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XTB TRADEBEAT

Bitcoin and stocks look to recover; data fails to drive USD and GBP

Summary:

  • Bitcoin higher by almost 10% on the day; back above $7000
  • DE30 recovers from 6-week low into the European close
  • Oil moves off fortnightly lows despite DOE build
  • Mixed data from US fails to support USD gains
  • GBP little changed after employment data beat

 Bitcoin has enjoyed a second strong day of gains this week as the cryptocurrency looks to recoup lat week’s sizable declines. The rise comes despite DBS, one of the largest banks in Asia, said that it sees Bitcoin as a bit of a pyramid scheme. What’s more David Gledhill being chief information officer and head of technology and operations at DBS said that Bitcoin transactions are incredibly expensive and all the fees are hidden through the crypto-mechanisms, hence therefore he doesn’t think DBS being in that game right now it’s going to create a competitive advantage for the bank.

The recovery from the weekend low has been all the more impressive considering its speed. The majority of the declines have now been recouped and the time taken to move back above the 61.8% fib of the decline has been far shorter than the time taken to reach this level in previous drops seen back in June and September. A sign of the rampant demand for Bitcoin can be seen in Zimbabwe where the market price has hit a high of $13,499 amidst political turmoil and a shortage of hard currency.  

It’s been a volatile day for DE30 traders with the market falling this morning to its lowest level in 6 weeks. Price breached potentially key support at 12912 but a bounce heading into the cash close could see the daily candle end above this level. The US500 was also under pressure early on but has also managed to rise throughout the afternoon session. 

The weekly DOE inventories release has seen another build in the headline reading with a print of +1.9M following last week’s +2.2M. This number is a clear negative when compared to the consensus forecast for a decline of 2.1M, but relative to last night’s API figure of +6.5M it appears to be not quite so bad. The inconclusive nature of the report can be seen in the immediate market reaction with price experiencing some wild swings and briefly falling back towards its lowest level in a fortnight before attempting to surge higher.

A spate of US data has failed to lift the US dollar, with the latest CPI and retail sales figures form the world’s largest economy coming in broadly inline with forecasts. The USD index has experienced some pretty severe technical damage this week with the market breaking a rising trendline going back to the September low and also moving back below the neckline of a possible inverse head and shoulders. The market has recovered a little but remains vulnerable to further declines. 

Wage growth in the UK economy accelerated in the third quarter while the jobless rate managed to stay at its 42-year low though employment shrank quite unexpectedly. Nonetheless irrespective of fairly upbeat readings the British pound hasn’t benefited on balance it’s moved lower afterwards. The currency stabilised throughout the session and trades little changed as the European traders call it a day. 

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