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Turkish Coffee Hangover

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Hi Everyone,

Hope you’re having a fine day. Thanks again to everyone sending me their thoughts, opinions and articles. It’s really amazing.

One thing that several people have asked me to comment on already is this story. So here goes.

Indeed, this is an exciting step towards the integration of blockchain technology into traditional finance. It’s nice to see such a reputable institution such as the World Bank using a private Ethereum network to monitor their new bond. However, we’re really just scratching the surface with this one.

In the realm of programmable money, the practical applications of this new tech are limited only to our imagination. So, to use it to manage bonds is nice but it somehow feels like we’re not living up to the full potential with this one.

As one pundit put it… this is almost like when the world celebrated the internet’s groundbreaking ability allowing people to order DVD’s from the comfort of their living room.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Turkish Coffee Hangover
  • Dollar is Strong
  • Crypto Support

Please note: All data, figures & graphs are valid as of August 15th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The excessive energy that the financial markets received from the “emerging markets currency sell-off” seems to have faded by now. Indeed, the entire debacle felt kind of like a strange rush of exuberance similar to the experience of drinking some very strong coffee. What we’re left with is contained fatigue.

Volatility has now returned to normal and the Lira seems to be in retracement. This despite the fact that neither Trump nor Erdogan seem ready to give any ground. In fact, the Turkish president announced a boycott of American technology yesterday and specifically targeted the iPhone, advocating Samsung instead.

AAPL was notably unaffected.

One thing that might be worth watching is the EEM Emerging Markets ETF that lost significant ground over the last few days and is now testing the lows.

Looking at the stocks today, things do seem to be in the red again. Let’s see how things progress. Precious metals are also down so be careful out there.

Take a look at Copper for example, which is down more than 1000 pips in the last 48 hours.

Dollar is King

As we discussed in yesterday’s update, all these progressions seem to be a direct reaction to the strength in the US Dollar.

A tightening labor market mixed with creeping inflation is causing the Federal Reserve to take aggressive action.

The Dollar’s strength against other major currencies can be seen quite clearly since the start of the month.

As well, the Dollar Index seems to have experienced some sort of breakout in the last few days.

Crypto Support

The crypto market is rebounding today after yesterday’s sizable sell-off. This relief rally has many alternative investors breathing easier, as we have green across the board.

The range we’ve been watching on bitcoin has been holding rather well. Since the beginning of the year, we’ve seen buyers stepping in about halfway through the $5K handle (yellow line), which is approximately what analysts estimate is the cost to mine bitcoin.

On the upper side, resistance is being maintained by the 200-day moving average (blue line). While the stable range should be seen as a positive sign, a breakout in either direction is always a possibility.

Let’s have an awesome day 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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4.7 stars on average, based on 128 rated postsSenior Market Analyst at Etoro.com.




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Analysis

Markets Looking for Direction as Dow Eyes All-Time High

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Global stocks have been trading without clear direction so far today, even after Asia kicked off the day in a bullish fashion, with the Shanghai Composite rallying for the second session in a row following Trump’s tariff announcement. The Nikkei retreated a bit after its recent surge, but Europe followed China’s lead and the majority of US stocks are also sporting gains, even as the Nasdaq is in the red, with the likes of Amazon (AMZN), Microsoft (MSFT) and Apple (AAPL) lagging behind.

Dow 30 Index Futures, 4-Hour Chart Analysis

The Dow, which has been relatively strong in the past weeks is outperforming again, thanks now mainly to the jump in mega-cap banks, and the index is edging ever closer to its all-time high from January which is less than 1% away currently. Should the industrial average set a record high, the correction that started with the February mini-crash would be erased by all the US indices, further widening the divergence compared to the rest of the world.

DAX 30 Index CFD, 4-Hour Chart Analysis

Looking closer at Europe, the DAX is trading at its highest level since the first days of the month, similarly to the EuroStoxx50, but the longer-term downtrends are not in danger yet. British assets were in the center of attention today, since the CPI came in higher than expected in the UK, giving a brief boost to the Pound in the generally choppy environment in the Forex segment.

In the US, the housing market provided the most excitement, with building permits significantly missing the consensus estimate of 1.31 million, coming in at 1.23 million, while housing starts beat expectations with 1.28 million units vs. the 1.24 units expected. The sector remains under pressure from rising rates, and activity is clearly below the cycle-peak earlier this year.

US Yields Continue Surge after the BOJ Meeting

2-year US Treasury Yield, 4-Hour Chart Analysis

The upward pressure on yields is apparent today again, with Treasuries plunging and rates rising across the curve. Today, the 30-, 5-, and 2-year yields all hit multi-year highs, and the 10-year yield is also close to the highs it hit in May, as rate hike odds continue to climb before next week’s Fed meeting.

USD/JPY, 4-Hour Chart Analysis

The Bank of Japan didn’t surprise the market today, sticking to its policy despite some recent tightening rumors, and the Yen is virtually unchanged after the decision, with a slight bullish bias.

Gold Futures, 4-Hour Chart Analysis

Commodities are higher today, even as copper gave back most of its early gains, with gold drifting higher towards the $1210 level and WTI crude oil getting back above the key $70 per barrel level. The precious metal is boosted by the slightly weaker Dollar, while oil gained ground after the larger than expected crude inventory draw in the US.

Featured image from 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 348 rated postsTrader 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.




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Market Overview

Market Update: U.S. Stocks Rise as Investors Shrug Off Tariff War; XRP Leads Crypto Market Recovery  

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U.S. stocks rebounded sharply on Tuesday, with investors seemingly looking past a worsening trade spat between China and the United States. In cryptocurrencies, XRP surged more than 16% in anticipation of a major commercialization effort by Ripple, Inc.

Stocks Recover Lost Ground

All of Wall Street’s major indexes put up firm gains on Tuesday. The large-cap S&P 500 Index rose 0.5% to 2,904.31, with most major sectors finishing higher. The Dow Jones Industrial Average rose 184.84 points, or 0.7%, to 26,246.96. The technology-driven Nasdaq Composite Index jumped 0.8% to 7,956.11.

On a sectoral basis, consumer discretionary shares were the strongest performers Tuesday, gaining 1.3% as a whole. The S&P 500’s information technology component finished 0.9% higher. Healthcare, energy and industrials also put up firm gains.

The CBOE Volatility Index, also known as the VIX, fell 6.5% to 12.79. The so-called “fear index” surged more than 12% at the start of the week, snapping a five-day losing skid.

Trade-War Escalates

In response to new tariff measures by the Trump administration, China on Tuesday announced it will tax $60 billion in American-made goods. More than 5,000 U.S.-made goods will be targeted in the new round of levies, including meat, alcoholic beverages, automotive parts, clothes and machinery. Levies placed on American products range between 5% and 10%, according to China’s state council.

Hours prior, President Trump said he will impose 10% tariffs on $200 billion in Chinese imports, the most comprehensive measures taken in the yearlong trade spat. The new round of levies will take effect as early as next week.

With respect to China’s countermeasures, Trump issued the following tweet Tuesday morning: “There will be great and fast economic retaliation if our farmers, ranchers and/or industrial workers are targeted!”

Both sides were aiming to return to the negotiating table later this month but those plans appear to have faded. Given China’s massive surplus with the U.S., it is already running out of products to penalize.

XRP Leads Cryptocurrency Rebound

The cryptocurrency market made incremental gains back toward $200 billion on Tuesday after Ripple announced new commercialization efforts for its technology. As a result, XRP surged more than 17% to $0.319, the highest in almost two weeks.

Ethereum exhibited unusual trading activity as prices rose sharply and suddenly over the span of an hour. The second-largest cryptocurrency by market capitalization reached a session high of $222, more than offsetting the previous day’s drop. ETH was last seen trading at $210 for a gain of more than 7%.

Bitcoin also clawed back most of its recent slide, signaling renewed stability in the market.  BTC rose 0.7% to $6,347, based on latest available data.

The total crypto market cap briefly climbed above $200 billion. At the time of writing, the market was valued at $198.7 billion, according to CoinMarketCap.

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 604 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Pre-Market: Sell The Rumor, Buy The News?

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After a long period of uncertainty, the US finally decided to commence with the second round of tariffs directed at China, slapping a 10% levy on $200 billion worth of goods, and threatening with tariffs on another $267 billion of goods in case of a Chinese retaliation. The tariffs will increase to 25% in 2019, but for now, the Chinese response was measured, with only an announcement coming from the Chinese ministry of commerce, saying that the country has no choice but to retaliate.

Shanghai Composite, 4-Hour Chart Analysis

While stock futures fell initially following the after-hours announcement by Donald Trump, today equities are slightly higher across the board, with even the Shanghai Composite staging a rally off its fresh bear market low. The new tariffs were widely expected by the market, so the “buy-the-news” response is understandable, but for a sustained rally in Chinese assets, a resumption of the trade talks between the two largest economies would likely be needed.

DAX 30 Index, 4-Hour Chart Analysis

The main European indices are little changed with the DAX still hovering around the 12,000 level and the EuroStoxx 50 being stuck ear 3350. Both benchmarks hit three-week highs in early trading, but the rally on the Old Continent is still lacking real momentum, especially given the distance to the bull market highs.

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Emerging markets are still very weak with the recent bounce being barely visible on the charts, and the segment is still stuck in a strong downtrend, with especially the most vulnerable countries weighing heavily. Emerging market currencies are mixed today, with the Turkish Lira completely erasing its rate hike gains, but with the Brazilian Real, the Chinese Yuan, and the Argentinean Peso being relatively stable after the US trade announcement.

S&P 500 Index Futures, 4-Hour Chart Analysis

Stocks are set to open slightly in the green on Wall Street, with the major indices still being within striking distance of their all-time highs, and with only the Nasdaq pulling back meaningfully recently. The S&P 500 is just a tad below its record high, and with the MACD indicator back in neutral territory, a move to new highs could still be just around the corner.

Dollar Stable as Oil Jumps Amid Syria Escalation

Interestingly forex markets remained stable despite the trade war escalation, with the Dollar drifting slightly lower compared to its major peers, and losing a bit more ground against the main China-related currencies. Commodities are also higher today, with especially the China-linked copper and crude oil being in the green and gold trading virtually unchanged.

WTI Crude Oil Futures, 4-Hour Chart Analysis

While the scope of the Syrian conflict shrank in recent months, the tensions around the last rebel stronghold Idlib are rising. Russia and Turkey (which back opposing forces) surprisingly announced the formation of a demilitarized zone around the city to avoid a siege and a likely bloodbath, but overnight, a Russian recon plane was downed, which could lead to a reescalation in the country.

Russia is blaming Israeli forces for the casualty, and an open conflict between the two countries would be increase risks in the region, and possibly drive oil prices higher. The Brent Oil contract has been already outperforming the WTI one thanks to the sanctions against Iran, and today Saudi officials stated that the Kingdom is comfortable with the $80 per barrel Brent price, further widening the divergence between the two contracts.

Featured image from 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 348 rated postsTrader 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.




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