Weekly Forecast: Crypto Markets Search for Direction After Plunge; Monetary Policy Remains in Focus
Cryptocurrencies stabilized over the weekend after a multi-day crash wiped more than $60 billion off market prices. Fallout from the latest bout of crypto carnage will be top of mind this week as investors look to the technical and fundamental indicators for an inflection point. However, finding it may prove difficult given the market’s general apathy as of late toward positive news.
In conventional markets, monetary policy will continue to drive the agenda as the Bank of England prepares to deliver its next interest-rate verdict. A bevy of central-bank speakers, including ECB President Mario Draghi and the Federal Reserve’s Jerome Powell, will be in the headlines throughout the week.
Cryptocurrencies: Bull Market in Jeopardy
As Hacked’s Mate Czer rightly identified Saturday in his long-term analysis, the cryptocurrency market’s upward trajectory is in jeopardy as bitcoin approaches a crucial breakdown and altoins trade below their large-scale consolidation.
Anchored by bitcoin’s price collapse, cryptocurrency prices have faced strong headwinds since the April run-up. Trading volumes during the weekend fell to their lowest levels in over two months. At the time of writing, 24-hour trade volumes had fallen below $10 billion.
Diminished trading activity makes large fluctuations in crypto prices more likely. It also points to subdued buying interest, which is keeping the supply of cryptocurrencies elevated. Without adequate turnover, a sustained rally in prices will prove exceedingly difficult. (As a comparison, the bullish reversal in April saw daily transaction volumes average between $20 billion and $30 billion).
At the time of writing, the cryptocurrency market was collectively valued at $279 billion, down from $320 billion this time last week.
The week of June 11-15 proved significant from the perspective of monetary policy as the Federal Reserve hiked interest rates and the European Central Bank (ECB) signaled for the gradual winding down of crisis-era stimulus.
The Bank of England (BOE) will deliver its next policy verdict on Thursday in a vote that is expected to go 7-2 in favor of keeping interest rates on hold. BOE policymakers are juggling a slowdown in economic growth and progress on the Brexit front, which has complicated the outlook on monetary policy.
The European Central Bank’s Mario Draghi is scheduled to deliver speeches throughout the week, where he will have the opportunity to expand on the Governing Council’s decision to end quantitative easing by year’s end.
Economic data and monetary policy are in focus over the next five days. Below are the most pressing events from around the world.
Monetary policy will headline the economic calendar at the start of the week. Federal Open Market Committee (FOMC) members Elizabeth Duke, Raphael Bostic and John Williams are all scheduled to deliver speeches.
Mario Draghi will also deliver opening remarks at the ECB’s Forum on Central Banking in Sintra, Portugal.
The U.S. Commerce Department will report on housing starts and building permits on Tuesday. Housing starts are forecast to climb 4.6% to a seasonally adjusted annual rate of 1.31 million units. Permits, meanwhile, are projected to fall 0.6% to a 1.355 million-unit pace.
Federal Reserve Chairman Jerome Powell is scheduled to deliver public remarks Wednesday just one week after the U.S. central bank hiked interest rates for the second time this year. FOMC members are eyeing two more upward adjustments this year.
Mario Draghi will be participating on an ECB Forum panel in Sintra on Wednesday. Colleague Benoit Coeure will also be participating in a panel on the microeconomics of price and wage-setting.
In terms of economic data, the National Association of Realtors (NAR) will report on U.S. existing home sales Wednesday morning.
The Organization of the Petroleum Exporting Countries (OPEC) will coalesce in Vienna, Austria Thursday for its biannual meeting. The Saudi-led regime is widely expected to raise production caps in an effort to retain market share following the yearlong recovery in crude prices.
In monetary policy, the Swiss National Bank (SNB) is scheduled to deliver its interest-rate verdict at 07:30 GMT. No change in policy is expected.
The Bank of England’s rate verdict is due at 11:00 GMT.
U.S. economic data will also be in the spotlight as the Labor Department reports on weekly jobless claims and the Philadelphia Fed unveils its June manufacturing index.
IHS Markit on Friday will release a bevy of preliminary PMI data for Eurozone members states. The Eurozone Composite purchasing managers’ index, which tracks manufacturing and services activity, is forecast to hold steady at 54.1 for June.
Markit’s flash U.S. Composite PMI is projected to fall to 55.1 in June from 56.6 in May.
North of the border, the Canadian government will report on consumer inflation and retail sales, two high-profile reports that could impact the currency markets.
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.
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