected president and their administration are likely to shift focus to other pressing issues. Geopolitics may overshadow discussions about cryptocurrencies, with the president's attention potentially diverted to international conflicts, particularly those involving Iran and Russia.
"The capital required to support laws aimed at developing cryptocurrencies may be redirected to addressing more urgent foreign policy issues. Therefore, regulatory clarity must be achieved now, before the political landscape changes after the elections," Hayes stated.

– At the beginning of the year, Nigel Green, CEO of deVere Group, predicted a rapid rise in bitcoin to $60,000, which proved accurate. He now believes that the demand for the leading cryptocurrency will continue to grow, and its price could reach $100,000 by the end of the year. "Bitcoin is likely the best asset for growth potential by the end of the year," writes the financier. "It is currently priced at $65,000, but many expect it to hit $100,000 by year-end. Is this possible? Certainly, because the number of bitcoins is limited. If demand for BTC increases, the price will go up. Bitcoin is not the same as the U.S. dollar, where the Federal Reserve can simply print more." Green also noted that the possible election of Donald Trump as President of the United States could further benefit bitcoin.

– Analyst and trader RLinda identifies the bullish flag pattern as a key indicator of a potential upward movement for bitcoin. This pattern, observable on both daily and weekly charts, is characterised by a sharp upward movement followed by a consolidation phase. RLinda expects that a breakout from this consolidation could continue the previous uptrend, with a potential target around $90,000.
Support and resistance levels are crucial in this analysis. The key support levels at $59,300 and $63,800 have shown strong buying interest and stability. High trading volumes at these levels reinforce expectations that they will hold during any potential pullbacks.
Critical resistance levels are marked at $67,250 and $71,754. Overcoming these resistance points is necessary for BTC to advance towards higher targets. The all-time high (ATH) at $73,743 is particularly significant, with a successful breakout potentially triggering further bullish momentum.

– Peter Brandt, head of Factor LLC, expressed skepticism that the price of bitcoin will exceed $71,000 and set a new record. He stated, "I try to be as honest as possible when identifying patterns. The current stagnation in the bitcoin market is incorrectly labeled as a flag (it has lasted too long); it actually represents a descending channel. Anything that lasts longer than 4-6 weeks is not a flag," wrote Brandt.
The flag pattern, which some analysts believe has emerged on the BTC/USD chart, is typically a precursor to a bullish rally. However, the descending channel mentioned by the veteran trader suggests a price decline. This pattern is characterised by lower highs and lows, which have been established since bitcoin reached its all-time high in March.
Based on the chart Brandt published, he believes that bitcoin's price will not surpass the resistance line around $71,000. If this scenario plays out, a bearish trend may ensue, potentially driving the price of the digital asset down to $51,000. The descending channel is slightly widening, indicating that price volatility is expected to increase over time.

– Analysts from the cryptocurrency market maker Wintermute predict that Ethereum could rise to a maximum of $4,300 in 2024. They believe that demand for this altcoin will be lower than expected, estimating that investment in these derivatives will range between $3.2 billion and $4.0 billion in the first 12 months following the start of trading. Under this scenario, the ETH price could increase by a maximum of 24% during 2024, reaching approximately $4,300.
In contrast, researchers at ASXN have made a more optimistic forecast. They predict that monthly capital inflows into Ethereum ETFs will range from $800 million to $1.2 billion. This suggests that by the end of the year, at least $6-7 billion will be invested in ETH-based exchange-traded funds, significantly exceeding the figures provided by Wintermute's analysts.

– The pace of Ethereum's potential bull rally will heavily depend on the capital inflow into ETH-ETFs shortly after trading begins. However, the launch of these products has not yet generated significant excitement in the cryptocurrency market, with investors responding cautiously to the event. Experts from QCP Capital reminded that after the launch of similar BTC-ETFs, bitcoin's price initially dropped to $38,000, but then hit historical highs two months later. (Although, it should be noted that the BTC halving may have played a significant role at that time.)
Currently, the options market suggests a potential decline in Ethereum's price in the near term. This expectation is reinforced by news of pressure from the U.S. government and the situation surrounding Mt.Gox. These factors add uncertainty and create additional challenges for ETH's growth. "As a result, ETH's price may remain stagnant or even decline until a new catalyst emerges," QCP Capital analysts suggest.
Experts also caution against underestimating the impact of political factors. As the U.S. elections approach, cryptocurrency market volatility may increase. Statements and actions by key political figures can create new opportunities or threats. Therefore, investors should be prepared for price swings and closely monitor news developments.


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

 

[Stan NordFX]

Forex and Cryptocurrency Forecast for July 29 – August 02, 2024​

EUR/USD: Europe is Not Doing Very Well, the US is Not Doing Very Badly

The main events in the currency market will unfold in the upcoming week, with meetings scheduled for Wednesday, 31 July, when the Bank of Japan and the Federal Reserve's FOMC (Federal Open Market Committee) will convene, followed by the Bank of England's meeting on Thursday, 01 August. Even if interest rates and other monetary policy parameters remain unchanged in all three cases, investors will closely listen to the statements made by regulators at the subsequent press conferences, trying to predict their next steps. Therefore, in anticipation of these events, we have focused more on the cryptocurrency market in this review, while still covering Forex.

In early July, one of our review headlines read: "The US is Not Doing Very Well, Europe is Not Doing Very Badly." This time, we have reversed the positions of the US and Europe, prompted by the macroeconomic statistics released last week.

Vladimir Lenin, the leader of the Communists who led the 1917 revolution in Russia, stated in one of his works that "politics is the concentrated expression of economics." In our view, the reverse is also true: not only does politics depend on economics, but economics also depends on politics. This is exemplified by the scales, with the current monetary policy of the Federal Reserve on one side, and the concerning prospects of Donald Trump’s return to the White House on the other.

The restrictive tariffs that Trump aims to implement in the trade war with Beijing will create new problems for the Chinese economy, which is already struggling. This, in turn, will negatively impact Europe, particularly Germany, which accounts for half of the EU's exports to China. Within just three months, Germany's business activity indicators have shifted from slowing growth to abandoning optimism about economic prospects. The recent Business Activity Index (PPI) values for Germany, released on Wednesday, 24 July, were all in the red zone, falling below both previous figures and forecasts. Both the manufacturing PPI and the composite PPI are below 50 points, indicating regression. These German indices have dragged down overall European metrics, which have also turned worryingly red. While the US economy is merely slowing down slightly, the recovery of the Eurozone risks being reversed.

The preliminary data on business activity in the United States, released on the same day, 24 July, showed that the PPI in the manufacturing sector decreased from 51.6 to 49.5 points, disappointing the market, which had expected a rise to 51.7. However, the same index in the services sector increased to 56.0, surpassing both the previous value of 55.3 and the forecast of 54.4.

The Composite Purchasing Managers' Index (PMI) rose to its highest level since April 2022. The real surprise, however, came from the US GDP data released on Thursday, 25 July. According to the Bureau of Economic Analysis' initial estimate, the Gross Domestic Product in Q2 2024 grew by 2.8% on an annualised basis. This followed a 1.4% growth in Q1, exceeded the market expectations of 2.0%, and confirmed the belief that the US economy will not fall into recession. Further details in the report showed that the core Personal Consumption Expenditures (PCE) price index increased by 2.9% on a quarterly basis, which was lower than the 3.7% growth recorded in the previous quarter, though slightly above the forecast of 2.7%.

The unrest that began on 17 July in the stock market (detailed in the cryptocurrency review) increased demand for the dollar as a safe-haven currency, strengthening it by more than 100 points. However, for the last three days of the trading week, EUR/USD moved within a narrow range of 1.0825-1.0870 in anticipation of next week's events, with the final note sounding at the 1.0855 mark.

As of the evening of 26 July, analysts' forecasts for the near future are as follows: 40% predict a rise in the pair, while 60% expect a decline. In technical analysis, 65% of trend indicators on the D1 chart remain in favour of the euro, while 35% support the dollar. Among oscillators, there is considerable confusion: 25% are in green, 35% are neutral-grey, and 40% are red, with a quarter of them signalling oversold conditions. The nearest support levels for the pair are at 1.0825, followed by 1.0790-1.0805, 1.0725, 1.0665-1.0680, 1.0600-1.0620, 1.0565, 1.0495-1.0515, and 1.0450, 1.0370. Resistance zones are located at 1.0870, 1.0890-1.0910, 1.0945, 1.0980-1.1010, 1.1050, and 1.1100-1.1140.

The upcoming week, as mentioned, promises to be very eventful, interesting, and volatile. On Monday, 29 July, retail sales volumes will be released, followed by preliminary data on GDP and consumer inflation (CPI) in Germany on 30 July. On the same day, GDP data for the Eurozone as a whole will also be published.

The key day will be Wednesday, 31 July. On this day, consumer inflation (CPI) data for the Eurozone will be released, followed by the FOMC meeting of the Federal Reserve. It is expected that the regulator will again leave the key interest rate unchanged at 5.50%. Therefore, market participants will be particularly interested in the FOMC's Economic Projections Summary and the subsequent press conference of the Fed leadership. The following day, Thursday, 01 August, final data on business activity (PPI) in various sectors of the US economy will be published.

Additionally, throughout the week (30, 31 July, 01 and 02 August), there will be a significant influx of labour market statistics from the United States, including key indicators such as the unemployment rate and the number of new non-farm jobs created (NFP).

USD/JPY: "The Most Intriguing Pair in Forex"

While the dollar has recently been strengthening against the euro and the pound, the situation with the Japanese yen has been quite the opposite. This wasn't just a retreat of the US currency, but rather a panicked flight. On Friday, 19 July, strategists from ING, a major Dutch banking group, described the USD/JPY pair as a "bundle of surprises," retreating to the 155/156 range. A week later, they referred to it as "the most intriguing pair in Forex." This time, the minimum was recorded at 151.93, in the key zone of 151.80-152.00, which coincides with the highs of October 2022 and 2023.

The yen began its resurgence like a Phoenix on 11 and 12 July when the Bank of Japan (BoJ), to support the national currency, purchased an estimated ¥6.0 trillion. On 17 July, USD/JPY came under pressure again due to another currency intervention. Analysts, examining BoJ's accounts, estimated the size of this intervention at approximately ¥3.5 trillion.

Then came a new surge. It is worth noting that on 03 July, USD/JPY reached a high of 161.94, a level not seen in 38 years. Now, in just three weeks, it plummeted by 1,000 (!) points, triggering widespread liquidation of positions across all markets, affecting everything from the yuan to various asset classes, including Japanese stocks, gold, and cryptocurrencies.

On Thursday, 25 July, the yen's exchange rate against the dollar rose to its highest level in over two months. This time, the cause seems to be not the currency interventions of the Japanese central bank but the expectation that the interest rate gap between Japan and the US will narrow on 31 July. Swap markets are currently pricing in a 75% probability of a BoJ rate hike on Wednesday, compared to 44% earlier in the week. Moreover, economists at ING believe the BoJ might raise the rate by an unprecedented 15 basis points (bps) for Japan.

They note that "Tokyo's consumer price data showed that core inflation fell to 2.2% year-on-year in July (from 2.3% in June), but the BoJ's preferred measure, core inflation excluding fresh food, rose to 2.2% in July from 2.1% in June." Based on this, ING suggests a 50% chance that inflationary pressure in the services sector will continue to rise, which could lead the BoJ to increase the rate by 15 bps at the upcoming meeting and simultaneously reduce its bond purchase program.

If something like this occurs, macro strategists at State Street Global Markets believe that the resurgence of the Japanese currency could lead to a significant adjustment in global trading strategies in the foreign exchange market, particularly in carry trades. Carry trades involve borrowing in low-yielding currencies, such as the yen, to invest in higher-yielding currencies.

USD/JPY ended the past trading week at 153.75. According to analysts at State Street Global Markets, "the yen rally may continue ahead of the Bank of Japan meeting next week." As for the median forecast by experts for the near term, it is as follows: 20% expect the pair to move south, further strengthening the yen, 30% predict a rebound north, and the remaining 50% have taken a neutral stance. Among oscillators on the D1 chart, 90% favour the Japanese currency, with 20% indicating the pair is in the oversold zone, and the remaining 10% are neutral. Trend indicators show 85% favouring the strengthening of the yen, while 15% support the dollar. The nearest support level is around 151.80-152.00, followed by 149.20-149.50 and 146.50-147.25. The nearest resistance is located in the 154.70-155.20 range, followed by 157.20-157.40, 158.25, 158.75-159.00, 160.20, 160.85, 161.80-162.00, and 162.50.

Apart from the Bank of Japan meeting on Wednesday, 31 July, no other significant events, including the release of important macroeconomic statistics concerning the state of the Japanese economy, are scheduled for the coming days.

continued below...

 

[Stan NordFX]

CRYPTOCURRENCIES: Politics Engages with the Digital Market

As early as the mid-19th century, French writer Charles de Montalembert warned, "You may not be interested in politics, but politics is interested in you." This sentiment is vividly illustrated by recent developments in the market for risk assets, including cryptocurrencies.

The past week was disappointing for investors, although the troubles began earlier, on Wednesday, 17 July. On that day, the shares of some of the world's largest semiconductor manufacturers plummeted, causing the stock market to reach its worst condition in several months. This reaction was due to the tensions in US-China trade relations and comments from former (and possibly future) President Donald Trump regarding Taiwan. Shares of several semiconductor companies sharply declined under the weight of geopolitical tension, with some losing over 8% and a giant like Nvidia dropping by 6%. As a result, the S&P 500 Index fell by 1.39%, marking its largest drop since late April, and the tech-heavy Nasdaq fell by 2.77%, its worst performance since the end of 2022.

However, the troubles for the stock market did not end there. Exactly one week later, on Wednesday, 24 July, the US stock market closed with even greater losses. The S&P 500 and Nasdaq indices dropped by 3.6% and 2.3%, respectively, after Tesla's Q2 results revealed a profit decline of more than 40% compared to the previous year. Tesla's shares fell by more than 12% in just one day. Alongside Tesla, shares of Alphabet, Visa, Microsoft, Nvidia, and other technology companies also declined. The seven largest IT giants lost $770 billion in market capitalization in one day. This turmoil occurred amidst ongoing issues with Microsoft's global Windows system outage, which affected many sectors.

Naturally, such market dynamics impacted the riskiest of assets—cryptocurrencies. It's worth noting that the prices of both bitcoin and ethereum appeared quite strong at the start of the past week. However, they eventually succumbed to the pressure and also declined. In addition to global geopolitical factors, cryptocurrencies had their own specific reasons for this downturn.

The market was shocked when US President Joe Biden announced on Sunday, 22 July, that he would not seek re-election. This decision sparked a debate about how it might impact the digital assets market. Many analysts and influencers argue that only a victory by Donald Trump could provide a strong bullish impulse to the industry. This view is shared by experts at JPMorgan. Analyst Josh Gilbert stated, "The longer we see Trump leading in the election odds, the more valuable crypto assets will become after his victory." He further explained, "It's hard to imagine Kamala Harris or another Democratic candidate overthrowing Trump's lead in the polls just three months before the end of this election race.".

Trump's Republican ally, Senator Cynthia Lummis, suggested backing the dollar with bitcoin to improve the country's financial system. A similar approach was proposed by Markus Thielen, founder of 10x Research. He believes that Trump could announce at the upcoming Bitcoin-2024 conference that he plans to make bitcoin a strategic reserve asset for the US government. Currently, the government holds only 212,800 BTC, worth approximately $15 billion, compared to its gold reserves of around $600 billion. If the government were to double its bitcoin holdings, it would have an impact on the price nearly equivalent to the net inflow effect on spot BTC-ETFs since the beginning of the year.

Bloomberg reports that bitcoin miners and crypto companies, previously hindered from going public in the US, could benefit under a second Donald Trump presidency. The agency cites the opinion of Christian Catalini, founder of the Crypto-economics Lab at the Massachusetts Institute of Technology. He believes that "almost everyone in America will benefit if they choose to operate under new rules after they are implemented."

In June, Trump met with miners and expressed his desire for all remaining bitcoin to be "made in the USA." Following Joe Biden's poor performance in debates and an unsuccessful assassination attempt on Trump, the price of bitcoin rose by 10%, while shares of the two largest public miners, Marathon Digital and Riot Platforms, increased by 30%. Cipher Mining's stock prices gained nearly 50%. For the first time since the crypto market crash in 2022, companies in the sector are planning initial public offerings (IPOs). Stablecoin issuer USDC, Circle, filed for an IPO in January with a valuation of $33 billion. Crypto miner Northern Data, which is actively expanding its AI computing division, is considering listing in the US, with a potential valuation of $16 billion. Kraken, the second-largest exchange in the country, is also preparing to go public.

However, all of this is speculative and dependent on future developments. Josh Gilbert, while optimistic about Trump's influence on the cryptocurrency market, cautions that "a lot can happen between now and the election, so nothing is certain." Gary Black, Managing Partner of The Future Fund, echoed this sentiment, warning his 433,000 followers on X that a Trump victory is far from assured. "Those who think Trump/Vance will secure an easy win are getting ahead of themselves," Black wrote.

Arthur Hayes, the former CEO of the crypto exchange BitMEX, also expressed skepticism. He believes that voters who support cryptocurrency may lose influence over politicians once the presidential election is over in November 2024. If a regulatory framework for digital assets is not established before the election, the elected president and their administration may shift their focus to other pressing issues. Geopolitical concerns could overshadow discussions about cryptocurrencies, with the president's attention potentially diverted to international conflicts, particularly involving Iran and Russia. Hayes argues, "The capital needed to support laws promoting cryptocurrency development could be redirected towards addressing more urgent foreign policy issues. Therefore, regulatory clarity should be sought now, before the political landscape changes post-election."

continued below...

 

[Stan NordFX]

BITCOIN: Bullish Flag or Bearish Den?

Experts at JPMorgan note that the current bitcoin price significantly exceeds its mining cost (~$43,000) and appears overvalued compared to its "fair" price adjusted for volatility (~$53,000). According to JPMorgan, the substantial upward deviation from this fair price "limits the potential for long-term growth." However, they have forecasted positive market dynamics in August, attributed to the diminishing negative impact of the sale of coins confiscated by German authorities and the distribution of coins to clients of Gemini and Mt.Gox.

At the beginning of the year, Nigel Green, CEO of deVere Group, predicted that bitcoin would soon rise to $60,000, and his forecast proved accurate. Now, he believes that the demand for the leading cryptocurrency will continue to grow, potentially reaching $100,000 by the end of the year. "Bitcoin is likely the best asset in terms of growth potential by the end of the year," the financier writes. "Many are expecting it to reach $100,000 by year-end. Is this possible? Quite possibly, because the supply of bitcoin is limited. This means that if demand for BTC increases, so will the price. Bitcoin is not the same as the US dollar, where the Federal Reserve can simply print more."

Green also mentioned that the potential election of Donald Trump as US President could positively impact bitcoin's price.

Analyst and trader known by the nickname RLinda identifies the bullish flag pattern as a key indicator of potential upward movement for BTC. This formation, observed on both daily and weekly charts, is characterized by a sharp upward move followed by a phase of consolidation. RLinda anticipates that a breakout from this consolidation will continue the previous uptrend, potentially targeting around $90,000.

Support and resistance levels play a crucial role in this analysis. Key support levels at $59,300 and $63,800 have shown strong buying interest and stability. The high trading volumes at these levels reinforce the expectation that they will hold during any potential pullbacks. Critical resistance levels are noted at $67,250 and $71,754. Breaking through these resistance points is necessary for BTC to advance towards higher targets. The all-time high (ATH) at $73,743 is particularly significant; a successful breakout above this level could trigger further bullish momentum.

Peter Brandt, the head of Factor LLC, has entered into a debate with RLinda. The legendary trader expresses skepticism that bitcoin will surpass $71,000 and set a new price record. "I try to be as honest as possible in identifying patterns. The current stagnation in the bitcoin market should not be called a flag (it has lasted too long); it represents a descending channel. Anything that lasts longer than 4-6 weeks is not a flag," Brandt wrote.

According to some analysts, the flag pattern observed on the BTC/USD chart suggests an impending bullish rally. However, the descending channel that Brandt refers to indicates a potential decline in the coin's price. This pattern is characterized by lower highs and lows, established after BTC reached its all-time high in March. Based on the chart published by Brandt, he believes that bitcoin's price will not break the resistance line, which lies around $71,000. In this scenario, a bearish trend could begin, with the digital gold potentially dropping to $51,000. The descending channel is slightly widening, suggesting that price volatility may increase over time.

On Thursday, 25 July, the BTC/USD pair dropped to the support zone of $63,200-63,800 and encountered additional support from the 200-day moving average (DMA200). Following this, it reversed direction and started to move upwards. As of the evening of Friday, 26 July, it has nearly recovered its weekly losses and is trading at around $67,500. The total market capitalization of the crypto market has remained relatively stable at $2.42 trillion, compared to $2.43 trillion a week ago. The Bitcoin Fear & Greed Index has risen from 60 to 68 points over the past seven days, remaining in the Greed zone.

ETHEREUM: ETH-ETF – Disappointment Instead of Hope

On 23 July, the long-awaited spot ETFs for Ethereum were launched in the US, providing investors with access to the altcoin through traditional brokerage platforms. On the first day of trading, the turnover reached $1.1 billion, which was 24.4% of the turnover of BTC-ETFs, aligning with optimistic forecasts. However, trading volume isn't the only metric to consider. The net inflow of investments into ETH was significantly lower than that into bitcoin, with $107 million compared to $655 million, respectively, showing a sixfold difference.

The situation worsened as the initial enthusiasm for Ethereum ETFs quickly faded, causing ETH/USD prices to decline sharply, despite the trading volume surpassing $1.0 billion again. The decline was triggered by a significant outflow of funds from a single issuer, Grayscale's Ethereum Trust ETF (ETHE). According to SoSoValue, Grayscale's ETHE lost $484 million on the first trading day and nearly $327 million on the second day, totalling $811 million. In contrast, most other spot ETH-ETFs, including ETHA from BlackRock, ETHW from Bitwise, and FETH from Fidelity, showed growth in inflows. However, these inflows were insufficient to offset the losses from Grayscale's ETHE.

This situation mirrors the experience with Grayscale's GBTC fund in the early weeks following the launch of the bitcoin ETF. Both Grayscale funds were converted from trust to spot ETFs. If the outflow rate from ETHE matches that of GBTC, it could negatively impact all newly established ETH-ETFs.

Moreover, macroeconomic factors contributing to the (hopefully temporary) stock market downturn, the ongoing situation with Mt.Gox, and the lack of staking in ETFs, which deprives the altcoin of the advantage of passive income, also play a role. Additionally, Ethereum's practical applications are increasingly being outperformed by competitors such as Tron and Solana. Experts also remind us of the upcoming US elections, where statements and actions by key political figures could create new opportunities and threats for the market.

Analysts at cryptocurrency market maker Wintermute believe that demand for Ethereum will fall short of expectations, predicting investments in these derivatives will range between $3.2 billion and $4.0 billion in the first 12 months after trading begins. As a result, they expect Ethereum's price to rise to a maximum of $4,300 in 2024.

In contrast, researchers from ASXN offer a more optimistic forecast. They predict that the monthly capital inflow into Ethereum ETFs will range from $800 million to $1.2 billion, implying a total investment of at least $6-7 billion in these funds by the end of the year, significantly exceeding Wintermute's estimate.

Adding to the positive outlook, experts from QCP Capital noted that following the launch of similar BTC-ETFs, bitcoin's price initially fell to $38,000 but then surged to new all-time highs within two months, posting a 90% increase. (However, it is worth noting that the BTC halving may have played a significant role at that time.) The dynamics of Ethereum will become clearer in the near future. Currently, ETH/USD recorded a weekly low of $3,089 and, as of the evening of Friday, 26 July, is trading around $3,200.


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

 

[Stan NordFX]

CryptoNews of the Week

– One of the speakers at the annual Bitcoin-2024 conference in Nashville (USA) was the United States presidential candidate Donald Trump. He promised to dismiss the Chairman of the Securities and Exchange Commission (SEC), Gary Gensler, if elected, and to appoint regulators who are friendly to the crypto industry to key positions. "From now on, the rules will be written by those who love your industry, not hate it," Trump declared, receiving a thunderous applause from the audience.
The politician also intends to end the war on digital assets, transform the USA into the world's cryptocurrency capital, and establish a strategic national bitcoin reserve. Trump also stated that "one day," bitcoin will surpass gold and silver in market capitalisation.
Trump's Republican colleague, Senator Cynthia Lummis, went even further. She has prepared a bill requiring the US government to create a reserve of 1 million bitcoins within 5 years. "The goal is to recognise bitcoin as a durable asset. This is digital gold," Lummis stated.

– The head and founder of MN Trading, Michael van de Poppe, commented: "Bitcoin has once again reached the $70,000 mark. Donald Trump's speech had a positive impact, which may allow bitcoin to test its all-time high in the coming weeks. As long as it stays above $60,000-62,000, we have good prospects for further growth."
Some experts, such as Dan Crypto Traders and Tanaka, predict that BTC could rise to $100,000, and ETH to $8,000-10,000, while analyst Daan de Rover, known on the social media platform X as Crypto Rover, expects the price of BTC to exceed $800,000. De Rover bases his forecast on Trump's remarks that bitcoin could surpass gold in capitalisation. According to the analyst's calculations, if this happens, the value of one BTC would be exactly $813,054.

– Former NSA and CIA special agent, Edward Snowden, who has found asylum in Russia, also spoke at Bitcoin-2024 via internet connection. During his speech, he urged American voters to remain critical and not to trust politicians blindly. He mentioned that political figures and parties have their own agendas and are simply trying to garner the support of the bitcoin community. Therefore, it is important to "cast a vote, but not join a cult."
Snowden also expressed serious concerns about privacy issues related to the first cryptocurrency. He reminded the audience that bitcoin transactions are not entirely anonymous, despite common misconceptions, as they can be traced back to specific individuals. "They know what you read, what you buy, who you send [bitcoin] to, whom you support politically, where your donations go: this information is available to them. They can draw conclusions about your thinking and beliefs," Snowden stated.

– Another speaker at the conference in Nashville was the founder of MicroStrategy, Michael Saylor, who announced that bitcoin prices would reach $13 million by 2045. According to his calculations, with the current bitcoin price at around $65,000, its market capitalisation is approximately $1.3 trillion, only 0.1% of the world's wealth. With an annual return of about 29%, digital gold could reach $280 trillion and 7% by 2045.
Saylor noted that this is an average projection. If a bullish scenario unfolds, the price of 1 BTC could reach $49 million, accounting for 22% of global wealth. Conversely, if a bearish scenario occurs, the figures would be $3 million and 2%, respectively.
The MicroStrategy founder is confident that all physical capital, from stocks and bonds to cars and real estate, obeys the laws of thermodynamics, including entropy, the tendency for energy to dissipate over time. "Entropy dilutes the value of physical assets. It drains capital from them." According to Saylor, the main cryptocurrency is an exception to this rule because it "does not exist in the physical world" and possesses "infinite lifespan." "Bitcoin is immortal, immutable, and intangible," he stated, calling it "the solution to our economic dilemma."

– The University of Wyoming (USA) has established the UW Bitcoin Research Institute, as announced by the university's director, Bradley Rettler. The announcement highlighted that many studies on bitcoin are of poor quality because they are conducted by individuals who do not fully understand the asset. "Some researchers are not even aware of the supply limit: perhaps the most defining characteristic of bitcoin. Others make erroneous assumptions about the demographics of its users. [...] Such mistakes find their way into journalism and politics," Rettler wrote, adding that the institute aims to produce high-quality publications.

– Scammers have published a fake video on YouTube, appearing to show Elon Musk speaking at the Bitcoin-2024 conference and promising a free cryptocurrency giveaway. The deepfake of the Tesla and SpaceX CEO was created using artificial intelligence. In the video, users are instructed to send any amount of BTC, ETH, DOGE, or stablecoins like USDT to a specified address. In return, the scammers promise to double the sent amount.
It is reported that over 70,000 people have viewed this "broadcast," resulting in several tens of thousands of dollars being "donated" to the scammers. It is worth noting that theft using deepfakes of Musk has occurred repeatedly. In November 2023, perpetrators promoted another cryptocurrency giveaway in his name, promising a 200% bonus on the amount invested.

– The well-known analyst known as Plan B has forecasted that the price of bitcoin will rise to $140,000. After the flagship cryptocurrency reached $70,000 on 29 July, he wrote: "I expect the price of bitcoin to double from its current value within 3-5 months."
Plan B explained his prediction by noting that following the halving in April, "miner revenue has hit rock bottom, meaning less profitable miners have stopped operations. Only the most profitable ones (with the latest equipment and the lowest electricity costs) have survived." He added, "The battle is over; difficulty will continue to rise. Investors will take over the pricing," indicating that the market dynamics will increasingly be influenced by investor sentiment and actions.

– Economist and trader Alex Krüger believes that bitcoin is in a super cycle. According to him, Wall Street and the traditional financial world have fundamentally changed the structure of the digital asset market. Due to the new nature of the crypto market, downward volatility will be much more limited, and buying activity will significantly increase due to pressure from Wall Street to expand access to digital assets.
"The essence of the super cycle," explained Krüger, "is not that we no longer have bear markets or corrections and are just going up. It means that upcoming corrections will be shallow, and this won't last forever."
"The main driving force behind this change," Krüger continues, "is that Wall Street is now involved, and ETFs [exchange-traded funds] are here, which has radically altered the market structure. [...] The proportion of bitcoin ownership is currently very low in aggregate terms and certainly within portfolios. Wall Street's marketing push suggests that this figure should be around 2%." Based on this, the economist believes the super cycle will continue until this target is reached.


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

 

[Stan NordFX]

July Results: Bitcoin Surpasses Gold in NordFX Trader Rankings

The brokerage company NordFX has released the performance results of its clients' trading activities for July 2024. The evaluation also covered the social trading services, PAMM and CopyTrading, as well as the profits earned by the company's IB partners.

● The highest profit in July was achieved by a trader from East Asia, account No.1609XXX, with a profit of 50,792 USD. This solid result was driven by the strengthening of bitcoin (BTC/USD).

– The second position in the ranking of the most successful traders of the month was secured by a client from South Asia, account No.1749XXX, who earned 45,106 USD from trades involving the 'golden' currency pair XAU/USD.

– The third place on the July podium was taken by a compatriot (account No.1771XXX), who achieved a result of 42,461 USD through operations with both the XAU/USD pair and the relatively exotic GBP/NZD pair.

● The following situation unfolded in NordFX's passive investment services:

– In the PAMM service, we continue to observe the account Zenix 786, which has shown a profit of 106% over 131 days. The account Gold24 also attracted attention, with its name suggesting exclusive trading in the XAU/USD pair. The number '24' in the name might refer to 24-carat purity (pure gold without any additives) or perhaps that trading is conducted 24 hours a day. Both interpretations are possible. Regardless, the manager of this account managed to achieve a profit of over 60% in just 62 days. The results of both accounts are impressive; however, the maximum drawdown, while not dramatic, is also not the smallest – 36% and 32%, respectively.

– On the CopyTrading showcase, highly attractive signals, at least at first glance, occasionally appear among the startups, showing astronomical returns. Currently, the signal Bro has surged to the forefront, increasing the initial deposit by 554% in just 6 days! However, the maximum drawdown for the same period has already approached 43%. Therefore, while these super-results are impressive, it's important to understand that they are achieved through super-aggressive trading. When subscribing to such signals, one must consider that the risk of losing invested funds is also extremely high.

Among the more stable and calm signals, NordFXSrilanka and Quiet_trade_USD stand out. While their profits are significantly lower than those of Bro, they still far exceed the interest rates on USD bank deposits. For instance, NordFXSrilanka showed a 47% increase over 205 days with a maximum drawdown of less than 10%, and Quiet_trade_USD yielded a profit of 12% since early March with a drawdown of only around 15%. It is worth noting that the longevity (or lifespan) of signals and PAMM accounts, along with maximum drawdown, are crucial indicators confirming that they won't collapse like a house of cards in the face of the first challenging situation in the financial markets.

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

– The first place was taken by a partner from South Asia, account No.1576XXX, who was rewarded with 16,445 USD in July;

– The next position was secured by another partner from South Asia (account No.1618XXX), who received 13,859 USD;

– Finally, rounding out the top three is a third partner from the same region, account No.1229XXX, who received a reward of 6,610 USD.


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.

 

[Stan NordFX]

Forex and Cryptocurrency Forecast for August 05 – 09, 2024​

EUR/USD: What the ECB and Fed Will Do

● There was a significant amount of news last week, so we will highlight and analyse only the most important ones.
Germany set the tone for European statistics, with consumer inflation rising instead of falling. According to the initial estimate, the Consumer Price Index (CPI) increased year-on-year from 2.2% to 2.3%, and month-on-month from 0.1% to 0.3%.
The following day, similar figures for the Eurozone as a whole were released. Preliminary data showed that CPI in July rose to 2.6% (y/y) compared to 2.5% in June, whereas the markets had expected a decline to 2.4%. Alarmingly, core inflation (Core CPI), which excludes volatile components such as food and energy prices, remained at 2.9% for the third consecutive month, against a forecast of 2.8%.
Some economic media outlets described this as an "unpleasant surprise" for the European Central Bank. It was anticipated that the ECB, at its meeting on 12 September, following the first rate cut in June, would take a second step and lower it by another 25 basis points to 4.00%. However, given the unexpected rise in CPI, this task becomes more challenging. Bloomberg currently forecasts that inflation will decrease to 2.2% in August. But, considering the current trend, this may not happen. It is quite possible that if the figure does not decline, the ECB may pause and keep the rate unchanged. This is further supported by the preliminary estimate of Eurozone GDP, which grew from 0.4% to 0.6% (y/y) in Q2. This indicates that the European economy is capable of coping with the regulator's fairly tight monetary policy.
● Another significant event of the week was the meeting of the Federal Open Market Committee (FOMC) of the US Federal Reserve on 30-31 July. It was decided to keep the key rate unchanged at 5.50%, where it has been since July 2023.
In the accompanying comments and Jerome Powell's speech, it was noted that inflation has decreased over the past year and, despite progress towards the 2.0% target, it remains somewhat elevated. It was also stated that economic activity continues to grow at a steady pace, with job growth slowing and the unemployment rate, though increased, remaining low. (The ADP employment report for the US, also released on 31 July, was disappointing, showing a decline from 155K to 122K).
CME derivatives estimate the probability of three Fed rate cuts by the end of the year at 74%. However, considering the cautious approach of the US central bank to economic regulation and its aim to maintain a balance between economic growth, the labour market, and reducing inflationary pressure, the Fed may limit itself to just two or even one act of monetary easing this year. The next Fed meeting will take place on 18 September and will be accompanied by an updated medium-term economic forecast, which will shed light on many issues concerning the market.
● The dollar's position could have been strengthened by key business activity data and US labour market figures released on 1 and 2 August, respectively. However, the PMI in the manufacturing sector showed a decline from 51.6 points to 49.6, falling below the 50.0 threshold that separates growth from contraction. Additionally, according to the report from the US Bureau of Labor Statistics (BLS), the number of non-farm payrolls (NFP) in the country increased by only 114K in July, which is lower than both the June figure of 179K and the forecast of 176K. Other data in the report indicated that the unemployment rate rose from 4.1% to 4.3%.
● After the publication of this data, Bloomberg reported that the likelihood of a 50 basis points rate hike in September increased to 90%. Consequently, the EUR/USD pair soared to 1.0926, then finished the working week at 1.0910.
As of the evening of 2 August, all 100% of surveyed analysts consider this rise in the pair to be temporary and expect the dollar to regain its positions soon, with the pair heading south. In technical analysis, 100% of trend indicators on D1 hold the opposite view, pointing north. Among oscillators, 75% point north, while the remaining 25% look south. The nearest support for the pair is located in the 1.0825 zone, followed by 1.0775-1.0805, 1.0725, 1.0665-1.0680, 1.0600-1.0620, 1.0565, 1.0495-1.0515, 1.0450, and 1.0370. Resistance zones are found around 1.0950-1.0980, 1.1010, 1.1050-1.1065, 1.1140-1.1150, and 1.1240-1.1275.
● In the upcoming week's calendar, Monday, 5 August, is notable for the release of the US services sector PMI. The following day, data on retail sales volumes in the Eurozone will be released. On Thursday, 8 August, the traditional statistics on the number of initial jobless claims in the United States will be published. At the very end of the working week, on Friday, 9 August, we will learn the revised consumer inflation (CPI) data for Germany, the main engine of the European economy.


GBP/USD: BoE Doves vs. Hawks, Score 5:4


● After the US Federal Reserve meeting, the market's attention shifted to the Bank of England (BoE) meeting on Thursday, 1 August. The interest rate on the pound had been at a 16-year high of 5.25% since August 2023. Now, for the first time in over four years, the British central bank lowered it by 25 basis points to 5.0%. The decision was made with a narrow margin – five members of the Monetary Policy Committee (MPC) voted for the reduction, while four voted to keep the rate unchanged. It should be noted that this outcome generally matched forecasts. The markets had estimated the probability of a rate cut at just 61%, despite the country's inflation being at the target level of 2.0% for the past two months.
As noted, this move was challenging for the regulator, as several Committee members expressed concerns about rising wages and persistent inflation in the services sector. Former Prime Minister Rishi Sunak welcomed the BoE's decision as "good news for homeowners" and a sign that the Labour Party had "inherited a strong economy." However, he also expressed concern that wage increases in the public sector could jeopardise further rate cuts.
● Let us quote some key points from the Bank of England's statement following the meeting. The regulator significantly revised the country's GDP growth forecast for 2024 to +1.25% (May forecast: 0.5%), with expected growth of +1.0% in 2025 and +1.25% in 2026. At the same time, the BoE anticipates "slackness as GDP slows and unemployment rises." According to the Bank of England's forecast, the unemployment rate will be 4.4% in Q4 2024, 4.7% in Q4 2025, and the same in Q4 2026.
Regarding consumer inflation, the CPI is expected to rise to approximately 2.75% in the second half of 2024. However, over the next three years, the Consumer Price Index is expected to fall to 1.5%, based on market interest rates. The BoE forecasts the interest rate at 4.9% in Q4 2024, 4.1% in Q4 2025, and 3.7% in Q4 2026. It is also stated that the "MPC will ensure that the bank rate remains sufficiently restrictive for as long as necessary until the risks of inflation returning are mitigated." Additionally, the statement includes the obligatory phrase that the scope of monetary policy will be determined and adjusted at each meeting.
● The market reacted to the rate cut to 5.0% with a weakening of the British currency and a drop in the GBP/USD pair to the level of 1.2706. However, the pound was subsequently supported by weak US labour market statistics, leading to a sharp upward movement of the pair towards the end of the working week, ultimately closing at 1.2804.
● All 100% of experts, when giving forecasts for the coming days, expect the dollar to strengthen and the pair to decline, just as with EUR/USD. As for the technical analysis on D1, 50% of trend indicators are green, while the other 50% are red. Among oscillators, only 10% are on the green side, another 10% are neutral grey, and 80% are on the red side, with 15% of them signalling oversold conditions.
In case the pair falls, support levels and zones are expected at 1.2700-1.2750, then 1.2680, 1.2615-1.2625, 1.2540, 1.2445-1.2465, 1.2405, and 1.2300-1.2330. If the pair rises, it will encounter resistance at levels 1.2855-1.2865, then 1.2925-1.2940, 1.3000-1.3040, and 1.3100-1.3140.
● No significant macroeconomic data publications regarding the state of the UK economy are expected in the coming days.

 

[Stan NordFX]

CryptoNews of the Week

– Another bearish bitcoin cycle started on 29 July after the BTC/USD pair reached a high of $70,048. The primary cryptocurrency continues to be pressured by the potential sale of coins returned to creditors of the bankrupt exchange Mt.Gox, as well as those assets confiscated by law enforcement agencies, including the US.
The decline in quotations is occurring amidst investors fleeing risks and a global stock sell-off triggered by concerns about the prospects of the world economy in general and the economies of countries such as Japan and the US. Negative sentiments are further exacerbated by tensions in the Middle East, uncertainty regarding the Federal Reserve's monetary policy, and the policy of the new US president to be elected in November.
On Friday, 02 August, bitcoin spot ETFs experienced the largest outflow of funds in the past three months. The head of cryptocurrency investments at Evergreen Growth, Hayden Hughes, believes that digital assets have become victims of the unwinding of carry trade operations using the Japanese yen after the Bank of Japan raised interest rates. However, the more apparent driver for the sell-off was the publication of extremely disappointing data from the US labour market.
The US Bureau of Labor Statistics (BLS) report showed that the number of non-farm payrolls (NFP) increased by only 114K in July, lower than both the June figure of 179K and the forecast of 176K. Additionally, it was revealed that the unemployment rate has been rising for the fourth consecutive month, reaching 4.3%. These data have raised concerns about a possible recession in the US, triggered a fall in Treasury bond yields, panic on Wall Street, and a sell-off of risky assets, including stocks and cryptocurrencies.
On "Black Monday," 05 August, bitcoin temporarily fell to $48,945, and ethereum to $2,109. The drop was the sharpest since the collapse of the FTX exchange in 2022. Long leveraged positions worth almost $1 billion were liquidated. In total, from Sunday evening, the overall market capitalization of the crypto market fell by more than $400 billion.

– At the opening of stock exchanges on Monday, 05 August, MicroStrategy shares, the largest corporate holder of BTC, immediately fell by 22%. (It is worth noting that just last week, MicroStrategy increased its bitcoin reserves to 226,500 BTC, and the company's founder, Michael Saylor, announced that bitcoin quotations would reach $13 million per coin by 2045).
Metaplanet securities, which calls itself the "MicroStrategy of Japan," fell by 18% – from 820 yen to 670 yen. "Black Monday" also affected the crypto exchange Coinbase, whose shares lost 18.5% in value. Public miners' shares also suffered significant losses: the three largest US companies by market capitalization – MARA, CleanSpark, and Riot Platforms – fell by 19.1%, 24.9%, and 16.7%, respectively.

– Disappointing macroeconomic statistics indicate the need for active measures to support US economic growth. According to several analysts, the current situation should push the Federal Reserve to start easing monetary policy and lowering interest rates as early as September. Recent shocks in traditional markets "increase the likelihood that less restrictive monetary policy will come sooner rather than later – which is good for cryptocurrency," claims Sean Farrell, head of digital asset strategy at Fundstrat Global Advisors.

– According to Jan3 CEO and former Blockstream head Samson Mow, evaluating the situation with bitcoin during periods of market financial turmoil is challenging. However, an analyst under the pseudonym Rekt Capital believes that the first cryptocurrency could see a price surge as early as October. He says the forming chart creates a bullish flag, which inspires optimism. "While bitcoin shows the possibility of a downward deviation in the near future, [however] the first cryptocurrency is slowly approaching its historical breakout point 150-160 days after the halving," notes Rekt Capital. He believes that although a price breakout will occur, it is not worth expecting an update to the historical maximum reached in March in the medium term.
The expert also emphasized that the current position in the crypto market suggests that BTC is unlikely to fall to $42,000, as buyers show strong support for the asset.

– Renowned analyst and trader, head of Factor LLC Peter Brandt noted that as a result of the market collapse, the situation has become similar to that recorded in 2016. Eight years ago, bitcoin fell by 27% after the halving that took place in July, and this year the coin's price dropped by 26%.
After hitting a low of $465 in August 2016, the price of bitcoin rose by 144% by early January 2017. Drawing an analogy between trends, Brandt suggests that an upward trend may soon emerge, and the BTC price could update its all-time high (ATH) in eight weeks (i.e., in early October). If this time digital gold appreciates to the same extent as in 2016, its price will be $119,682.
However, ITC Crypto blockchain project founder Benjamin Cowen holds a different view and believes that the bitcoin exchange rate dynamics will reflect the trend seen in 2019 when the coin appreciated in the first half of the year and depreciated in the second. In this case, the downward trend will continue, and BTC will see new lows.

– Analysts at Bernstein believe that bitcoin's reaction as a risky asset to general macroeconomic and political signals is not surprising. "A similar situation was observed earlier during the sudden collapse in March 2020. However, we remain calm," explained Bernstein. The experts noted that the launch of spot BTC-ETFs helped simplify investments in the first cryptocurrency and prevented its price from falling to $45,000. This time, the crypto industry's response to external factors will also be restrained, and the recovery of stock market indices will allow cryptocurrencies to show a slight but noticeable growth.
The company's analysts also warn that the "Trump factor" will influence the first cryptocurrency's price. "As the gap between Trump and Kamala Harris narrows, bitcoin and altcoins have traded weakly. We expect bitcoin and cryptocurrency markets to remain in a narrow range until the US elections, changing in response to catalysts such as presidential debates and the final election result," said Bernstein experts.

– Back in December 2022, the Reserve Bank of India launched a digital version of the rupee (CBDC), stating that transactions in such currency would be more confidential than in fiat. Initially, only Indian banks could conduct transactions with it through their mobile apps. The implementation process of the national CBDC was quite slow, and by the end of June this year, just over 1 million retail transactions had been recorded. This figure was achieved only after local banks began offering customers bonuses for using the virtual rupee and started paying part of employees' salaries in CBDC.
Most likely due to the low popularity of the novelty, the regulator announced in April 2024 that any financial companies with payment services could participate in the project. It was recently revealed that companies such as AmazonPay, GooglePay, and Walmart-backed PhonePe have expressed their desire to join the testing of the electronic rupee. Besides these US payment giants, Indian fintech companies Cred and Mobikwik plan to join the project.

– QCP Group has proposed a rather unexpected version regarding the cause of the crypto market crash. "The drop in cryptocurrency quotations to more than a five-month low was mainly caused by the sale of ethereum by the Jump Trading team," QCP Group believes. According to their information, Jump Trading unlocked 120,000 wETH tokens on Sunday, 04 August. Most of the coins were sold on 05 August, negatively impacting ethereum and other assets' prices. QCP Group suggests that the market maker either needs liquidity urgently on the traditional market or has decided to exit the market entirely due to reasons related to LUNA tokens.
For reference: On 21 June 2024, the US Commodity Futures Trading Commission (CFTC) launched an investigation into Jump Trading's activities, as the company acquired LUNA tokens at a price 99.9% below market value, and the subsequent sale of the coins caused a collapse in the asset's quotations. On 24 June, Kanav Kariya, president of Jump Crypto, a subsidiary of Jump Trading, resigned.

 

[Stan NordFX]

August 2024 Results: Three NordFX IB Partners Earned Over $77,000 in a Month





The brokerage company NordFX has summarized the trading performance of its clients for August 2024. Additionally, the social trading services, CopyTrading and PAMM, along with the profits earned by the company’s IB partners, were evaluated.



● In August, the top, "golden" spot on the podium was claimed by a client from South Asia, account No. 1782XXX, who earned 142,908 USD from trading gold (XAU/USD).

– The second place was secured by a trader from Western Asia, account No. 1785XXX, who also traded the XAU/USD pair, earning 32,471 USD.

– The TOP-3 is rounded out by a client from East Asia, account No. 1609XXX, with a profit of 24,196 USD. However, unlike the top two leaders, this impressive result was achieved through bitcoin (BTC/USD) trading.

● The situation in NordFX's passive investment services is as follows:

– A month ago, in our CopyTrading review, we mentioned the signal Bro, which, at that time, had increased the initial deposit by a staggering 554% in just 6 days (!). However, we cautioned that such exceptional results could only be achieved through highly aggressive trading, which also meant the risk of losing the entire investment was extremely high. This warning proved to be well-founded, as by 13th August, the deposit losses had reached 100%. Thus, Bro lasted only three weeks before ceasing to exist.

This is precisely why it is essential to consider not only profit but also drawdown. For this reason, we continue to monitor the signals NordFXSrilanka and Quiet_trade_USD. Of course, their profits may not seem as impressive at first glance, but they still far exceed the interest rates on USD bank deposits. Thus, NordFXSrilanka has shown a growth of 48% over 236 days with a maximum drawdown of less than 10%. Quiet_trade_USD has achieved a profit of approximately 15% since the end of February this year, with a moderate drawdown slightly exceeding the same 15%.

– On the PAMM service showcase, a startup Gold24 has already appeared. The name of this account speaks for itself – trading is conducted exclusively on NordFX's popular XAU/USD pair. The number "24" in the name could signify 24-carat purity (pure gold without any alloys), or perhaps it indicates that trading on the pair is conducted 24 hours a day. We consider both possibilities equally likely. Regardless, in just three months of operation, the manager of this account has achieved a profit of 73% with a maximum drawdown of 31%.



● The TOP-3 NordFX IB partners received the following commissions in August:

– The highest commission of 36,691 USD was awarded to a partner from South Asia, account No. 1576XXX.

– The second place goes to another partner from the same region, account No. 1678XXX, who earned 27,244 USD.

– Finally, the TOP-3 is completed by yet another partner from South Asia, whose account No. 1678XXX differs only in the last three digits. His commission amounted to 13,690 USD.



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.

 

[Stan NordFX]

Forex and Cryptocurrency Forecast for November 04 – 08, 2024

In October 2024, the U.S. labor market saw limited movement, with total nonfarm payroll employment rising by only 12,000 jobs, keeping the unemployment rate steady at 4.1%. Health care and government sectors saw continued job growth, while temporary help services and manufacturing experienced declines, the latter impacted by strike activity. Hurricanes Helene and Milton, which caused significant damage and evacuations in the southeastern U.S., may have influenced employment figures and data collection, potentially skewing labor data.
The Bureau of Labor Statistics noted, however, that it cannot quantify the hurricanes' impact on employment shifts. Moreover, the storms did not visibly affect the unemployment rate. After the data release, the dollar fell sharply by 0.35%, while stock indices and cryptocurrencies saw a recovery. Markets are now anticipating rate cuts in 2025, with expectations of a 25 basis point reduction at the November and December Federal Reserve meetings.
The U.S. presidential election on November 5th will be a major focal point for the markets next week, likely driving significant volatility around that date.

EUR/USD

The Euro saw a slight increase over the week, though it appears to be struggling to hold onto those gains. Currently, the market seems likely to remain volatile and move sideways, with prices hovering around the 50-Week EMA.
If the price breaks above the top of previous week’s candlestick, it could face resistance at the 1.10 level. Conversely, the 1.0750 level offers strong support and is worth monitoring closely. Should the price fall below this point, it may target the 1.05 level, which has consistently served as a major support zone over the past few years. Overall, the market appears to lack clear direction at this stage.

XAU/USD

Escalating geopolitical tensions have led investors to turn to safe-haven assets like gold, fueled by heightened risk aversion and worries about global market stability. Gold has repeatedly set new records this year, climbing over 30% amid expectations of further central bank rate cuts and ongoing geopolitical uncertainties. According to LSEG data, this marks its strongest annual growth since 1979.
Gold had a bullish run past week, but momentum appears to be slowing. The weekly candlestick reflects some hesitation, indicating that a phase of profit-taking might be near. The $2800 mark, a significant psychological level, has drawn substantial market interest. Traders should monitor any pullbacks closely, as these may present buying opportunities, particularly around the $2600 level.

BTC/USD

Bitcoin (BTC) saw a gain of over 2% this week until Friday, with a strong start bringing it close to a new all-time high, followed by a notable decline as signs of profit-taking emerged.
Analysts suggest that Bitcoin might experience a pullback in the coming days ahead of the U.S. presidential election, a critical event that could shape the regulatory landscape for cryptocurrencies. The continuation of Bitcoin’s recent rally in the short term is closely tied to the election results, with many traders believing that a victory for former President Donald Trump could result in more favorable regulatory conditions for the crypto market.
If BTC continues its decline and closes below the $69,500 mark, it could potentially fall over 5% to test the next key support at $66,000, aligning closely with the breakout point of the downward-sloping parallel channel pattern near $65,800 on the weekly chart. However, if Bitcoin stays above $69,500, it may attempt to retest and possibly break through its all-time high of $73,777.

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.