1. Bitcoin’s Big Day is Here
Bitcoin’s future got a lot clearer in the past two weeks, as the surpassingly quick miner lock in of the BIP 41 proposal, the following BIP 141 lock in and the SegWit finalization opened up the way for a smooth transition. The Bitcoin Cash hard fork initiative failed to gain traction, despite an initial surge, and the brief correction in Bitcoin faded away in the second half of the week, although the weekend ended up to be slightly bearish for BTC. With all the positive developments in mind, we still expect nervous trading leading up to August 1, as several exchanges will halt trading, which could lead to a low-liquidity environment. With the long-term technical picture still being favorable for the currency, and for the whole segment, adds favor rally towards the back end of the week.
Bitcoin, Daily Chart Analysis
2. Oil at $50 as Goldman Sachs Sees Balancing of Fundamentals
Oil had a nice run in the past two weeks, as it continues its orderly range trading from a technical viewpoint. The WTI contract is back at the crucial $50 level, with the help of the strong decline in the Dollar, the prospects of slower tightening by the Federal Reserve, the positive news regarding the OPEC production cut deal, and the slower growth of the US output. While these factors are definitely favorable, the growing share of the shale industry means that output is much more flexible than it has ever been, and prices will likely be capped thanks to that. The slow global growth, and the weak demand are also long-term challenges for the commodity and we don’t expect a major move above the prior highs at $54. And as Goldman issued a “cautiously positive” outlook, one might wonder if they are already on the other side, selling or even shorting oil here.
WTI Crude Oil, 4-Hour Chart Analysis
3. Dollar Still Hitting New Lows before Jobs Friday
This week delivered two major blows to the already struggling Greenback, as the dovish Fed-statement was followed by a prelim GDP report that showed very weak inflationary forces. While we still expect the Fed to start normalizing its balance sheet this year, the economic cycle seems to have peaked, and with the mountain of debt still on the back of basically all developed nations, it’s hard to imagine interest rates back at the “old normal” of 4-5% anytime soon. That said, the Dollar might still lose ground compared to the Euro, as the ECB will likely follow the FED as usual, but we see this trend as a cyclical bull market, within a secular decline for the common currency against the USD. The next big impulse will likely come on Friday again, with the ever crucial US Employment Report.
4. Another Big Earnings Week Coming
While this week was certainly the peak of the US and the European earnings season, traders will see some other interesting reports coming out in the coming days. Most importantly, Apple (AAPL) will publish its quarterly earnings, and the company that sports $785 billion in market cap is always a huge force alone. So far earnings were a mixed bag, as AT&T (T), Facebook (FB) and Coca Cola (KO) delivered positive surprises, while Alphabet (GOOG), Amazon (AMZN), and Exxon (XOM) missed the consensus estimates. Markets were as choppy as expected amid the releases, and what’s more, Thursday brought another flash crash in the biggest names of the NASDAQ, without any news whatsoever. We will see if that is once again a precursor of a deeper correction, as it was the case in June.
5. Gold Finally Tops $1300?
Gold investors have been treated well by the market as of late, with the Shiny Metal finally reacting to the economic and monetary news in an encouraging way. We have been urging investors to load up on the dips, as the long-term picture still looks bright for precious metals, and although we are nearing short-term overbought readings, gold will likely test the $1300 level soon. With the bear market that started in 2011 likely being over, further hints on economic weakness could cause a sustainable rally gold, even without a clear signal from the central banks that, in fact, interest rates will remain depressed for the foreseeable future.
Gold, 4-Hour Chart Analysis
Key Economic Releases Next Week
|Monday||US||Pending Home Sales||1.1%||-0.8%|
|Tuesday||AUSTRALIA||RBA Rate Decision||1.5%||1.5%|
|Tuesday||US||PCE Price Index||0.1%||0.1%|
|Tuesday||US||ISM Manufacturing PMI||56.4||57.8|
|Wednesday||US||ADP Employment Change||187,000||158,000|
|Wednesday||US||Crude Oil Inventories||–||-7.2 mill|
|Thursday||AUSTRALIA||Trade Balance||1.77 bill||2.47 bill|
|Thursday||UK||BOE Rate Decision||0.25%||0.25%|
|Thursday||US||Initial Jobles Claims||242,000||244,000|
|Thursday||US||ISM Non-Manufacturing PMI||56.9||57.4|
|Friday||AUSTRALIA||RBA Monetary Policy Statement||–||–|
|Friday||CANADA||Trade Balance||-1.4 bill||-1.1 bill|
|Friday||US||Trade Balance||-45.6 bill||-46.5 bill|
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