Market Analysis

Markets awaiting the Fed and trade negotiations

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The markets reduced expectations of interest rate cuts by the US Federal Reserve after the unexpected improvement in the US labor market.

The United States Government reported last Friday that 224 thousand jobs were created in June, well above what analysts expected. Now investors are wondering if the US central bank will make any rate moves to support economic growth.

Powell could provide more clues about the prospect of his short-term monetary policy on Wednesday, in his half-yearly testimony before the United States Congress. On the same day, the Fed will publish the minutes of its last monetary policy meeting

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Stock markets rise after the G20 summit

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The week begins with significant rises in stock markets and retracements in bond yields, after the United States and China agreed to resume trade negotiations.

Both countries agreed on Saturday to resume trade negotiations, President Donald Trump offered some concessions to his Chinese counterpart, Xi Jinping, at the meeting held in the framework of the G20 summit in Japan. The US president promised not to make new tariff increases and will allow US companies to sell their products to the Chinese manufacturer Huawei.

On the other hand, the data published last Friday showed that the consumer price index in the United States fell to 1.5% in May. This is a key indicator for the monetary policy of the Federal Reserve and led investors to bet on an aggressive policy of monetary easing by the Fed.

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The Fed pushes the stocks and presses the bonds and the dollar

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Equity markets continued to rise the previous week, while the dollar and global bond yields contracted, after the Federal Reserve signaled possible cuts in interest rates for this year. The yield on 10-year US Treasury bonds fell to 1.974%, its lowest level since November 2016.

Signs that China and the United States will resume trade negotiations after a six-week hiatus also reinforced investor sentiment.

The Federal Reserve chairman, Jerome Powell, said after the monetary policy meeting that the “justification for a more accommodative monetary policy has been strengthened” but the Fed wants to “see more data” before making decisions.

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EUR/USD Analysis: Recovery seems to be corrective at the moment

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  • The EUR/USD is recovering after testing the 1.1200 level, but the bullish outlook is still unclear.
  • The disappointing data from the United States caused the dollar bulls to be in suspense for the time being.

The EUR/USD has been moving around 1.1200 since the beginning of the day, bouncing from the area in a modest way, since the psychological barrier is a level difficult to break.  However, the US currency maintains its strength, since the latest macroeconomic publications in the United States make investors doubt a turn in the monetary policy of the Federal Reserve, given that consumption continues to be resilient. The central bank of the United States is scheduled to meet this week, and its decision will be key to the dollar. Meanwhile, Benoit Coeure of the ECB warned of “gloomy” indicators on the health of the global economy, and that the risks could materialize in the next meetings.

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Dollar shows weakness between trade tensions and key economic data

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The trade war between the United States and China continues to be the focus of the markets. However, in the last hours a new conflict was added, of similar characteristics, but with different causes, such as the announcement that the United States will impose, from June 10, tariffs on imports from Mexico for 5% .

In this way, not only does a new dispute begin with unpredictable derivations, but the implementation of the new trade agreement between these two countries and Canada, which the United States unilaterally called USMCA, is questioned. In addition, it generates a major concern in the US business sector, given that there are many firms that have their factories in Mexican territory, and export to the United States.

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Expiration of Bitcoin CME futures generate volatility in the markets

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  • In past periods, the maturity of Bitcoin CME futures resulted in price movements
  • CME recorded record volumes in the month of May, moving more than 33,000 contracts.

On Friday, May 24, some 2,710 contracts expired for the equivalent of 13,500 bitcoins settled by the CME. The maturity of these futures contracts increased the volatility of prices in the Bitcoin market. Taking as reference the past values, it can be observed that in the days following this type of events, the prices of the cryptocurrency with the highest capitalization in the world begin to move.

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The Gann Fan – Description and Uses

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What is the Gann fan?

In this article, we will explain another market analysis tool developed in the last century by a famous analyst and trader, which was designed to study the price oscillations between market highs and lows. This tool has some popularity and can be found on most trading platforms, although its effectiveness has been questioned. The Gann Fan is a technical analysis tool used to indicate price movements from important highs and lows as well as to identify price breakouts.

William Delbert Gann developed analysis techniques based on geometric patterns and classical angles whose relationship, according to its creator, allows us to correctly predict future market movements in both time and price. This analysis tool is built based on Gann angles.

Gann was a stock market analyst who in the 20th century wrote his foundations to invest in the stock market in his work “The basis of My Forecasting Method”. This work, which consists of just over 30 pages as a manual, was published in 1935.

The Gann fan is formed by lines that start from the same point with different angles. It is similar to the Fibonacci fan, but the angles between the lines that make up this fan are classic angles like the 45 degrees one.

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Bitcoin Markets Trend For 2019

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As proven in 2017, Bitcoin markets are overly sensitive in their reactions. In 2017, Bitcoin price soared by 1,800% to peak at over $19,000 and generated a market capitalization of over $250 billion. In contrast to 2017’s movement, the turmoil during 2018 led cryptocurrencies into a great crash. Bitcoin had a total market capitalization of around $65 billion by the end of 2018, reversing 70% of its 2017 market value in a year marked by volatility and higher volumes.

Bitcoin markets started the year on a smooth downwards swing. The hacking of the Japanese exchange Coincheck at the end of January, China’s talks regarding cryptocurrency banning and Facebook’s ban on cryptocurrency and ICO advertisements were some of the factors that added pressure on Bitcoin’s price. Certainly, it has not been a good period for the most famous cryptocurrency and the sector in general.

The US Securities and Exchange Commission (SEC) also had a negative effect on Bitcoin markets after rejecting BTC ETFs. A further drop was seen in September, which is believed to have been caused by a single wallet discharging nearly $1 billion of BTC into the market.

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