Powell in Focus Later Today
UK Inflation Prints as Expected But Still Very High
JPY Hits 24 Year Lows
Risk did rally yesterday as suspected with the S&P posting a 2% gain over the day. Correspondingly, the USD sold off against both the EUR and GBP. Something to note is that the USD did not back off against the Yen. USD/JPY now comfortably sits above 136.00, these are 24 year highs for the pair. I have been bearish Yen for a while although I did square this position up a few weeks back. I feel we will test 140 and potentially higher but USDJPY will face headwinds in the second half of the year as the market tests the BoJ yield curve control strategy. Buying longer dated downside into USD/JPY rallies makes sense I feel.
Overnight, the risk rally stalled with US equity futures turning South and Asian indexes following. There wasn’t a reason for the turn, just perhaps reaffirming the view that risk rallies will be temporary for now. With Powell testifying later, the market is also nervous to be long risk heading into it considering just how hawkish he has been. This morning saw the latest UK CPI print which came inline but at a whopping 9.1%. The BoE is really making life difficult for themselves and their reluctance to be as hawkish as other central banks will keep GBP on the back foot for now. On the day, I remain long CHF versus the EUR.
Crypto markets have come under pressure overnight in line with the general risk sentiment. I find it tough to not be too repetitive in regards to crypto at the moment. Too early to call a base – need either the recession to come or clear evidence one will be avoided. Until then, we will be trading sideways and we advocate trading the extremes. The levels for now remain fairly well defined with support coming in at $17,500 and $850 and resistance at $23000 and $1250 in BTC and ETH respectively. In other news, the world’s largest bitcoin spot ETF, Purpose Bitcoin ETF, lost half of its AUM on Friday which equated to approximately $500m and I am sure contributed to the sell off we saw over the weekend. We could really do with less headlines like this.
For more information and industry insights, visit www.bcbgroup.com
BCB Payments Limited is regulated by the Financial Conduct Authority, no. 807377, under the Payment Services Regulations 2017 as an Authorised Payment Institution. BCB Prime Services (Switzerland) LLC, a company incorporated under the laws of the Swiss Confederation in the canton of Neuchâtel with business identification number CHE-415.135.958, is an SRO member of VQF, an officially recognized self-regulatory organization (SRO) according to the Swiss Anti-Money Laundering Act.
The information contained in this document should not be relied upon by investors or any other persons to make financial decisions. It is gathered from various sources and should not be construed as guidance. The information contained herein is for informational purposes only and should not be construed as an offer, solicitation of an offer, or an inducement to buy or sell digital assets or any equivalents or any security or investment product of any kind either generally or in any jurisdiction where the offer or sale is not permitted. The views expressed in this document about the markets, market participants and/or digital assets accurately reflect the views of BCB Group. While opinions stated are honestly held, they are not guarantees, should not be relied on and are subject to change. The information or opinions provided should not be taken as specific advice on the merits of any investment decision. This document may contain statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, new legislation and regulatory actions, competitive and general economic factors and conditions and the occurrence of unexpected events. Past performance of the digital asset markets or markets in their derivative instruments is not a viable indication of future performance with actual results possibly differing materially from those stated herein. We will not be responsible for any losses incurred by a client as a result of decisions made based on any information provided.