1 Minute Market Rundown – 15th August 2022

Equities Continue to Rally
USD Exceptionalism
ETH Sells Off as BTC Tops Out

Happy Monday all, I hope everyone had a great weekend.

Equities continued their impressive rally on Friday with the S&P now back toward 4300 and the Nasdaq back above 13000. Commodities, in particular oil prices, remained under pressure which helped boost risk markets.

This year thus far has been characterised by high inflation, negative risk sentiment and a stronger USD – i.e. USD positive stagflationary momentum. One would be forgiven for expecting in this period of positive risk sentiment, we find ourselves in, that the USD would come under pressure. Alas, the market is not here to please us. It seems the USD exceptionalism story is still here to stay. When I truly take a step back, I guess that is just not that surprising. Compare the US economy to that of the UK or the Eurozone or even China, zero covid policy just isn’t conducive to an economy’s improvement, and the USD remains appealing. The USD play has been, dare I say, easy this year but it is now much more two way.

As such I find myself wanting to avoid the USD for now and instead trade the crosses. I am short EUR/CHF and am looking to enter a EUR/AUD short. Data last week showed Australia registered a new record monthly trade surplus which will benefit the AUD. Their economy’s strong supply side performance will also support the currency.

Crypto finds itself under pressure this morning. The moves are being attributed to the news on twitter that an Ethereum Genesis ICO giant whale address just became active after 3 years of dormancy. Now I am not saying this isn’t the case but I will also draw your attention to the fact BTC traded to a high of $25,200 – bang on its resistance level. I feel it is also a market that is just tired and has lost a bit of upward momentum – especially in ETH. ETH’s show stopping run of late has been due to the merge and it is unlikely it continues at that pace. We have bought BTC/EUR on the dip this morning with a very tight stop through 23,300 looking for a move to 24,200.

As always, good luck out there.

Lux Thiagarajah – Head of Markets

1 Minute Market Rundown – 15th August 2022

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