We start the trading week this week on a very positive note and the reasons are very straightforward. On Friday night the US Senate passed their $1.9 trillion stimulus package and the importance of that package to the Covid ravaged US economy can’t be stressed too much.
The market reaction was very positive with good gains for all three of the major US indices, positive moves in industrial commodities as well. And that enthusiasm for growth is flowing into the market this morning.
Now that comes despite the fact that on Friday night, the US saw some very strong non-farm payrolls data and over the weekend we saw some very strong Chinese trade data. This good news on economies is actually bad news for markets because of the potential impact it has on interest rates. We’ll hear more about this issue when the European Central Bank meets on Thursday night to make an interest rate decision.
Whilst there’s almost 0% expectation there will be a change in interest rates, there is a lot of speculation that the ECB could increase its bond purchase program. And said two weeks ago they would keep a steady hand on the tiller despite fears about inflation. A lot of people have interpreted that as potential expansion of that bond purchase program. Now we could see weakness in the Euro in the lead up to that decision as traders potentially position themselves ahead of the decision. Whichever way it breaks it will be very important for EUR/USD.
The chart I’m watching this week is Bitcoin. We’ve seen enormous volatility in cryptocurrencies. There’s an expectation that will continue this week. Now on the downside, one of the key levels is the low from last week around $44,000 USD, if we see a breach of this level, it could be very bad news for Bitcoin enthusiasts. We are trading above $50,000 USD at the moment and threatening the high of last week around that $52,600 level, if we see a breakup through that point we could see a new all-time high for Bitcoin, above the previous high of $57,600.
Log in to our Next Generation platform and check out the Bitcoin chart.