Today's Highlights
Welcome back China
Missed Opportunity
Bitcoin Back > $1000
Please note: All data, figures and graphs below are valid as of February 3rd. All trading carries risk. Only risk capital you're prepared to lose.
Market Overview
This morning we welcomed back the Asian Markets from their New Year's break. As they taste the first fruits of spring we hope they don't choke, so far things are pretty sour. The China50 index is down 1.2% so far today as they try to catch up with the losses from other markets and process some manufacturing data that was certainly less than ripe.
In the meantime, the Bank of Japan is playing games with their bonds again and leaving investors to guess what's next.
The above image from Bloomberg shows the effect on the Japanese bond market but we can see it echoed in the currency as well in this chart of the USD/JPY.
The dollar is really weak now against many currencies and the Yen even threatened to drop below 112 yesterday, a very dangerous level indeed.
As of this morning, the US dollar is fighting back and a strong NFP today could help breath confidence in the world's main reserve currency.
Did the BoE Miss an Opportunity?
The Bank of England missed the chance to prepare the market for an interest rate hike. They did revise their forecasts saying that they're expecting better growth and worse inflation but left the obvious solution out of the report.
The market expectations of a rate hike have actually gone down since their meeting yesterday as did the pound sterling.
As of Wednesday, the market was pricing in a 48% chance of a rate hike in December, as of this morning, we're looking at a 35% chance.
Perhaps, the BoE was getting nervous about the pound rising too far too fast. The GBP/USD has been rising steadily since Theresa May's "Clean Brexit Speech" on January 17th saved it from the brink of collapse.
Yesterday morning, before the BoE announcement it reached as high as 1.2700, so perhaps Carney tugging the reins is not such a bad idea.
Crypto-interest
Bitcoin is moving to the beat of its own drum, passing $1000 yesterday afternoon and continuing as high as $1020 this morning before seeing a sharp pullback.
Interest in Bitcoin can be gauged by looking at Google Trends. We can see that the number of people searching for the cryptocurrency has been rising steadily over the past year but are still nowhere near the levels of 2013.
More people searching, means more people buying and that tends to drive up the price.
Disclaimer: This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results. All trading carries risk. Only risk capital you're prepared to lose.