5 Things to Watch Next Week: Ethereum, UK Election, Oil, Summer Seasonality, Gold

1.            Strong Fundamentals Lift Cryptocurrencies as Capital Pours in the Market

Several favorable fundamental developments helped the crypto-market in its recovery after the steep correction of the previous week. New leaders pushed the market value back to $90 billion, after a $30 billion drop, as Ethereum, Dash, and Ethereum Classic showed relative strength, while Bitcoin, Litecoin, and Ripple are still well off their respective highs. The biggest Chinese cryptocurrency exchanges reopened withdrawals, one of the biggest Japanese forex brokerages started offering Bitcoin trading, while the Russian leadership is considering a “national” cryptocurrency.

2.           Lots at stake at the UK Election Under the Shadow of Terror

Yesterday’s tragic terror attack in London could have a major effect on the British snap elections, especially after the narrowing of the difference between the Conservative Party and the Labour Party. The campaign has been officially suspended following the attacks, while both parties have accused the other of “politicizing” the attacks. PM Theresa May and the Conservative Party are more likely to benefit from the current sentiment, and the reaction by the Pound could actually be surprisingly positive thanks to that.

GBP/USD, 4-Hour Chart Analysis

3.           The OPEC Under Pressure: Oil Supply Creeps Higher

The crucial commodity remained in a declining trend throughout the week, falling as low as $47 per barrel from the pre-OPEC-meeting highs near $52. The relentlessly rising US production numbers keep a lid on the price of crude oil, and the trend is likely to continue in the coming months, as break-even levels for shale-oil continue to decline. As the effectiveness of the cartel’s production cut is questionable, a sustained rally in oil is unlikely.

4.           Will Negative Summer Seasonality Kick-In for Stocks?

“Sell in May and go away!” This is one of the oldest “common knowledge” trading strategy regarding US stocks, and a little bit surprisingly, it has a lot of merit to it. As you can see in the chart above, June is one of the worst months of the year and, on average, the S&P 500 hasn’t gone anywhere in the past 30 years from May to December. That said, outlier years are not uncommon, so the summer could bring more gains, but, given the internal weakness in the markets, investors should be cautious, especially after the huge “Trump-Rally” in the US since the election in November.

5.           Will Gold Continue above $1300?

Gold broke out from the trading range between $1260 and $1275 following the lackluster US Employment Report, and continued its short-term uptrend, on its way to the $1300 level. The London attacks, combined with the disappointing economic numbers, could fuel the next leg higher in the precious metal, with the next Federal Reserve meeting coming up in 10 days. Interest rate expectations have dipped before the central bank’s decision, and that is usually bullish for gold. The ECB will announce its rate decision on Thursday, and that could also move the price of the metal.

Gold, 4-Hour Chart Analysis

Key Economic Releases Next Week

Day Country Release Expected Previous
Monday UK Services PMI 55.1 55.8
Monday US ISM Non-Manufacturing PMI 57.3 57.5
Monday US Factory Orders -0.20% 0.20%
Tuesday AUSTRALIA RBA Rate Decision 1.50% 1.50%
Tuesday AUSTRALIA RBA Statement
Tuesday CANADA Ivey PMI 62 62.4
Wednesday AUSTRALIA GDP Growth 0.30% 1.10%
Wednesday UK Halifax HPI -0.20% -0.10%
Wednesday CANADA Building Permits -5.80%
Wednesday US Crude Oil Inventories -6.4 mill
Thursday JAPAN Final GDP Growth 0.60% 0.50%
Thursday AUSTRALIA Trade Balance 1.99 bill 3.11 bill
Thursday CHINA Trade Balance 336 bill 262 bill
Thursday EUROZONE ECB Interest Rate Decision 0 0
Thursday EUROZONE ECB Monetary Statement
Thursday CANADA NHPI Index 0.30% 0.20%
Thursday US Initial Jobless Claims 241,000 248,000
Friday CHINA CPI Index 1.50% 1.20%
Friday CHINA PPI Index 5.70% 6.40%
Friday UK Manufacturing Production 0.80% -0.60%
Friday UK Goods Trade Balance -12.0 bill -13.4 bill
Friday CANADA Unemployment Rate 6.6% 6.5%
Friday CANADA Employment Change 11,500 3,200

 

Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.