1. Cryptocurrency Correction Nearing its End?
Volatility has been in a declining trend in the crypto market since the Monday Massacre, and the major coins are all still well above their correction lows, despite this weekend’s dip. The long-term picture is getting more constructive as the overbought readings are being cleared across the board. With Bitcoin’s crucial month getting closer and closer, uncertainty in the segment is still apparent, despite the continuous string of ICOs. A broad rally to new highs might be ways off, and we do expect more sideways action, the stronger looking coins like Dash and Litecoin might get interesting soon even for short-term positions.
ETH/USD 4-Hour Chart Analysis
2. It’s Jobs Friday Again
While the US labor market is still OK compared to some other more forward-looking measures, and the low level of initial jobless claims points to more solid numbers, employment is always deceivingly good in late in an economic cycle. With that in mind, a good report would make for a good counter trade opportunity. The currency markets could get wild on Friday, as this week’s central bank confusion would get another boost should the Non-Farm Payrolls number surprise big in either direction. Also, the generally low summer volumes could exaggerate the moves, so caution is required especially from leveraged traders.
3. The Deadline of the Qatar Ultimatum
The ultimatum given by Saudi Arabia and its allies expires tomorrow, and the world still doesn’t have a clue what will happen next. Qatari officials communicated that the country is ready to face the consequences, meaning they called the bluff of the Saudis, or that they don’t realize the seriousness of the situation. We will see soon enough, but at this point, the whole crisis looks like muscle-flexing from the restructuring Saudi leadership rather than the start of an escalation with Iran. That said, any hint of a military conflict could turn markets upside down, and start a new chapter in the political saga of the Middle East.
4. The Dollar Remains in Focus
We are seeing early signs of a major bottom forming in the Dollar, as the recent surge in the Euro ran out of steam towards the end of the week, and the supposed advantage of the European economies compared to the US is mostly a mirage. That said if the ECB doesn’t cool down tightening expectations and US economic numbers continue to disappoint we might see a quick jump and final selling wave in the already lengthy downturn in the Greenback. Also, if the stock market correction continues, the Dollar will likely gather strength and burn the late shorts that jumped on the train chasing momentum.
5. Supports Crumble in Global Stocks?
As we stated last week, market tops are processes, not events, but when declines start they tend to get ugly quickly. European stocks got smacked down on Thursday when investors come to the realization that the European Central Bank will likely do it again (as in 2008 and 2011) and raise interests rate just before an economic downturn. The NASDAQ also continued to look shaky, and it is testing the rising trendline and the primary support just under the current price level. While there is no guarantee that the decline will last long, being patient already paid off, as most of the major benchmarks erased a couple of months of gains in a few days.
NASDAQ 100 Futures 4-Hour Chart Analysis
Key Economic Releases of Next Week
|Monday||JAPAN||Tankan Manufacturing Index||15||12|
|Monday||JAPAN||Tankan Services Index||24||20|
|Monday||CHINA||Caixin Manufacturing PMI||49.9||49.6|
|Monday||US||ISM Manufacturing PMI||55||54.9|
|Monday||US||Vehicle Sales||–||16.7 mill|
|Tuesday||AUSTRALIA||RBA Rate Decision||1.50%||1.50%|
|Wednesday||US||FOMC Meeting Minutes||–||–|
|Thursday||AUSTRALIA||Trade Balance||1.11 bill||0.56 bill|
|Thursday||EUROZONE||Monetary Meeting Accounts||–||–|
|Thursday||US||ADP Employment Change||181,000||253,000|
|Thursday||CANADA||Trade Balance||–||-0.4 bill|
|Thursday||US||Initial Jobless Claims||245,000||244,000|
|Thursday||US||ISM Non-Manufacturing PMI||56.6||56.9|