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Five risks for the Canadian dollar in 2024
Five risks for the Canadian dollar in 2024

Five risks for the Canadian dollar in 2024

363130   December 31, 2023 21:56   Forexlive Latest News   Market News  

1) House prices

Eight weeks ago, we might be having a very different conversation about Canadian housing. Yields were rising and central banks were offering no hints about cutting rates. Pain was certainly in the pipeline and a hard housing landing in the spring was likely.

Skip ahead and the Government of Canada five year has fallen to 3.20% from almost 4.50%. That 130 basis points will feed directly into housing. Notably though It looked like it would be the year of a housing reckoning but now it looks like the year of rate relief.

Canada has about $1.75 trillion in mortgage debt outstanding with about $250 billion coming up for renewal in 2024, with another $352 billion in 2025. Every 100 basis points is taking $17.5 billion in annual spending out of the economy plus all the multipliers on that. Compare that to around $67 billion in monthly retail sales and it’s material.

But it may be the wealth effect that’s more impactful. Going back to the start of 2023, the question then was, if housing prices fell 20% (which was merely back to 2021 levels) would consumers recoil. The answer was that they largely didn’t.

I wouldn’t take for granted that the same thing happens if prices continue down to 2019 levels or lower. At some point there is a drag and it should be noted that in mid-1990 when the Bank of Canada began to cut rates from 13% down to 5%, house prices continued to fall for two years.

Summing up, the housing market remains in a precarious state as there is something of a buyers’ strike while sellers continue to hold out hope for high prices. If a flood of supply hits the spring market, it could easily crack the dam, even with 50-75 bps in BOC cuts in H1. Alternately, a hint at cuts could unleash the housing animal spirits again with buyers taking variable rates on the well-grounded belief that they will come down.

How that unfolds is key to the outlook for the economy but note that there is some reflexivity in play. If buyers balance out the market, the BOC is less likely to cut in 2024 and 2025 and vice versa. That has important knock-ons for the currency.

2) China

AI image

A key upside risk for Canada and the Canadian dollar is China. Sentiment surrounding China right now is ghastly, with many fund managers determining its univestible due to President Xi wanting to squeeze out housing excess and control tech companies. There’s also a strong belief that a conflict in Taiwan is more a question of ‘when’ than ‘if’.

At this point, I’d argue those worries are fully priced in. Chinese consumers have also been struggling coming out of covid and officials haven’t taken strong steps to reverse that. The upside risk is that they will, and they have many levers to pull given zeroed out inflation in China. If so, it would flow through to Canada via commodity demand, boosting a sector that had a tough year in 2023.

For now, I’ll file this under: I’ll believe it when I see it, but it’s a spot to watch.

3) OPEC

Angola quitting OPEC in December fanned the flames of the idea that OPEC is in an unsustainable position. They keep cutting output and US shale continues to hike to fill it. A tense December OPEC meeting eventually agreed to H1 cuts that should balance the market but all the risks are to the downside now, with further cuts unpalatable.

Eyes will be on market balances early in the year but it’s seasonally the slowest time of year so inventory builds are possible. As the year progresses, OPEC needs to see deficits emerge, which they can fill by gradually increasing output. In time, rising demand should allow them to wind down spare capacity but if shale another 1 mbpd in the first half of the year, then they may have no choice but to start an ugly war for market share; crippling Canada’s largest export just as TMX ramps up.

4) Inflation

Canada headline CPI y/y

The latest CPI was worrisome at 3.1% versus 2.9% expected and it came at the same time as inflation data undershot in most other advanced economies.

That miss should help to keep the Bank of Canada cautious at the January meeting but beyond that there is reason for optimism as easier y/y comps hit.

Two major sources of Canadian inflation right now are mortgage interest (which the BOC obviously controls) and rent (which is one of the toughest things for the BOC to affect). Scarcity of rental supply is something the BOC can’t control but the central bank has a mandate for low and stable inflation and they won’t tolerate high inflation, even if it’s driven by rent. I’d certainly argue though that lower rates would be helpful in bringing on long-term housing supply but that won’t be possible until they’ve restored credibility on low-and-stable inflation.

5) Consumer spending

This is a great chart from CIBC. It highlights how Canadian consumption has already slowed materially while in the US, demand for consumer goods has continued to rise.

US consumption will continue to benefit from low 30-year fixed mortgages while Canadian consumers will be hit with higher fixed-rate resets through 2026, even if the BOC cuts materially from here.

Ultimately, these are two consumer-driven economies and the winning currency will be largely driven by the winning consumer. The latest leg of Canadian dollar strength was all about pricing-out risks of a hard landing in the housing market — you can see that in the banking equities and REITs. That trend may extend into early 2024 and take USD/CAD down to 1.30 (or CAD/USD 0.77) but to fuel further moves we will need to see positive outcomes from housing, the consumer, China or energy. Alternatively, a path lower for USD/CAD would be broader USD weakness on a softening American consumer and economy, though some of that is undoubtedly priced in already.

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Bitcoin Spot ETF approval may fail to catalyze BTC price rally for these reasons
Bitcoin Spot ETF approval may fail to catalyze BTC price rally for these reasons

Bitcoin Spot ETF approval may fail to catalyze BTC price rally for these reasons

363129   December 31, 2023 21:45   FXStreet   Market News  


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  • Bitcoin Spot ETF’s likely approval next Tuesday failed to stir volatility in futures markets. 
  • Options data for January 12 has a strong correlation with Bitcoin Spot ETF. 
  • Options Implied Volatility fell rather than rising and the block was almost untraded. 

While there is news of a Reuter’s report that the US financial regulator could approve a Spot Bitcoin ETF as early as next Tuesday, it failed to stir excitement in futures markets.

Bitcoin futures traders likely not enthusiastic about Spot ETF approval 

Bitcoin Spot ETF approval is widely considered a catalyst for BTC price by market participants. However, latest data from the options markets reveals a different side of the narrative. It is likely that Bitcoin Spot ETF approval is priced in, since there was little implied volatility observed in January 12 BTC options. 

Analysts at the firm Greek Live believe that the January 12 BTC options are highly correlated with Bitcoin Spot ETF, since the first deadline for approval of the Ark/21Shares application is January 10. The outcome of the event would therefore reflect in the January 12 options data.

The major term Implied Volatility observed was little relative to previous slots and the block was almost untraded according to Greeks Live. The Implied Volatility dropped rather than increasing and accounted for less than 2% of the day’s turnover, this is a relatively low share and a rare event in options markets.

Greeks Live analysts therefore believe that even if the SEC approves a Spot Bitcoin ETF, there may not be a significant impact since the market has priced in the event.


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Litecoin hits over 1 million daily transactions for the first time in 2023 alongside LTC price rally

Litecoin hits over 1 million daily transactions for the first time in 2023 alongside LTC price rally

363126   December 31, 2023 19:26   FXStreet   Market News  


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  • Litecoin active addresses climbed consistently between November 11 and December 31. 
  • LTC daily transactions hit a record 1 million for the first time in 2023, while Litecoin price rallied. 
  • Litecoin yielded nearly 7% gains in the past month for LTC holders. 

Litecoin price climbed 7% in December alongside an increase in volume, active addresses and daily transactions in the decentralized project. LTC hit a new milestone in 2023 with a record 1 million in daily transactions for the first time.

Also read: Vitalik Buterin proposes to solve Ethereum design’s weakness through update

Litecoin daily transactions hit key milestone

Litecoin, a decentralized asset used for borderless transactions. The altcoin hit a key milestone with 1 million daily transactions in 2023. The asset’s price is up 8.61% in the past year, and offered LTC holders nearly 7% monthly gains.

According to on-chain data from Santiment, LTC active addresses climbed between November 11 and December 31. 

LTC

LTC daily transactions and price. Source: Santiment 

Santiment data reveals that despite consistent profit-taking by LTC holders, Litecoin price increased from its September 11 low of $58.83 to December 8 local high of $76.28. Litecoin enjoys a relatively high correlation with Ethereum, at 0.78, therefore LTC price is likely to follow ETH in its steps. 

Large wallet investors are on the move in Litecoin as whale transactions coincide with spikes in Network Realized Profit/Loss metric, as seen in the Santiment chart below. This signals that Litecoin’s uptrend is not influenced by profit-taking activities of LTC holders.

LTC

Litecoin whale transactions and Network Realized Profit/Loss. Source: Santiment

Ethereum has sustained above the $2,200 level since December 21, and the altcoin’s uptrend is one of the factors supporting LTC price gains.


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Vitalik Buterin proposes to solve Ethereum design’s weakness through update
Vitalik Buterin proposes to solve Ethereum design’s weakness through update

Vitalik Buterin proposes to solve Ethereum design’s weakness through update

363125   December 31, 2023 15:51   FXStreet   Market News  


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  • Ethereum co-founder Vitalik Buterin shared an updated roadmap for ETH 2023 appreciating progress made by ETH Layer 2s. 
  • Vitalik did not commit to a timeline for changes to Ethereum and noted that they are ordered according to priority. 
  • Ethereum price is $2,293 as the altcoin eyes recovery. 

Ethereum co-founder Vitalik Buterin tweaked the project’s 2023 roadmap and shared it with his followers on X (formerly Twitter). Buterin’s proposition is aimed at reducing Ethereum’s design weakness and the co-founder did not commit to a timeline for changes presented in the roadmap.

Also read: PancakeSwap community votes to remove 300 million CAKE from supply

Ethereum maintains core priorities plans updates to design

In his recent tweet on X, Vitalik Buterin shared an updated roadmap for the second largest cryptocurrency by market capitalization. Buterin’s project maintained its core priorities:

  • Merge: Proof-of-Stake consensus
  • Surge: 100,000 transactions per second across Ethereum and Layer 2 networks
  • Scourge: liquid pooling
  • Verge: simplifying the block verification process on the ETH chain
  • Purge: simplifying the ETH chain further
  • Splurge: all else

Ethereum currently faces design weakness that has encouraged the development of the Layer 2 networks and the Verkle tree implementation. Buterin proposed a Single Slot Finality, within a consensus mechanism, in a single slot, a block of transactions can be considered “finalized,” meaning a guarantee that these cannot be altered or removed from the blockchain. 

Buterin’s proposal differs from the original design of Ethereum consensus because all validators are involved in endorsing slots. 

SSF further aims to make changes to the Ethereum blockchain irreversible without burning at least 33% of the total staked Ether. According to Buterin, SSF is the easiest path to resolving a lot of the Ethereum PoS design’s weaknesses. 

At the time of writing, Ethereum price is $2,293 on Binance. ETH yielded nearly 12% gains for holders in the past week. 


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Spot Bitcoin ETF decision by the SEC could be out by January 3: Reuters report
Spot Bitcoin ETF decision by the SEC could be out by January 3: Reuters report

Spot Bitcoin ETF decision by the SEC could be out by January 3: Reuters report

363124   December 31, 2023 14:09   FXStreet   Market News  


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  • Spot Bitcoin ETF issuers could hear from the SEC as soon as Tuesday or Wednesday according to a Reuters report.
  • ETF issuers are meeting their end of the year deadline for filing revisions in order to prepare for a probable launch on January 10.
  • Bitcoin price resisted a correction, sustained above $42,000 on Sunday. 

A recent Reuters report said that sources who spoke on the background of ETFs said that the Securities and Exchange Commission (SEC) may notify issuers as soon as Tuesday or Wednesday. It is likely that the SEC informs the issuers that they have been cleared to launch the following week.

Also read: Bitcoin Spot ETF wars: Bitwise S-1 filing reveals $200 million seed, beats BlackRock’s $10 million

SEC could share its decision on Spot Bitcoin ETFs soon

Spot Bitcoin ETF approval is anticipated by market participants as it is expected to act as a catalyst for BTC price. Traders expect an approval of a Spot Bitcoin ETF to support a bullish thesis for BTC price ahead of the halving scheduled for April 2024. 

A Reuters report said that the SEC may notify issuers of the clearance to launch the securities product as soon as Tuesday or Wednesday. Sources revealed that an approval on the securities product is likely and the financial regulator may inform Spot Bitcoin ETF issuers ahead of the January 10 deadline. 

The Ark/21Shares Bitcoin Spot ETF deadline is January 10 and Bloomberg ETF analysts believe there is a 90% likelihood of an approval by this date. 

Bitcoin price sustained above the $42,000 mark on Sunday, despite a few on-chain metrics flashing bearish signs.

At the time of writing, Bitcoin price is $42,192 on Binance, the asset yielded nearly 3.31% weekly losses for holders. 


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China Dec Manufacturing PMI 49.0 (vs. 49.5 expected) & Services 50.4 (50.5 expected)
China Dec Manufacturing PMI 49.0 (vs. 49.5 expected) & Services 50.4 (50.5 expected)

China Dec Manufacturing PMI 49.0 (vs. 49.5 expected) & Services 50.4 (50.5 expected)

363123   December 31, 2023 09:33   Forexlive Latest News   Market News  

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China NBS Non-Manufacturing PMI came in at 50.4, below expectations (50.5) in December
China NBS Non-Manufacturing PMI came in at 50.4, below expectations (50.5) in December

China NBS Non-Manufacturing PMI came in at 50.4, below expectations (50.5) in December

363122   December 31, 2023 09:33   FXStreet   Market News  

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

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FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

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China NBS Manufacturing PMI came in at 49, below expectations (49.5) in December
China NBS Manufacturing PMI came in at 49, below expectations (49.5) in December

China NBS Manufacturing PMI came in at 49, below expectations (49.5) in December

363121   December 31, 2023 09:33   FXStreet   Market News  

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

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Bitcoin price sustains above $41,500 despite rising BTC exchange supply

Bitcoin price sustains above $41,500 despite rising BTC exchange supply

363117   December 30, 2023 21:21   FXStreet   Market News  


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  • Bitcoin exchange supply has climbed steadily in the past three days. 
  • BTC price sustained above $41,500 on Saturday, as statistics reveal that over 30% of Bitcoin supply is considered lost. 
  • Bitcoin price is in an uptrend despite consistent profit-taking by traders since October 2023.

Bitcoin Spot ETF anticipation has supported BTC price above the $41,500 mark on Saturday. BTC price is $41,968, at the time of writing, on Binance. According to on-chain statistics, over 30% of Bitcoin supply has been held for more than five years. Most of this Bitcoin is considered lost.

Also read: Bitcoin Spot ETF wars: Bitwise S-1 filing reveals $200 million seed, beats BlackRock’s $10 million

Bitcoin exchange supply is on the rise

Bitcoin exchange supply has climbed from 5.37% to 5.45% of BTC’s total supply, between December 27 and 30, according to Santiment data. There is an increase in exchange inflow of BTC, according to Exchange Netflow statistics from Santiment. 

While BTC price has sustained above the $41,500 level on Saturday, Bitcoin price could suffer a correction with increasing supply of the asset on exchange platforms. 

BTC

BTC supply on exchanges (as % of total supply BTC). Source: Santiment

According to the Network Realized Profit/Loss metric, BTC holders have engaged in profit-taking since October 2023. There are large spikes in profit-taking in BTC throughout December, as seen in the chart below. 

BTC

BTC Network Realized Profit/Loss and price. Source: Santiment

According to data from IntoTheBlock, over 30% of Bitcoin supply has been held for over five years. The data intelligence firm notes that while there are dedicated BTC holders, a large percentage of the Bitcoin is considered lost.

BTC

Bitcoin held dormant for over five years. Source: IntoTheBlock

Despite the bearish signals from on-chain metrics, BTC price has sustained above $41,500 on Saturday. In the past month Bitcoin yielded nearly 11% gains for holders. The asset is currently in an uptrend, despite profit-taking spikes.


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Bitcoin Spot ETF wars: Bitwise S-1 filing reveals $200 million seed, beats BlackRock’s $10 million
Bitcoin Spot ETF wars: Bitwise S-1 filing reveals $200 million seed, beats BlackRock’s $10 million

Bitcoin Spot ETF wars: Bitwise S-1 filing reveals $200 million seed, beats BlackRock’s $10 million

363116   December 30, 2023 19:02   FXStreet   Market News  


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  • Bitwise filed SEC S-1 form, indicating that an entity is going to seed BITB with $200 million. 
  • BlackRock earlier indicated that the firm would seed its Bitcoin Spot ETF with $10 million. 
  • Bitwise is yet to name its authorized participant, BlackRock named Jane Street and JP Morgan. 

Bitwise, one of the world’s largest crypto index fund managers, filed S-1 Form, required by the US Securities and Exchange Commission from securities issuers. The filing revealed that an entity plans to seed Bitwise’s Spot Bitcoin ETF with $200 million. This is relatively larger than BlackRock’s $10 million seed for its Spot BTC ETF. 

As the deadline for approval or rejection of Bitcoin Spot ETFs draws close, the war among issuers has intensified. 

Also read: Ripple executive slams SEC for its forever crypto ground war, XRP price eyes recovery

Bitwise Bitcoin Spot ETF to receive $200 million seed

One of the world’s largest crypto index fund managers, Bitwise has dropped details of a $200 million seed for its Bitcoin Spot ETF. Market participants are observing a race among issuers of the securities product, following the recent round of S-1 form filings from entities like BlackRock, Fidelity and Hashdex. 

Bloomberg’s Senior ETF analyst, Eric Balchunas shared the S-1 filing in a recent tweet and noted that Bitwise’s $200 million seed blows away BlackRock’s $10 million and is likely to be useful to the firm in early days of the race. The firm is yet to name an AP and Authorized Participant (AP), the information is likely forthcoming. 

The looming deadline for Bitcoin Spot ETF is fast approaching and the US SEC is expected to approve/ disapprove the filings. This is likely to set the tone for Bitcoin and cryptocurrency prices in 2024, ahead of the upcoming BTC halving event, scheduled for April 2024. 

At the time of writing, Bitcoin price is $41,766. BTC price sustained above $41,500, early on Saturday.


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PancakeSwap community votes to remove 300 million CAKE from supply

PancakeSwap community votes to remove 300 million CAKE from supply

363114   December 30, 2023 16:02   FXStreet   Market News  


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  • PancakeSwap community’s voters are 98% in favor of a proposal to remove 300 million CAKE from the asset’s supply.
  • CAKE token’s total supply will be reduced to a maximum cap of 450 million according to the proposal. 
  • CAKE price rallied nearly 6% in response to the proposal’s approval. 

PancakeSwap revamped its tokenomics and the DEX’s strategy. The proposal to remove 300 million CAKE from total supply is a key step in helping the DEX token gain market share across all chains. 

CAKE price rallied nearly 6% as 98% of voters support the proposal.

Also read: 8.4 billion Shiba Inu tokens go up in flames and SHIB supply on exchanges shrinks

CAKE focuses on deflation, community agrees to pull 300 million tokens

Nearly 98% of votes on a proposal to reduce CAKE token’s total supply supported the protocol’s plan to introduce a maximum cap of 450 million. The current total supply of cake is 388 million, the new lower cap is likely to help the project gain market share across all chains.

The proposal calls for a journey to “ultrasound” CAKE, focused on achieving consistent deflation in the token. 

CAKE

PancakeSwap journey to “ultrasound” CAKE

The CAKE community has battled token inflation since its inception in 2021 and three years post the DEX asset’s development, the team is now focused on reducing total supply and pivoting away from hyperinflation. The project’s team believes that 450 million is a reasonable new cap for CAKE supply as it ensures a sufficient supply for future growth and for the token to stay deflationary long-term. 

CAKE price rallied nearly 6% following the proposal’s approval. At the time of writing, the DEX token is trading at $3.596, up 41% in the past week.


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Zcash and Dash price crash by 10% after crypto exchange OKX announces their delisting

Zcash and Dash price crash by 10% after crypto exchange OKX announces their delisting

363111   December 30, 2023 15:33   FXStreet   Market News  


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  • Dash price dropped by 10.4%, falling to $33 at the time of writing.
  • Zcash price witnessed a near-equal drop as well, with the altcoin trading below $30, losing the support of all three EMA.
  • The world’s fourth largest crypto exchange, OKX, announced the delisting of all privacy tokens, which are set to be taken off the site by January 5.

Ahead of the anticipated bull run in January 2024, most people are looking to capitalize on the hype, but by the looks of it, OKX is taking a different route. The result of the cryptocurrency exchange’s recent decision was significant for Zcash and Dash price action.

Zcash and Dash price crash

OKX, the world’s fourth largest cryptocurrency exchange, announced it will soon be delisting about eight crypto tokens. These include the likes of FSN, ZKS, CAPO, CVP, XMR, DASH, ZEC, and ZEN. These crypto assets represent nearly all the major privacy tokens listed on the exchange.

By January 4 and 5, all of these tokens will be delisted, and the deadline has taken a toll on the cryptocurrencies. Notably, Zcash (ZEC) Dash (DASH) took the biggest hit, crashing by nearly 10%.

Zcash price at the time of writing fell below the $30 mark and could be seen trading at $29.02. The single day’s 9.8% dip resulted in the altcoin falling through all three 50, 100 and 200-day Exponential Moving Averages (EMA).

ZEC/USD 1-day chart

ZEC/USD 1-day chart

Dash price had a similar reaction as the cryptocurrency fell by more than 10% on the chart, declining to trade at $33.30.

DASH/USD 1-day chart

DASH/USD 1-day chart

DASH did not see much recovery at the time of writing, but the presence of the Relative Strength Index (RSI) above the neutral line at the 50.0 mark is an optimistic sign for investors.


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