Monday was not the most exciting of days and Tuesday’s beginning was less than inspiring also. A lack of data releases gave the markets little to guide them.

Some mildly positive comments from RBA Governor Lowe saw AUD spike up to 0.6805. And the UK Supreme Court ruling that Boris Johnson’s closing of parliament was unlawful saw GBP rally from 1.2420 to 1.2490.

Equity futures rallied on the news that Friday’s cancellation of the Chinese trade delegation’s visit to several US farms was actually at the request of the US.

Treasury Secretary Mnuchin confirmed it was purely a scheduling issue and would be rescheduled for a later date. USDJPY slowly climbs as high as 107.80 and DJ futures indicate a higher open of around 100 points.

For crypto, a soggy start to the week continues with BTC trading down to $9,600 and ETH to $194.50.

As the US day gets going, equities open higher, the DJ up 120 points. However weak Consumer Confidence data turns the market with USDJPY falling from 107.70 to 107.40 and the DJ cutting its gains to just 50 points.

GBPUSD touches 1.2500 as EURUSD trades at 1.1010. But as equities give up their gains to be flat on the day, GBP and EUR fall back. Also falling is crypto with ETH now down to $191 and BTC to $9,500.

The disappointing volume on the newly open Bakkt Exchange seems to have the market concerned about the true level of institutional interest in crypto, especially since Facebook was heavily scrutinised following the announcement of its Libra coin.

As the US afternoon begins, there is the chatter of a possible President Trump impeachment enquiry. The DJ sinks 200 points, USDJPY drops to 107.01 and EURUSD rallies to 1.1020. XAU zips higher to $1,535.

But that is nothing compared to what crypto is about to experience. ETH dives from $192 to $153 in minutes! BTC from $9,400 to $8,050! Why I hear you ask? I wish I knew! As incredible as it is to say that after something has moved 20% in minutes, there is no natural catalyst other than a market just long and wrong.

Realistically, the market is probably overly disappointed with the Bakkt exchange launch, but it is some move.

For equities, the end is inevitable with exchanges closing close to their lows, the DJ down 142 points and the Nasdaq down 118 points. EUR ends at 1.1020, GBP at 1.2490 and JPY at 107.05. BTC finishes at $8,500 and ETH at $165.

Given the magnitude of the moves, I have to show some sort of crypto chart. ETH best shows the magnitude and speed of this afternoons sell-off.

The 2H chart is self –explanatory. You will see a line of support at $141. That to me is where the whole crypto rally for the year began.

Obviously, we have held there for now but you can see what a remarkably sharp move we had this afternoon. July’s $363 high seems a long way away. Last Thursday’s high of $225 feels a long way away!

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David Hannigan
Author

A graduate of the Cass Business School, Dave's career began with Credit Suisse as an Equity Options Trader on the London Stock Exchange, before moving into the world of FX with Chemical Bank and Citibank. 1994 saw him join National Australia Bank, first as a Senior Dealer, then Senior Vice President and Chief Dealer.

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