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Asian Market Update – Friday: Dollar is Up as Central Bankers Get Ready For Big Event

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Janet Yellen Speech

The Big Question: Is the weakness seen in the dollar this year finally coming to an end?

The US dollar edged up in the early hours of the Asian trading session on Friday, extending a recent uptrend in the USD/JPY chart.

The dollar gained some 0.10 percent against the Japanese yen before midday in Tokyo trading. All eyes are now on the Federal Reserve symposium in Jackson Hole, Wyoming, where Fed chair Janet Yellen is expected to deliver a speech at 1400 GMT time.

Yellen’s speech has a high potential impact on FX markets in particular and traders are advised to adjust their risk levels accordingly.

The question traders are asking themselves is if the weakness shown by the dollar will now end, or if this is just the start of a longer-term decline for the greenback.

The initial optimism following Donald Trump’s election victory last year seems to be fading off, as his business-friendly agenda of tax cuts and deregulation may prove difficult to pass in Congress. With the President preoccupied with party infighting, Russia investigation, and “employee turnover” at the White House, traders are starting to realize that the initial prospects were too optimistic.

In the short term though, Yellen’s speech will determine the direction of the US dollar.

European Central Bank (ECB) President Mario Draghi is also participating at the Jackson Hole symposium and is expected to deliver his remarks at 1900 GMT. However, expectations for this speech are somewhat measured, as the ECB has made it very clear that there will be no change in policy until the next ECB meeting.

Still, it is worth noting that Mr. Draghi has previously used the conference as an opportunity to deliver critical, market-moving news.

Main Market Movers – Midday Asian Trading Session

Indexes Value at Midday Daily Change
Japan-Nikkei Stock Average 225 19,473 0.60%
China-Shanghai Composite Index 3,309 1.16%
Australia-ASX 200 5737 -0.06%

Major Asian indexes advanced Friday morning, holding on to their gains for the week and ignoring lower stock prices in the US the day before.

In Japan, the Nikkei 225 was up 0.60 percent, trading at 19,473, near the same level as the start of the week.

In China, the Shanghai Composite gained a good 1.16 percent to 3,309, ending the week on a strong note and breaking through the previous swing high from early August.

The Shanghai index is now at a high level, currently breaking through previous longer-term market tops. Some analysts believe the market is ripe for a reversal in trend in the coming days. However, if the index can push through these previous highs, it is a very bullish sign for Chinese Mainland shares.

Shanghai Composite IndexIn Australia, the benchmark ASX 200 opened the day lower, but then traded back to where the day started at around 5,737.

Currencies

The Japanese Yen is slightly down today versus the US dollar, with JPY/USD trading at 0.009124, down 0.04% for the day.

In Australian trading, the AUD/USD is unchanged for the day at 0.78982.

Commodities

WTI Oil was up 0.27 percent to $47.73, back at the same level where the price has consolidated in recent days.

Brent Crude also gained 0.58 percent to $52.41 per barrel.

Gold was up 0.10 percent to $1,286.56 an ounce.

Business News across Asia

In China, aluminum prices are expected to remain at high levels following a statement from the State Council saying that the country should continue cutting in the current oversupply of aluminum.

In Japan, the government released data showing that the core consumer-price index increased 0.5% in July compared with the same month the previous year, in line with expectations.

Take away: This provides some evidence that Japan is, at least temporarily, succeeding in its long battle against deflation.

Featured image from Wikimedia Commons.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.3 stars on average, based on 37 rated postsFredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.




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Ethereum Co-Founder Puts to Rest Speculation of Crypto Armageddon

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Blockchain pioneer Joseph Lubin, who is at the helm of blockchain startup ConsenSys, isn’t swayed by this year’s downturn in the crypto market. In fact, Lubin has been a voice of calm in the crypto space all year, emphasizing the development side of the equation while cryptocurrencies have been in the doldrums, not the least of which has been the currency of the project he co-founded, Ethereum (ETH). He told CNBC:

“Digital currencies are not on the edge of a collapse. We’ve seen lots of boom and busts in our ecosystem over the last nearly 10 years and our ecosystem has never been stronger.”

Lubins’ barometer for success in the crypto industry is the number of projects and people that have been drawn into this space, including entrepreneurs and developers. “It’s orders of magnitude bigger than it was and the foundational infrastructure is getting built out,” he noted.

That foundational infrastructure is exactly what is going to deliver the kind of scalability that networks like Bitcoin and Ethereum need to go from what an Andreessen Horowitz General Partner recently described as “dial-up” days to mainstream adoption. Meanwhile, Lubin recently pointed out that the amount of activity on the Ethereum blockchain today outpaces where it was a year ago when the market was approaching its peak.

Industry Regulation

While U.S. regulators have been dragging their feet to develop  a framework for cryptocurrencies like bitcoin, they’ve been more keen to embrace the blockchain and according to Lubin “regulators are getting a very good understanding of the value of the technology.” When pressed, Lubin said he expects “lots of self-regulatory activity” in the crypto space” but he is quick to distinguish ether more as a crypto commodity or as a crypto fuel for the Ethereum network than a cryptocurrency, though it has some features of the latter.

Incidentally, while the broader cryptocurrency market is currently trading flat, one of the best-performing cryptocurrencies of late is Basic Attention Token (BAT), which is an Ethereum-based coin that is up approximately 50% in the last week amid speculation it will be Coinbase’s next listing.

And then there’s regulated crypto exchange Bakkt, whose parent company is the Intercontinental Exchange (ICE). Bakkt announced today that it will launch its bitcoin futures contract on Dec. 12, which is slightly behind the original plan for a November launch. In a nod to foundational infrastructure, it’s been about a year since the CME and CBOE launched the industry’s first bitcoin futures products.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 69 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Market Update: U.S. Stocks Dragged Lower by Financials, Energy Companies; China Rebounds

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U.S. stocks finished mostly lower on Monday, as brisk selloffs of financials and energy shares offset modest gains in the technology and communication sectors. A large relief rally in China failed to ignite a similar revival in Europe and North America as concerns over global growth dampened investors’ appetite.

U.S. Stocks Sputter

The S&P 500 Index opened in positive territory before wobbling during the morning session and eventually turning lower in in afternoon trade. The broad index settled down 0.4% at 2,755.88, with a majority of sectors finishing in the red. Energy and financials were the biggest decliners, each falling more than 1% as a sector.

Modest gains in tech pushed the Nasdaq Composite Index to higher ground. The benchmark rose 0.3% to close at 7,468.63.

Dow industrials declined 126.86 points, or 0.5%, to 25,317.48. DowDupont Inc. (DD), American Express Co (AMX) and Goldman Sachs Group Inc (GS) were among the biggest decliners.

European markets also headed for losses on Monday, with all major continental bourses finishing in the red. The Euro Stoxx 50 Pr index closed down 0.7%,

China’s Biggest Rally in Three Years

Chinese markets exploded higher on Monday, with the mainland indexes posting their biggest single-day advance in almost three years following reassuring comments from government officials last week.

The benchmark Shanghai Composite Index surged 4.1% while the CSI 300 Index closed 4.3% higher, its largest advance since November 2015. Hong Kong’s Heng Seng Index rose 2.3%.

Government officials ranging from the Vice Premier to the heads of the People’s Bank of China talked up the domestic economy last week, reassuring investors that the ongoing trade war with the United States would not have a material effect on the nation. President Trump has implemented tariffs on more than $250 billion worth of Chinese imports, making whole on a campaign promise to hold Beijing to account for its unfair trade practices. According to the International Monetary Fund, the trade spat will result in both economies growing 0.2 percentage point slower next year. This will also lead to a downshift in global growth.

Last week, China reported annual GDP growth of 6.5% during the third quarter, the slowest since 2009. On Friday, the U.S. Department of Labor is expected to release preliminary Q3 GDP figures.

Lackluster Session for Cryptocurrencies

Risk-off sentiment in global equity markets in hasn’t translated into higher demand for bitcoin and other digital assets. On Monday, cryptocurrency prices traded slightly to the downside, erasing minor gains made during the previous session. At the time of writing, the total market capitalization of all coins was just over $209 billion, according to CoinMarketCap.

The bitcoin price swung back below $6,500, though losses were generally well contained. Ethereum, XRP and bitcoin cash all traded slightly lower on a 24-hour basis.

Digital currencies are experiencing a downshift in volatility as well as in trade volumes, with investors unwilling to commit to either direction. Recent history has taught us that prolonged periods of lateral moves are usually followed by sharp declines in subsequent sessions.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 649 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Cautiously Flying

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Hi Everyone,

It’s only Monday and already it seems to be one of the most exciting weeks of the year for the financial markets. Asian stocks are flying this morning (the reason for this below) despite some clear signs that investors are still cautious.

One of these signs is the price of gold, which has spiked during the sell-off two weeks ago (purple circle) but is now showing signs that it may be ready to stretch higher (yellow rising support line).

The fact that gold is trading near its highs is not necessarily any indication in and of itself. The upcoming Diwali Festival in India is traditionally a time when gold prices tend to rise.

As we’ll see below, investors are still happy to pour money into this market but they are doing so very carefully right now.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Chinese Support
  • Mark’s Market
  • Even more stable crypto

Please note: All data, figures & graphs are valid as of October 22nd. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

As we mentioned above, Chinese stocks are flying. The China 50 index is up an astonishing 5.3% as of this writing. This is largely due to strong support from President Xi Xinping…

We’ve seen these type of stunts before from President Trump but this behaviour does seem to be new for the Chinese leader.

The timing is impeccable here too. As we’ve been watching, the Chinese stock markets have been on the ropes after retreating more than 30% since the year’s highs. However, the Xi’s gambit may have fallen short of the mark.

As we can see below, the red line being defended on the China50 is just above 10,500 points. Whereas, to break out of the current range to the upside we’d need to see levels above 12,000.

Cautious Like an Oak Tree

For legendary investor Howard Marks, the markets are not so binary. The co-founder of Oaktree Capital does see the current markets as expensive but adds that this doesn’t mean we’re about to see a crash. The economy is doing well and therefore it pays to be in the market, but defensively.

We all know that markets are cyclical. They go through bull times and bear. However, not every rise is a bubble and not every decline is a crash. In fact, most market moves are a lot more moderate.

Marks’ theories are always fascinating even if they sometimes differ from my own, especially when it comes to bitcoin. I’ve been enjoying his email alerts for a while now, but this interview on Bloomberg opened my eyes in a new way.

Crypto Markets

Crypto markets remain steady and are showing even more signs of stability. Tether seems to have regained most of its composure and is now trading within 2 cents of the $1 mark, right where it should be.

In the meantime, volumes on other stable coins have stepped up to further stabilize the market. In this graph from theblockcrypto.com we can see USDT’s dominance of the stablecoin market dropping sharply since the incident on October 15th.

As we see more stable coins join the market, the safer the market will become. According to CCN there are more than 50 active stablecoins at the moment with more coming out all the time. At the moment, it seems that the one eating into Tether’s market share is Paxos, which is both regulated and rising quickly in volumes.

Wishing you an amazing week ahead!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 133 rated postsSenior Market Analyst at Etoro.com.




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Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

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