A Week to be Remembered as Euro Jumps and Cryptocurrencies Dive Deep | Hacked: Hacking Finance
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A Week to be Remembered as Euro Jumps and Cryptocurrencies Dive Deep

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A Week to be Remembered as Euro Jumps and Cryptocurrencies Dive Deep

Introduction

This article was posted on Saturday, 15:27, UTC.

Weekly Recap

Asset Current Value Weekly Change
S&P 500 2428 0.15%
DAX 12815 0.11%
WTI Crude Oil 46.33 -4.15%
GOLD 1242.00 -1.10%
Bitcoin 2495 -3.21%
EUR/USD 1.1417 1.86%

Central Bank Bonanza

The beautiful town of Sintra in Portugal was the center of the financial world for a week, as the most powerful players of the global economic field (well, that is even scarier than it sounds) gathered there to discuss monetary policies. The European Central Bank and “Super” Mario Draghi were in the forefront of the event, as the bank tried to “double-speak” the market, hinting at monetary tightening, while keeping the Euro’s reaction to a minimum.

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EUR/USD, 1-hour Chart Analysis

Well, that didn’t quite work out, as you can see on the chart of the common currency above, but given the track record of the ECB in being “behind the curve” and having to change his policies very quickly, we expect a lot of flip-flopping from them in the coming years as well. For now, the market reacted in line with a tightening move; Euro up, stocks down, gold under pressure. The exception is the strong bounce in oil which was caused by the quiet Middle East situation and the effect of the higher yields on the US shale industry. The sustainability of these trends is questionable, especially gold’s bearish one, but we can definitely imagine a stronger move in the Euro as well as a deeper correction in stocks.

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NASDAQ and DAX Looking Weak while Banks Turn Higher

Looking at the major stock markets, the NASDAQ is once again the weakest link, as it has been since the flash-crash two weeks ago, and that usually spells trouble for the broader market as well. Banks, especially US mega-banks, have reacted to the jump in yields in a bullish fashion, and the financial sector is testing its bull market highs near the $25 level as measured by the XLF ETF.

XLF (US Financial Sector ETF), 4-Hour Chart Analysis

The DAX and the major European stock indices were under pressure as the Euros rally pushed them lower, although the prior technical position of the segment was already quite bearish, as we noted last week. The German benchmark is now testing the support zone that we have been monitoring, and odds are good for an even deeper correction, even if the Euro’s jump won’t be long-lived.

DAX Index, 4-Hour Chart Analysis

Cryptocurrencies

The crypto-segment remained in a correction all week long following Monday’s scary mini-crash, which was arguably led by Ethereum. The long-term picture looks more and more neutral for the major coins, and it wouldn’t be a surprise if Monday’s lows were the final lows for the correction. The majority of the major and smaller coins are falling once again this weekend, but volatility is lower and correlations are not that strong anymore between the currencies, and Bitcoin is holding notably above the $2450 level, acting much stronger than during the past two weeks.

Bitcoin, 4-Hour Chart Analysis

Economic Numbers

The main economic indicators were mixed this week, with notable strength in Europe and a two-faced set of releases from the US. The forward-looking indicators were mostly bearish in the US, especially the Durable Goods Orders report, while the Pending Home sales number cooled down expectations regarding the housing market once again. The better than expected GDP print was accompanied by a price index downgrade, muting the effects of the positive surprise. The German IFO Business Climate Index, the Retail Sales report, and the Eurozone CPI all fueled the Euro’s rally, although the momentum of the move stalled on Friday.

Key Economic Releases of the Week

Day Country Release Actual Expected Previous
Monday GERMANY IFO business Climate 115.1 114.7 114.6
Monday US Core Durable Goods Orders 0.1% 0.4% -0.5%
Tuesday UK BOE Financial Report
Tuesday US CB Consumer Confidence 115.9 116.1 117.9
Wednesday EUROZONE M3 Money Supply 5.0% 5.0% 4.9%
Wednesday US Goods Trade Balance -65.9 bill -66.2 bill -67.1 bill
Wednesday US Pending Home Sales -0.8% 0.9% -1.3%
Wednesday US Crude Oil Inventories 0.1 mill -2.1 mill -2.5 mill
Thursday GERMANY Prelim CPI 0.2% -0.2% 4.9%
Thursday US Final GDP 1.2% 1.2% -67.1 bill
Thursday US Initial Jobless Claims 240,000 241,000 -1.3%
Friday CHINA Manufacturing PMI 51.7 51.0 51.2
Friday CHINA Services PMI 54.9 54.5
Friday GERMANY Retail Sales 0.5% 0.3% -0.2%
Friday UK Current Account -16.9 bill -16.5 bill -12.1 bill
Friday UK Final GDP 0.2% 0.2% 0.2%
Friday EUROZONE Flash CPI 1.3% 1.3% 1.4%
Friday CANADA GDP 0.2% 0.2% 0.5%
Friday US Personal Spending 0.1% 0.1% 0.4%
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Mate Cser

Mate Cser

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.

Comments
  • user

    AUTHOR embersburnbrightly

    Posted on 4:36 pm July 1, 2017.

    Recent market moves have the ultimate effect of the mega banks getting even richer, all of this around a summit of key economic players in the banking industry. At a certain point, one has to wonder if that was the ultimate intended effect, with strategically-placed “fat fingers” involved around flash crashes in difference sectors. I am no conspiracy theorist, but it sure seems quite the coincidence how the all the timing of this all comes together this way. There are certainly those who benefit from the market behaving this way, and those who would have the influence to make the market behave that way. No, I’m sure it’s just happenstance how many “fat fingers” have pushed the wrong button on keyboards over the past week or two. They only have our best interest at heart, those with those pesky fat fingers.

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