Analytics

Expert Review: Oil, Cryptocurrencies and Market Activation

Mid-term Analytics by Olymp Trade Experts


Non-farm Payroll went and shook the market seriously. The dollar continues to strengthen and defensive assets are falling. The market is finally beginning to trend after a period of consolidation. What exactly is happening with the commodity, foreign exchange, and cryptocurrency markets has been analyzed by Olymp Trade experts in this article.

 

Weekly Trends

  • CHF/JPY  −0.61%. Trading for a sell with $100 and X200 multiplier could have earned $ 122.
  • CAD/CHF +0.92%. You could have earned $184 by trading up with $100 and a multiple of X200.
  • NZD/CHF  +0.75%. You could have earned $150 by trading up with $100 and a multiple of X200.

 

Commodity Markets

The price of Brent crude oil at the moment has recovered to $70 per barrel. The main reason was the signs of growing demand for fuel in the United States, which offset fears of restrictions on movement in Asia caused by the spread of the Delta strain of the coronavirus.

However, the situation soon changed. Brent soon dipped below $70 after the US called on OPEC to increase production in an attempt to counter rising gasoline prices. President Biden’s administration believes that the current level of production is “simply not enough” and that this could jeopardize the recovery of the global economy. We can say that the current administration completely repeats the actions of the previous one in this matter.

Meanwhile, the International Energy Agency (IEA) has released its oil forecast. It is quite conservative and assumes that the oil shortage on the market will end in December 2021. If everything goes according to the IEA scenario, then we will not see an increase in oil prices anytime soon.

According to the IEA, Brent crude prices will remain close to current levels until the end of 2021, averaging $72 per barrel and demand will actually drop. In 2022, Brent crude oil will drop to an average $66 per barrel.

The main reasons are the same as those discussed by the OPEC+ cartel. The continued growth of production in OPEC+ countries and the acceleration of growth in the production of hard-to-recover oil in the United States will outstrip the slowing growth in world oil consumption, and will contribute to the decline in prices for black gold.


Gold prices have plunged to $1,720 an ounce since the last Non-farm Payroll report. The dollar strengthened after US job openings jumped 590,000 in June and surpassed 10 million for the first time according to the US Labor Department. Also, the number of new non-farm jobs in the United States jumped by 943,000 in July, which was well ahead of the forecast.

 

Currency Markets

USD is holding at high levels thanks to more strong data in the US labor market. In turn, it has strengthened the expectation that the Federal Reserve’s stimulus will soon wind down.

The prospect of a cutback in the bond buying program boosted the yield on US bonds and negatively affected safe haven assets such as gold and the Swiss franc.


CHF has fallen by about 1.6% against the dollar over several days and is trading at 0.92 francs per dollar. In tandem with the euro, the Swiss currency is at a level of 1.080 euros, while earlier this month, the franc strengthened to a maximum of 1.072 over the last nine months.

The market has been set in motion, revising the timing of the Fed’s stimulus cut. This process has just begun and further adjustments can be expected.


JPY fell 0.08% against the dollar to 110.37 yen, close to a two-week low. The dollar will return to previous peaks at 111 yen only in the case of a significant increase in the yield of US government bonds.

 

Cryptocurrency Markets

Bitcoin is recovering rapidly after a prolonged decline. The price of the premier cryptocurrency has already exceeded $46,000 adding more than 50% to BTC value in just a couple of weeks. There are no apparent fundamental reasons for this growth so far, so it may turn out to be another bullish trap for short-term traders.


The London hard fork took place on the Ethereum Mainnet at block #12,965,000. In the first hours after London’s activation the price of ETH rose by 10%. The update delayed the activation of the “difficulty bomb” until December 1, 2021 and reduced compensation, which will lead to a decrease in mining income by approximately 20-30%.


Meanwhile, US regulators continue to “attack” cryptocurrency services in the following series of moves:

  • BitMEX has settled a civil dispute with the US Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN). The company agreed to pay a $100 million fine for violating anti-money laundering and customer verification procedures.
  • The US SEC filed a petition with the court to provide the agency with access to the correspondence of Ripple employees in the Slack messenger. They plan to access “over a million messages that include terabytes of data.”
  • The SEC fined crypto exchange Poloniex $10 million for organizing trading in unregistered securities in the form of digital assets between July 2017 and November 2019.

 

Conclusion

The US dollar has started moving, pulling almost all markets with it. The prospect of a decline in Quantitative Easing (QE) from the US Fed has stirred up the market, which is still digesting this information. As a result, medium-term trend movements for many assets may form because they have been brewing for a long time.

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