1 Minute Market Rundowns - brought to you by the BCB Trading Team

This Daily Digest will cover:

• Russian unrest dominates weekend news
• Crypto is back but needs to break recent highs to confirm the move
• Stocks lower last week but just a drift for now

Well that was a ride and a half last week. Having mused for sometime about how Crypto was out of fashion and the news being dominated by negative headlines around SEC action, Trad FI rode in on its trusty steed to ignite a furious 25% rally in BTC. BlackRock announced they have applied to the SEC for BTC ETF in a move that whilst not unexpected was much needed by the market. The rally appeared to catch the market short/underweight as it was dramatic and sustained on the week.

So do we get excited now? Well ish is my answer. I like the news medium term for sure as anything that allows trad fi money to flow into the space will be medium term bullish. Short term, stepping back, we have just rallied to the top of the range and we need a close above 31,000/33,000 to ignite a bigger move (see chart of the day below). Altcoins and even ETH have struggled to match their big brother and I continue to see a 2 tier market developing and I remain a seller of most altcoins on rallies.

Elsewhere the weekend futures market went on a mad roller coaster as a coup in Russia was on then off. The cracks are appearing in Russia for sure and the situation out there is on my radar far more than it has been for 12 months. Putin backed into a corner is a dangerous short term prospect and one the markets cannot ignore.

I suspect until we get a little more clarity risk markets will be whippy with a tendency for risk reduction. In FX I think the mad cross yen rally will stall this week as the market reduces exposure until the situation is calmer.

Good luck as always

Richard Usher
Head of OTC Trading 

This Daily Digest will cover:

• Fed dot plot looking wobbly
• EUR to stay supported
• Crypto left behind – for now

Well, markets are still trading mixed having navigated last week’s Fed and ECB meetings. The Fed’s big ticket event pedalled a tone of ‘hawkish pause’, as consensus had largely determined, but pushback from a hawkish ECB and the prospect of other central banks having the ammunition to keep raising rates has left the dollar with a soft underbelly.

Dollar weakness is admittedly a contrarian shout: gains for the core majors have slowed since Friday, commodity FX is softer (despite broadly stronger equity markets), US yield curve is still heavily inverted and USD/JPY has drifted towards 142 after the BoJ left policy unchanged last week. DXY looks stable for now, but could be poised to soften as markets consider whether the Fed can fully deliver on the implied hikes in last week’s dot plot -July swaps imply 17-18 bps of tightening, with September’s contract only reflecting a total of 21 bps of hiking. Reaching the peak of the Fed policy cycle is likely to be negative for the USD and positive for risk assets, as cash pivots from the high yielding USD towards riskier assets in anticipation of some relaxation in monetary policy. This is all largely baked in, but awaits a catalyst – with the Fed blackout lifted, the gloves are off this week, and we may see some dovish dissent from the voting members. I see DXY trading the week with a downside bias beyond 102.00.

Across the pond, a failure in China to announce fresh stimulus measures dented
EUR/USD momentum through the 1.0950 zone, but investors retain more conviction about the hawkish policy outlook in Europe relative to the US, which should buoy EUR sentiment and keep it supported through 1.0910. A near-term move towards 1.1000 looks likely as investors position for a second half dollar decline. Expectations around GBP remain elevated as snapshots of consumer inflation expectations show some progress, yields climb and indicators on the chart look good, but a ticking mortgage time bomb and a clown school at Downing Street are enough to convince me to give it a wide berth and express any market view elsewhere.

Any crypto momentum in line with equity markets has largely been cratered by operation Chokepoint 2.0 – the US executive quietly leaning on its institutions to strangle access for the industry. Peak Fed rates, a relaxation of monetary policy and the subsequent injection of liquidity should hopefully come into play for crypto soon, but while there is so much regulatory risk abound I struggle to see new ground being broken in any tokens. A continuation of consolidation marked by a growing share of BTC market dominance is the most likely situation in the medium term.

As always, good luck.

James Laidlaw
Head of OTC Trading 

This Daily Digest will cover:

• FOMC skip/pause but indicate more hikes coming

• Risk wobbles but stays strong overall

• Crypto the exception as the move lower gathers pace

All eyes were on the FOMC last night following Thursday’s fall in CPI. As broadly expected rates were held but the committee signalled further hikes are coming (likely in July) and the medium dot plot chart showed 2 more hikes before a pause. There was also an acknowledgement that rates will stay higher for longer than expected. This narrative was more hawkish than expected but a move up in the USD and lower in stocks was fleeting as the recent trends remained strong.

These moves have momentum and FOMO is real with cross yen being bought willy nilly and AI stocks powering ahead. FOMO is my only real justification for people buying stocks and risk assets at these levels in this environment. Nvidia is trading at 202 times its earnings. Justify these purchases when the stock falls at your peril. I suspect a nasty pull back is coming across asset classes, the question is when and timing the trade is proving almost impossible.

The exception to this narrative has sadly fallen, yet again, to the Crypto market. As flagged on Wednesday the overhang of supply remains and late last night Crypto took another lurch lower. It is hard to argue with the moves and the fact they are happening when broader markets are rallying is all the more worrying.

Chart of the day is BTC/USD. We are testing 25,000 and clearly in a short term downtrend. That said we are approaching 2 big levels on the charts. 24,000 is the first opportunity for a bounce, but a break opens 20,500 where serious questions will be asked around if a low is in place…

As always, good luck.

Richard Usher
Head of OTC Trading