The People's Bank of China banned all crypto transactions on overseas Chinese services along with its domestic ban. Bitcoin is down over 8% today and Ethereum is down 11.48%.
I think we're seeing a lot of noise around China and their condemning of cryptocurrencies before they digitize their own. In the short term, this puts a ton of pressure around these digital coins, but lower prices seem like they're setting up better deals for long term success. Mining has already moved away from China as mining activity is starting to pick back up elsewhere. I think we're seeing another sale of cryptos: bitcoin below $40K and Ethereum below $3K seems like great spots to consider getting in.
Bitcoin just under support in the $42,000s and possibly making a higher low on the 1D chart. The golden cross is still relevant for this pair, but COT will have to pick up some and help out price action. Additional support lies underneath around $37,300s.
Price action is the same for ETHUSD as it looks to be making a higher low on the 1D chart. Price is just above its 200 DMA which could act as support should price fall all the way back down to this level. More support is under around $2438.
Let's look into the Bank of England's Monetary Policy Summary which took place on Thursday the 23rd of September, 2021.
The minutes of the MPC meeting revealed that discussions about inflation showed that might not be as transitory as expected. Further, it highlighted the uncertainty around the labour market regarding wages inflationary pressures due to labour shortage.
The Pound rose after the latest Bank of England (BoE) rate decision. The central bank left interest rates unchanged at a record low of 0.10%. The bank will continue with its asset purchase plan to support the economy costing £875B. The bank is also revised the country's growth forecast for the year to 2.1%, down from 2.9%. However, there's still a broad understanding that the BoE cannot solve the ongoing challenges facing the UK right now, an example would be controlling the spread of the Delta variant, ongoing supply shortages or the issue of inadequate workers.
The Committee voted by a majority of 7-2 for the BoE to continue with its existing programme of UK government bond purchases, financed by the issuance of central bank reserves, maintaining the target for the stock of these government bond purchases at £875 billion and so the total target stock of asset purchases at £895 billion. The two dissenters were Dave Ramsden and Michael Saunders, who voted for an early end of the program by decreasing purchases with a target of £840B.
Alongside this, the BoE noted that some developments have meant that the case for tightening has strengthened, which in turn has prompted a shift in money markets pricing in a 15bps rate hike for March 2022 vs Previous May 2022. That said, the March meeting is not a quarterly meeting like February or May, making it unlikely that a hike will take place in March.
G/U broke above 1.37 to 1.375 in response to a slightly more hawkish than expected statement, nearing the middle of the range between 1.36-1.39. We saw price bounce from the bullish order block at 1.361, the same support level that price has been bouncing off over the past month. It's likely we could see price retrace and collect final orders before continuing its bullish move towards resistance at 1.39.
The precious metal snapped three days of gains and tumbled back down to the support range from $1740s-1760s approximately. Gold is down -.56% on the day going into the opening of the NY session.
Gold will likely rise on the US indices falling, and is usually due to slowing economic growth. Because the Fed called for slower growth and higher inflation, it seems like a good sign for the metal against the USD. However, gold is falling after this news which is confusing. We could be seeing an uncertain reaction to this news before a rise in price; I think gold could be something to consider buying going into next week after the Fed's announcement in FOMC yesterday.
Something to look for is a break under support at the lows of $1743 because that would probably mean that the metal doesn't have enough strength to to come back up. However, if gold can stay above this support level, it might start seeing strength as the USD weakens with inflation. The past several months have not been great for gold, so if price falls under this support, there is clean support around $1700.
For the past month, Bitcoin went on a tear rising over 20% from the beginning of August. Recently, however, China and other risk-off factors have contributed to a 23% decline from the recent highs around $52,760. Now the most prominent crypto has touched these monthly lows which could be a potentially good deal at this level.
Bitcoin on the 1D chart fell back to the low $40Ks and rejected the lows on the latest daily candle. Price is below its 50 and 200 DMA, but there was a golden cross on this timeframe (50 crosses above 200 DMA). This golden cross along with the bounce from the lows could signal a move to the upside for bitcoin.
Today is a federal election where 338 members will be added to Canada's parliamentary system in a turbulent race caught in a dead heat. Current prime minister, Justin Trudeau, and his liberal party are now one percentage point behind the conservatives in the election. This is causing some major volatility for the loonie in the wake of a strengthening dollar.
I think the USD has the potential to run away with all the momentum as uncertainty in the Canadian parliament election. Expectations of the Fed tapering this year are getting higher an higher as bond yields crumble to February levels and 1.32% this morning. Risk-on sentiment towards stocks and crypto are dwindling in the wake of fears of regulation and global uncertainty. When this starts happening, investors turn to safe spots like the USD. So, we could see an increase in demand for the dollar this week as FOMC economic projections will come out this Wednesday followed by Powell's testimony later in the week.
USDCAD on the 1D chart has been in a tug-of-war behavior for months now as the pair might have started to form a head and shoulders pattern if the dollar can't find any more strength on the day. It's not exactly a head and shoulders though as this second "shoulder" is noticeably significantly higher that the first; there are also higher lows on this timeframe that suggest a move higher. The pair might have good momentum may catch more momentum if price can close above the 1.28055 level (previous shoulder).
This week’s risk sentiment vibes looks to be one of risk-off, likely influenced by the never-ending pandemic uncertainty, as well as bearish economic updates & news from China. The USD and JPY out performed the rest of the majors, typical results in a risk-off environment. The USD also benefitted greatly from the positive US retail sales data update, launching it higher on Thursday.
Stocks are down -0.58% this morning after coming down to test a significant level of support once again. While stocks fall, the dollar rises in the anticipation of sooner-than-expected tapering by the Fed along with a hike in interest rates starting in 2022.
Other than September being one of the worst months for stocks, I think that we could be looking at an increasing investor uncertainty in the markets. Stocks have had a wonderful year for the most part, and they could definitely keep rising. But, it's important that we keep an eye out for these corrections that happen once in a while; and this 50 DMA indicator could be what sparks a sell off.
SPX500 came all the way back down to its 50 DMA after what looked like a promising bounce on the 1D chart. This leads me to believe there is an overall weakness in the stock market right now, and that we might see another leg down during this month. I think clean support could be at $4400 if stocks were to fall that far down.
The Euro-Dollar pair is down over 0.5% today after several days in the red. Today's speech by EU president Lagarde mentioned how the economic recovery had come quicker than expected six months ago. This was praised by the prompt vaccine distribution so citizens could get back to work. Across the pond, the US just saw a slowing in inflation and an increase in retail sales which were expected to be negative this month. Both sides seem to be recovering well.
The USD looks like it could be the better play here because at least investors are getting hints as to approximately when the Fed will start tapering and raising rates. Lagarde said that Europe is far from recovery, but they are impressed with the pace so far. However, whatever has been said so far, it doesn't seem like investors are taking this all too well and are flocking to the USD today. The pair's general price action has also been relatively weak for the past three months.
EU fell under its 50 DMA and is on support around 1.75400s. If price breaks this level, it could be a catalyst of another significant drop. If this level of support does not break, there could be more consolidation between this support and resistance level.
This morning's report on CPI m/m and core CPI m/m came in at a lower percentage than expected which resulted in a falling dollar pre-New York session. The USD is now volatile under the uncertainty of potential tapering and rising rates while the equities market seems to be rising because of this.
This news looks to be better for the market, although I still feel like anything suggesting a closer indication to tapering also means that we're getting closer to a rise in interest rates. That would be strong for the USD and bad for equities. But investors might be taking this as a recovery in the economy as inflation slows, so this week could be good for the stock market as long as the end of the week's jobs claims come in good as well.
US equities look like they're able to catch support as the SPX500 finds support on the 200 SMA on the 4H chart. Lower inflation data could be indicating that the market will find some momentum to the upside. However, price has to break above that previous top to get that extra for it to look truly bullish in my opinion. We are looking at a series of higher highs and lower lows which could mean the SPX is in a wedge for the time being.
Tech stocks look like they're in the same boat as the NAS100 is starting to form a wedge as well. Resistance lies at $15,543 while the index retraces on a lower high. We could be seeing mixed movement in both indices today as investors try to decide where the market should go.
Big money has been moving out of Australia's currency for nearly a month now which has been the biggest drop in long contracts in this amount of time year-to-date. Australia's dollar index (AXY) is up 0.06% at 73.61 on the day after rebounding from the lows around 71.19.
Australia's economy has surprised investors with a beat in GDP and jobs numbers in the most recent reports. Having said that, institutions have been selling out of the buck for about a month now at an alarming rate which is rather concerning for the average investor. A little while back, I argued that Australia had a good chance for rebounding in this article. Price jumped over 2% in the next few days after that article, but the run was very short term. AUD/USD rose after a good GDP, but it couldn't maintain itself above the 0.74200s and put the pair in a state of consolidation. So until big money changes their sentiment toward the currency, I think it would be best to stay away from long plays and look to ride the momentum to the downside. Long term, the currency looks like a good long play, especially if they keep reporting good jobs numbers. But right now it's struggling with massive futures contract selling that will most likely continue to put pressure on the buck.
This pair fell back under the 0.74200s and is now riding the 50 DMA on the 1D chart. It looks like price will either consolidate between these two levels of support and resistance, or it will slowly bleed lower under support. In the past, this pair has historically made extended losses after a short rise in price according to this year's performance.
AC broke out of a long term channel and is now hovering at the top trend line on support. If momentum is strong enough, it could come up to test the previous high at 0.94185. Some bullish signs here on the 1D chart, but if it does end up moving bearish, we could see a test on support around the 50 DMA.
AUDCHF actually looks the most bullish out of these pairs right now. Price is bouncing up from the 50 DMA and testing support which is now a triple top on the 1D. If there is enough strength, price could come up to a falling trend line around .68495.