The week started with a bang on all fronts. 

Crypto managed to build on its weekend gains as BTC powered up to $11,800 and ETH up to $237. 

LTC blasted back up through the $100 level to a high around $107 as mining rewards were halved. With the broad market having lost around 40% of its value from the highs in June, this is an impressive come back.

Significant technical hurdles lie ahead, but all seems positive to get the week going. Crypto is a benefactor of the meltdown in other asset classes and is almost starting to resemble a safe haven venue, much like XAU.

And from the positivity of crypto, we move to the negativity of the rest of the markets. The major focus is still the US / China trade dispute, which has weighed on equities once more. China allowed its currency (the yuan) to fall to its lowest level against the USD in more than a decade in retaliation for last week’s additional US tariffs. 

Stocks in Asia all closed down by more than 1.6%, the Hang Seng, the worst of the major indices, down 2.85%. 

Prior to the US open, DJ futures are lower by 350 points and European equities all deep in the red. EURUSD has rallied to 1.1170 and GBP to 1.2160. USDJPY has dropped to a low of 105.80 as ‘risk-off’ trades are prominent. 

AUD, NZD and CAD have all weakened during the Asian and European sessions, while XAU has been the relief trade, rallying to $1,472. And so this trend continued as the US markets opened and equities just tanked. No better way to describe it. 

The DJ was down by 950 points at its worst with the US 10Y yield down to 1.73%. Gold continued to rally as it traded north of $1,480. Currencies though were strangely subdued. With such a vicious sell-off in stocks you would imagine USDJPY would come under a lot of pressure but spent the entire US session 20 points either side of 106. 

EURUSD did breach 1.1200 but GBPUSD was happy to trade 20 points either side of 1.2150. Even AUD, NZD and CAD, while a little lower on the day, were strangely subdued. This was an equity story and it was a horror show. 

At the equity market close, there was a minor pullback with the DJ closing down ‘only’ 767 points or 2.9% lower. The S&P and Nasdaq faired even worse with the latter down 3.4%.

Today a quick look at ETH, which rallied back to some stiff resistance around $237 and hit a brick wall.

As you can see from the hourly chart, $237 was the approx. high from the bounce after the sharp sell-off through $261. While only backing off $5-$6, this remains a big hurdle for ETH, which has lagged BTC on this move up over the weekend. If it does break, $261 is the next obvious resistance level.

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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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