eToro UK markets analyst, Adam Vettese, has provided his daily commentary on traditional and crypto markets for September 3, 2019. The text below is an excerpt and does not contain the full analysis.
Highlights include:
- Bitcoin Network Prepared for Bakkt Launch: Physically-settled bitcoin futures contracts are set to launch this month. Bitcoin’s hash rate continues to hit record highs, indicating that the demand for these products definitely exists.
- Economic Data Offsets Trade War Escalation: Global markets remained calm yesterday despite the US and China imposing additional tariffs on each other. US futures, however, reacted bearishly to trade talk doubts.
- BTC Trading Range: Bitcoin is trading between $9,400 and $10,500, but downside support levels are scarce; meanwhile, several technical headwinds stand in the upper trading range.
- Political Uncertainty Weighs on GBP: The British Pound has fallen to its lowest level since 2016 against the US Dollar, as political uncertainty around Brexit continues.
All data, figures & charts are valid as of September 3rd. All trading carries risk. Only risk capital you can afford to lose.
Trading in the global financial markets remained quiet yesterday despite US and China imposing additional tariffs on each other. US and Canadian stock markets were closed due to the Labour Day holiday. Chinese manufacturing PMI data came in better than expected which helped European stock markets to trade positively. Focus returned to the emerging markets. Argentina’s currency and stock markets experienced another day of volatility as capital controls were re-imposed by the government in an attempt to prevent a possible ninth sovereign default. In Asia, tensions are running high in Hong Kong. Police and protesters clashed in some of the most intense violence since unrest erupted more than three months ago.
The day ahead
Key economic data releases for today include the Royal Bank of Australia’s interest rate policy decision and statement. In the Eurozone, we should be on a lookout for July’s PPI figures and August’s ISM manufacturing data for the US.
UK markets – Brexit
Investors are readying themselves for a crucial day in the UK as MPs return to the House of Commons after the summer recess. It is believed that about 15 to 20 Conservative Party ‘rebels’ will work with the Labour Party to bring a bill designed to prevent Johnson taking Britain out of the EU without a deal. If they succeed then Johnson could call a ‘snap’ general election on 14th October.
Goldman Sachs have raised their estimate for the UK leaving the EU without a deal to 25% from 20%. They also see the possibility of a ‘no-Brexit’ outcome at 30% down from 35%. The most likely scenario, in their view, is a variant of the existing deal that failed three times to get through Parliament under Theresa May’s tenure as Prime Minister.
The growing political uncertainty has impacted the UK pound which has fallen to its lowest level against the US dollar since 2016. Refinitiv data shows that Sterling dropped as much as 0.62% in early London dealings to $1.197, the weakest level since the flash crash in October 2016. This GBP weakness helped the FTSE100 rise for a fifth straight session. The large USD earning contingent comprising the index get a boost from weak GBP when it’s time to report results.
The FTSE100 now appears range-bound, currently supported by 7,200. Initial upside resistance is at 7,400 – the 50 day moving average (DMA). A confirmed breakout above 7,400 and an end of day close higher could support a bullish outlook targeting additional upside resistances at 7,455 and 7,520. Alternatively, a confirmed loss of the 7,200 support (200 DMA) would change the outlook to bearish targeting additional downside supports at 7,080 and 7,030.
Macro
Chinese and US officials are failing to agree on the schedule for September’s trade talks. According to Bloomberg News, who are citing people familiar with the negotiations, the scheduling difficulties come after Washington rejected Beijing’s request to delay tariffs that took effect over the weekend. US equity futures reacted bearishly to the news yesterday.
Crypto
Bakkt clients will be able to start depositing their funds in the Bakkt Warehouse for physically delivered Bitcoin futures starting on 6th September. The platform for physical delivery of Bitcoin with end-to-end regulated markets and custody is scheduled for 23rd September.
The key difference is that these ‘physical-delivery’ contracts will be settled in Bitcoin as opposed to cash. These institutional grade products allow for greater access to market and better liquidity. With Bitcoin’s hash rate continuing to hit record highs, the strength in the network would indicate the demand for these products is definitely there.
Bitcoin is range trending in the daily and 4 hourly timeframes capped by the 20 and 50 DMA and supported by the 200 DMA. The price appears to be in consolidation range, creating lower highs and lower lows. Intraday price action is bearish, supported by 9,400. The upside is capped by initial resistance at 10,500. A confirmed breakout above 10,500 appears bullish targeting resistances at the psychologically important 10,900 followed by 11,000 and 12,000. Alternatively, a confirmed loss of 9,400 would support a bearish outlook targeting additional downside supports at 9,030 initially, followed by 8,750 and 8,400.
North Korea has denied a recent UN report suggesting it was behind major hacks of banks and crypto exchanges that reaped around $2 billion for the nation’s weapons programs.
The National Coordination Committee of the DPRK for Anti-Money Laundering and Countering the Financing of Terrorism accused the US and “other hostile forces” of “spreading ill-hearted rumours”.
Such a fabrication by the hostile forces is nothing but a sort of nasty game aimed at tarnishing the image of our Republic and finding justification for sanctions and pressure campaign against the DPRK,” the agency said via a spokesperson.
The news was first reported by North Korea’s state-run news agency, KCNA. Experts are reportedly investigating “at least 35 reported instances of DPRK actors attacking financial institutions, cryptocurrency exchanges and mining activity designed to earn foreign currency” – activities that span around 17 nations. Most of North Korea’s hackers are considered to operate under the Reconnaissance General Bureau, an intelligence agency that handles clandestine operations.
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