Trading Week Ahead: 24th May – 28th May
Key Events & Data Releases This Week
WednesdayNZD Official Cash Rate, RBNZ Monetary Policy Statement, RBNZ Rate Statement, RBNZ Press Conference
ThursdayUSD Prelim GDP
The Weekly Wrap
Last week safe havens resumed their march lower. The USD and JPY saw fresh moves downward as traders turned back towards risk markets. Stocks indices were far from clear with strong selling to start the week, before buyers found direction from mid-week driving a strong recovery.
The EUR and GBP lead the gains on the major’s side to the USD, with both hitting new weekly highs. The AUD lagged at week’s end as worries emerged around commodity prices in China. Beijing moved to cap surging raw material prices, some material prices slid up to 5% on the news. This led to a weaker AUD on Friday, as the currency relies heavily on commodity export prices.
US bond purchases were a topic this week with talk of tapering due to ongoing inflation worries driven by government spending. CPI surprised the markets but both jobs data and retail sales disappointed. Bond purchases have been a massive driver for stocks and any type of tapering talk is likely to have negative influences. Mixed messages came from the FED with comments about tapering in the future, but others suggest inflation volatility might only be temporary.
In Europe, the ECB commented that the current yield rate is favourable. Late week flash PMI came out of France, Germany and the EU, as French manufacturing and service beat expectation, while Germany’s came in mixed with a miss in manufacturing and a rise in services. EU manufacturing came in flat but services data increased.
Gold continued to its recent rally, mainly driven by two fronts. A weaker USD and inflation worries helped maintain buyer drive as price moved back to the $1,890 area. Oil stalled, breaking a run of three weeks of gains, as price moved back into the $61 area.
The Big Event
Bitcoin and cryptos also proved to be a big talking point last week. Elon Musk set the tone with talk that Tesla were going to liquidate their holdings and stop customers using Bitcoin to pay for vehicles due to the environmental impact from mining. China added to a weak market announcing they were going to ban all cryptocurrencies. This sent the market into panic selling losing 34% in two sessions.
Bitcoin saw over $425 billion in value wiped off, in 24 hours, according to data from coinmarketcap.com. More nerves could be seen as the US look to set currency regulation on cryptocurrencies by asking for disclosure from buyers if they hold more than 10K USD, as that is seen in current FOREX transactions.
The selling wasn’t only confined to the BTC. This sell-off affected the entire crypto market.
Focus will remain on Bitcoin as the current pullback has touched the 50% fib point of the trend. Are we going to see a solid pull back to halt the selling or is this 2017 all over again? (Sorry to be a bit dramatic!).
Data wise it’s not the busiest week coming up on the calendar, but traders will likely be watching RBNZ rates decision and rates statement after an interesting week for the EURNZD.
Interest will all be on US Preliminary GDP. When will we see a fightback from USD buyers? Surely we need to a hit point of overextension and a technical rally develops. And finally, will we see some direction return to stock indexes? For two weeks now we have seen wide range stalemates.