Crypto tries to bounce

This Daily Digest will cover:

• Crypto tries to bounce after washing out longs
• USD regaining ground as rate cut odds drift
• US retailers report this week

Last week I wrote about how markets looked tired and highlighted the risk of Crypto and FX correcting lower. This move played out, albeit in a gentle and fairly controlled fashion. EUR/USD opens the week at 1.0860 with stale longs squaring up and it seems the topside will attract sellers into 1.0910-40 for now. Equities threatened to move lower several times last week but the dull 4060-4200 range in the S/P 500 continues to hold and bulls/bears shout louder about where the break will be. My view is skewed to the downside as I think the global economy is likely to stagnate at best this year, but frankly I don’t care which way it breaks just please break!!

Crypto is interesting as BTC and ETH both broke support at the back end of last week but found little in the way of a sharp sell off. It has felt like a huge TWAP sell order has been going through for sometime which has gently caused the drift to be lower. That said, Friday lows around 26,000 and 1740 have been swifty rejected and we open at 27,500 and 1835. I am impressed by the bounce and once again find myself a little underweight (ironic) having tried to be sensible on the way down. I wonder how much of the market finds itself in this quandary and I look for any sell off to form a higher low this week to encourage me to add to my core longs again.

Data this week is dominated by the major US retailers (Walmart, Target etc) and these will be interesting to watch. Bad results could show the tightening of belts, but watch for the effect of inflated price hikes being passed on to the public. Sadly I suspect another week of muddling through for the markets, nap time beckons…

As always, good luck.

Richard Usher
Head of OTC Trading