1. Cryptocurrencies Still in Correction Mode
Ethereum, Bitcoin, and Ripple are both still well below their all-time highs following a choppy sideways week for the crypto market. Litecoin’s break-out was the biggest move of the week and we expect more to come from LTC before BTC’s “Judgement Day” in August. The weekend brought another wave lower for the majors, but so far, the damage is limited and the consolidation patterns are intact. The long-term picture remains supportive of more correction for the coins after the stellar rally of the past few months, but it’s a bull market, and surprises usually come on the upside so getting rid of one’s core positions is probably not a good idea.
BTC/USD 4-Hour Chart Analysis
2. The Central Bank Summit
The European Central Bank Forum will take place in Portugal next week, and that might prove to be a game-changer, as the Federal Reserve is in a totally different phase of the monetary cycle than its peers, having hiked the interest already twice this year. The European Central Bank and the Bank of the Japan are still in the middle of the “extreme easy” territory, and given the recent troubles on the global economic front, a dovish change in the Fed’s rhetoric is probably more likely than a shift from the other major banks. The Dollar’s weakness is reflecting this risk already, and the dip in long yields also shows the pressure on the Fed.
3. The Qatar Ultimatum
The Saudi Arabia-Iran power struggle moved to a new era this week, with the ultimatum sent to Qatar by the kingdom and its allies. The surprising move in the leadership of the country also, the anointment of the new crown prince, also put Saudi Arabia in the spotlight, and the next moves could determine the region’s political landscape, and of course, the environment for the world’s energy sector. The ultimatum will expire in a bit more than a week, but the reactions of Iran and Turkey will surface before, and we might learn what sanctions (or other measures) the blockading countries will apply in the likely event of Qatar’s “non-compliance”.
4. Gold on the Move?
The post-Fed correction in precious metals might have run its course and the geopolitical tensions together with the Dollar’s slide sets up a possibly great week for gold. Gold has been moving in concert with the Yen and US treasuries, but the central bank summit could change that if we see a new effort from the heroes of money printing again. Cryptocurrencies could also benefit from a shift towards “hard” assets, with primarily Bitcoin being considered a safe haven currency by some. The US GDP, Durable Goods Orders, and CB Consumer Confidence reports could pose a risk for the metal, as a much better than expected string of reports could break the Dollar’s losing streak.
5. Stock Markets Still Look Shaky
Market tops are processes, not events. The old saying seems to be proving true once again, as global stock markets are long overdue for a deeper correction following the Trump-rally, the signs (loss of momentum, deteriorating market internals…) are there for several weeks now, but stocks continue to grind higher or sideways in the summer environment. Corrections usually are hard to exactly predict, but conditions are favorable, and what we the market needs is a trigger to start a sell-off. It might be the escalation in the Middle East, further economic weakness, or something unforeseen, but bulls should keep the gunpowder dry and wait for it before jumping in the late-bull-market party.
NASDAQ 100 Futures 4-Hour Chart Analysis
Key Economic Releases of Next Week
|Monday||GERMANY||IFO business Climate||114.7||114.6|
|Monday||US||Core Durable Goods Orders||0.4%||-0.5%|
|Tuesday||UK||BOE Financial Report||–||–|
|Tuesday||US||CB Consumer Confidence||116.2||117.9|
|Wednesday||EUROZONE||M3 Money Supply||5.0%||4.9%|
|Wednesday||US||Goods Trade balacne||-66.2 bill||-67.1 bill|
|Wednesday||US||Pending Home Sales||0.6%||-1.3%|
|Wednesday||US||Crude Oil Inventories||–||-2.5 mill|
|Thursday||US||Initial Jobless Claims||240,000||241,000|
|Friday||UK||Current Account||-16.5 bill||-12.1 bill|