The troll farms are winning and can’t be stopped

June 15, 2024 21:26   Forexlive Latest News   Market News  

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

That’s the first amendment and may prove to be what undoes liberal democracies. Worse yet, the Supreme Court has interpreted ‘free speech’ extremely broadly, including the use of money as free speech.

It’s increasingly clear to me this is an extreme vulnerability that being exploited in the US and around the world.

On June 6 the State Department’s top official on digital and cyber
policy, Nate Fick, told an audience at an event hosted by the Washington Post:

“I don’t think most American
citizens really viscerally understand how much of the content they see
on social platforms is actually a foreign intelligence operation…. I
just don’t think we viscerally get how much of what we see is
bot-generated or foreign intelligence service–generated.”

I have little doubt that’s true and an increasing fear that much of what I see — and maybe even things I believe — has been hijacked by these groups.

Seeing the tools that are out there with AI and bots, I believe it’s almost trivial now to set up a bot farm. If I were an anti-American Russian doing it, I wouldn’t be writing “Mother Russia is great,” the aim would be to sow division, to crank up the volume on any issue, to inspire American hate for other Americans.

Divide and conquer.

I also believe that Russia sees itself as a victim of this game, rightly or wrongly. They believe that the Euromaidan rallies in Ukraine — which were organized on social media — were a US influence operation.

On Friday, Reuters reported an incredible story. During the peak of the pandemic, the US was running an online operation to discredit the Chinese vaccine in the Philippines and ultimately vaccines in general, putting thousands of lives at risk and the Philippines had among the worst inoculations rates in Southeast Asia.

It was part of a petty fight after China started a “disinformation campaign to falsely blame the United States for the spread of COVID-19,” according to the report.

If the US was willing to do that to the Philippines, what is it doing elsewhere?

After Euromaiden, the Russians became determined to retaliate and that was why the Internet Research Agency — founded by Yevgeny Prigozhin — was at work in the 2016 US election. I suspect the Russians were amazed at how well it worked and so did the rest of the world. The aim isn’t to invent stories but to elevate conspiracies and make people angry.

Given the comments from the State Department, the US knows its a target. Heather Cox Richardson wrote about it earlier this week:

Officials from the Office of the Director of National Intelligence
(ODNI) told lawmakers that Russian influence operations aimed at
undermining support for Ukraine and faith in democratic institutions
provide the top threat to the upcoming U.S. election. China is the
second-greatest threat but is more cautious because it is concerned
about U.S. blowback, while the third, Iran, acts primarily as a “chaos
agent,” trying to confuse voters. The ODNI officials said they have been
issuing warnings to political candidates, government officials, and
others targeted by foreign groups.

That brings us back to free speech. These kinds of campaigns are going to prove nearly-impossible to stop. Democrats like it when false rumours are spread about Republicans and vice versa. Anyone trying to stop the rumours would be seen as partisan or disloyal. It’s a win-at-all costs mentality that puts party ahead of country.

AI is going to hyper-charge this. There will be individually-optimized campaigns based on your data that create videos and ads targeted at you personally to make you unhappy and enraged.

Yes, some bot farms will be shut down but 10 more will spring up. I don’t see any way to stop it. The first amendment is written in stone and social platforms are open, anonymous and for sale.

What can we do? Ban anonymity online? That would be extremely unpopular. Go to a censored, walled-off internet like China? That’s completely incompatible with the Constitution and freedom in general.

For markets, the destabilization will inevitably lead to conflict and division; none of which can be good for growth.

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PEPE holders distribute their tokens after massive profit taking for 30 days

June 15, 2024 20:02   FXStreet   Market News  

  • PEPE token holders consistently took profit on their holdings in the past 30 days, booking $330 million in gains.
  • The frog themed meme coin has added nearly 15% to its value in the same timeframe. 
  • PEPE supply on exchanges is down nearly 3%, reducing selling pressure on the meme coin.

PEPE, the frog-themed meme coin has added 820% to its value, year to date. On-chain data from crypto intelligence tracker Santiment shows that wallets holding 1 billion and higher PEPE tokens have distributed their holdings in the past 30 days. 

Santiment data shows consistent profit taking, exceeding $330 million in the same timeframe. PEPE is changing hands at $0.0000119, at the time of writing. 

PEPE on-chain data suggests meme coin could extend gains

Data from Santiment shows that in the past 30 days, supply on exchanges is down nearly 3%. PEPE holders have realized over $330 million in gains between May 14 and June 15. Despite consistent profit taking, PEPE has sustained 14.46% gains in the past 30 days, on Binance. 

PEPE supply on exchanges is down to 169.93 trillion as of June 15. Typically, consistent profit taking contributes to selling pressure on an asset. However, supply of PEPE on exchanges is down in the same timeframe, easing the pressure on the frog-themed asset and the meme coin has held on its gains. 


PEPE network realized profit/loss and supply on exchanges 

While Solana-based meme coins have gained relevance in the ongoing market cycle, PEPE’s market capitalization exceeds $5 billion. The frog-themed asset has seen a decline in active addresses and volume in the past 30 days, while holding on to nearly 15% gains in its value in the same timeframe. 

Crypto intelligence tracker Lookonchain identified a whale wallet which sold 114.7 billion PEPE tokens for $1.27 million at break even. While PEPE holders have taken over $330 million in profits in the past 30 days, a sale at break even signals that the trader likely anticipated a decline in PEPE price, and sold instead of pocketing a loss. 

At the time of writing, PEPE extended gains by 5% on Saturday. 

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Liquid staking tokens see resurgence while Bitcoin ranges below $67,000

June 15, 2024 17:02   FXStreet   Market News  

  • Liquid staking tokens Lido DAO, Rocket Pool, Stride and pStake Finance among others, have rallied in past 24 hours. 
  • The $3.96 billion market capitalization category has added 6%, while Bitcoin ranges below $67,000.
  • Total value of assets locked in Liquid Staking exceeds $53 billion per DeFiLlama. 

Liquid staking tokens (LSTs) represent staked tokens that can be used as collateral in lending protocols. The LST category has noted a resurgence in assets like Lido DAO (LDO), Rocket Pool (RPL), Stride (STRD), and pStake Finance (PSTAKE) have extended their gains in the past 24 hours. 

Liquid staking tokens rally on Saturday

Data from crypto data tracker CoinGecko shows that LDO, RPL, STRD and PSTAKE have added to their value in the past 24 hours. LDO, RPL, STRD and PSTAKE prices are up 3.5%, 24.6%, 2.1% and 12.1% respectively.

Users lock their tokens on these platforms, contributing to their security and consensus mechanism and earn rewards. Tokens of the staking platforms can also be used as collateral in lending across the DeFi ecosystem. 

In the ongoing cycle, meme coins and Real World Asset (RWA) tokenization are the leading narratives. However, news of the upcoming launch of ETH ETF. Bloomberg ETF analyst Eric Balchunas recently stated that July 2 is the likely date for ETF launch. 

The news has fueled gains in Ethereum-related assets. Liquid staking tokens that allow users to stake Ether and earn rewards are gaining relevance on Saturday, June 15. 

The market capitalization of liquid staking tokens is up 6%, touching $3.96 billion, as seen on CoinGecko. The volume of tokens locked on these platforms has surged to a peak of $53 billion, as seen on DeFiLlama. 

It remains to be seen whether these tokens will continue rallying as anticipation for ETH ETF launch rises. 

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EUR/JPY Price Analysis: Slips below 169.00 amid political turmoil

June 15, 2024 06:05   FXStreet   Market News  

  • EUR/JPY trades at 168.43, marking the second consecutive day of losses due to political uncertainty in France.
  • Technical outlook: Consolidation below 170.00 with potential further losses if price drops below the 50-DMA at 167.47.
  • Key support levels: Kumo bottom at 165.92 and 100-DMA at 164.78, indicating acceleration of the downtrend if breached.

The Euro tumbled for the second straight day against the Japanese Yen due to political uncertainty. France’s presidential approvals plunged to their lowest level in five years ahead of the General Elections. The EUR/JPY trades at 168.43, down 0.08%.

EUR/JPY Price Analysis: Technical outlook

After peaking around 170.00, EUR/JPY has consolidated below this level but remains above the Ichimoku Cloud (Kumo), which would accelerate the downtrend if breached.

The Relative Strength Index (RSI) indicates that sellers are gaining momentum as it falls below the 50-line, suggesting that EUR/JPY could face further losses.

If EUR/JPY drops below the 50-day moving average (DMA) of 167.47, it could trigger a decline into the Kumo, signaling an acceleration of the downtrend. The next support would be the bottom of the Kumo at 165.92, followed by the 100-DMA at 164.78.

EUR/JPY Price Action – Daily Chart

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Top 10 wallets reduce Shiba Inu, Chainlink and Ethereum holdings on exchanges

June 15, 2024 06:02   FXStreet   Market News  

  • Large wallet holders of Shiba Inu, Chainlink and Ether across exchange platforms have reduced their holdings since May 27. 
  • Santiment noted nearly 2.5%, 3% and 8.5% decline in SHIB, LINK and ETH holdings of the top 10 exchange wallets. 
  • SHIB, LINK and ETHER have added to their value on Friday, seven-day returns are in the negative. 

Crypto intelligence tracker Santiment tracks the exchange wallet holdings of different assets. Santiment noted that the top 10 largest exchange wallets have reduced their holdings of Shiba Inu (SHIB), Chainlink (LINK) and Ethereum (ETH) since late May. 

Large exchange wallets reduce Shiba Inu, Chainlink and Ethereum holdings 

Santiment monitors the holdings of large exchange wallets for different assets to gauge the selling pressure on the token and any impact on price. The tracker identified that since May 27, the top 10 exchange wallets have reduced their SHIB, LINK and ETH holdings. 

Santiment noted a 2.4% decrease in SHIB holdings, 2.9% decrease in LINK and 8.6% decline in Ether holdings in the ten largest wallets. In its recent tweet on X, Santiment notes that  “decreasing exchange supplies should be considered a good sign for bullish traders.”

Whale wallet holdings

Top whale wallet holdings on exchanges.

Data from the on-chain data tracker shows that SHIB supply on exchanges is at its lowest level since March 2021. This is a sign of reduced selling pressure on the asset due to the lesser availability of tokens to sell. The development could positively impact SHIB price. 


SHIB supply on exchanges vs. price

Chainlink added 5% to its supply on exchanges since the beginning of 2024. In the past four days, however, LINK supply is down nearly half a million from its local peal of 211.19 million observed on June 11. 


LINK supply on exchanges 

Ethereum supply on exchanges has reached its highest level in nearly 22 months. Reduction of ETH holdings of exchange wallets tracked by Santiment may therefore not have a significant impact on Ether price. 


ETH supply on exchanges 

At the time of writing, SHIB, LINK and ETH added between 2% and 3% to their values on Binance, on June 14. Seven-day returns for the three assets remain negative. 

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NZD/USD Price Analysis: Consolidation phase intensifies, bulls present battle

June 15, 2024 05:56   FXStreet   Market News  

  • The NZD/USD stabilizes near 20-day SMA as bears intensify their attempts to breach the20-day SMA.
  • Despite spirited defenses, both bulls and bears are yet to make significant headway.
  • Daily chart indicators underscore continued consolidation with a slight downward momentum.

The NZD/USD dipped to a low of 0.6115 before recovering and stabilizing at the 20-day Simple Moving Average (SMA) of 0.6140. Both bulls and bears seem locked in an intense tussle with attempts to breach the 0.6220 area and the 20-day SMA respectively proving unsuccessful. This is indicative of an ongoing consolidation phase in the aftermath of Mid-May’s sharp increase which saw the pair rise by more than 1.30%.

In the daily chart, the Relative Strength Index (RSI) has switched momentum and is now pointing downwards, suggesting a slight decline in buying pressure. This downward shift in the RSI is consistent with the flat red bars in the Moving Average Convergence Divergence (MACD), which further corroborates the consolidation narrative.

NZD/USD daily chart

The NZD/USD’s immediate support is now at the 20-day SMA of 0.6140, with the 100 and 200-day SMAs converging in the 0.6050-0.6060 region and providing a strong support base for the pair. This could potentially serve as an anchor for correction if bears begin to take control. Any movements below this point of convergence may potentially signal sell conditions.

On the upside, the 0.6200 is the main resistance which in case of being breached, could be considered a buy signal.

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EUR/USD tests fresh six-week lows below 1.0700 on Friday

June 15, 2024 05:12   FXStreet   Market News  

  • EUR/USD tilted lower on Friday as politicalk upheaval crimps Euro demand.
  • US consumer sentiment survey figures dipped in June.
  • Markets are grappling with odds of fewer Fed rat cuts than hoped.

EUR/USD slipped further into the low end on Friday, clipping into 1.0670 before recovering to the 1.0700 handle during the US market session. Political pressure is weighing down the Euro after a wide shift in European voter sentiment tilted towards right-of-center political parties in European parliamentary elections recently, sparking a snap election in France. On the US side, steepening negative data is reigniting possible concerns of an economic downturn, fueled by a worse-than-expected print in the University of Michigan’s (UoM) Consumer Sentiment Survey Index.

European Central Bank (ECB) officials have been working to reassure the market as the Euro has performed poorly this week compared to other major currencies. French President Emmanuel Macron has dissolved the French government and called for a snap election in an effort to counter the rise of right-wing contender Marine Le Pen, who achieved a surprising victory in the European parliamentary elections.

With support for President Macron fading due to public discontent with unpopular fiscal policies, Le Pen, who has made several unsuccessful bids for the French Presidency since 2012, is trying for the fourth time. Financial markets are concerned about the political instability in France, as Le Pen’s proposed tax cuts and reduced retirement age could lead to economic strain for the European Union.

The UoM Consumer Sentiment Index survey fell to 65.6 in June, missing the expected increase to 72.0 and dropping from the previous 69.1, reaching a six-month low. This decline reflects growing consumer concerns about the US economy. Additionally, 5-year Consumer Inflation Expectations rose to 3.1% from the previous 3.0%, indicating persistent price growth that is affecting consumers’ economic outlook.

Market sentiment was negatively impacted this week by the Federal Reserve’s latest Summary of Economic Projections (SEP), which showed that the market’s expectations for multiple rate cuts are higher than what the Fed anticipates. The Fed’s median interest rate expectations, represented in the “dot plot,” were revised to only one rate cut in 2024, down from the three projected in March.

Despite the Fed’s cautious stance, rate markets still anticipate a rate cut in September. According to the CME’s FedWatch Tool, traders are pricing in nearly a 70% chance of at least a quarter-point rate reduction from the Fed at the September 18 meeting.

EUR/USD technical outlook

EUR/USD slid to a six-week low of 1.0676 on Friday before a mild recovery during the US market session, clawing back to the 1.0700 handle to wrap up the trading week. Fiber has declined in near-term choppy trading, descending from 1.0900 through June.

Daily candlesticks have tumbled back below the 200-day Exponential Moving Average (EMA) at 1.0804, and the way is clear for an extended slide to April’s swing low near 1.0600.

EUR/USD hourly chart

EUR/USD daily chart

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Dow Jones Industrial Average claws back slim recovery on Friday, but still struggles near lows

June 15, 2024 05:09   FXStreet   Market News  

  • Dow Jones rises intraday, but still on the low side of Thursday’s close.
  • UoM”s Consumer Sentiment Index flubs forecasts, declines further.
  • Consumer inflation expectations ticked higher in June.

The Dow Jones Industrial Average (DJIA) climbed from an early low on Friday, but sill traded on the low side of Thursday’s closing bids after getting knocked further back during the overnight session. Friday has been a slow grind as markets attempt to recover lost ground, but market confidence remains half-hearted after the University of Michigan’s (UoM) Consumer Sentiment Index declined to a six-month low and missed a forecast recovery, while the UoM’s Consumer Inflation Expectations ticked back into a recent high as spenders continue to remain despondent on future price growth.

The UoM Consumer Sentiment Index survey declined to 65.6 in June, entirely missing the forecast uptick to 72,0 and dropping from the previous 69.1, tumbling to a six-month low as consumers grow increasingly fearful about the state of the US economy. 5-year Consumer Inflation Expectations also ticked back up to a familiar high of 3.1% from the previous 3.0% as price growth continues to weigh on consumers’ economic outlook.

The wind was taken out of market sails this week after the Federal Reserve’s (Fed) latest Summary of Economic Projections (SEP) revealed that market hopes for multiple rate cuts continue to run well ahead of what the Fed expects in the future. The Fed’s “dot plot” of median interest rate expectations shifted lower to only a single rate cut in 2024, down even further from the three projected in March. 

Despite the cautious tone from the Fed, rate markets are still pricing in hopes for a September rate cut. According to the CME’s FedWatch Tool, rate traders are pricing in nearly 70% odds of at least a quarter-point rate trim from the Fed at the September 18 rate decision.

Dow Jones news

Two-thirds of the Dow Jones’ constituent securities are in the red on Friday as sentiment tilts lower. Salesforce Inc. (CRM) is recovering from near-term selling pressure, climbing 1.3% to $232.00 per share to lead the scant gainers on the Dow Jones for the day. On the low side, Boeing Co. (BA) has declined -2.06% on Friday, backsliding below $55.00 per share.

Dow Jones technical outlook

Friday’s US session etched in a new weekly low in the Dow Jones, declining to 38,300.00 near the day’s market open before making a meager recovery to chart territory just above 38,500.00. Bullish momentum still has the DJIA trading below Thursday’s closing bids near 38,650.00, but an exhaustion play could easily drag the major equity index back towards the 38,000.00 handle.

The Dow Jones Industrial Average is on pace to close slightly lower for a fourth consecutive day on Friday, and the index has continued waffle down from recent all-time highs above 40,000.00 set in May. The index continues to hold north of the 200-day Exponential Moving Average (EMA) at 37,369.62, and a demand zone is holding in place to catch any short side pushes below the 38,000.00 handle.

Dow Jones five minute chart

Dow Jones daily chart

Economic Indicator

Michigan Consumer Sentiment Index

The Michigan Consumer Sentiment Index, released on a monthly basis by the University of Michigan, is a survey gauging sentiment among consumers in the United States. The questions cover three broad areas: personal finances, business conditions and buying conditions. The data shows a picture of whether or not consumers are willing to spend money, a key factor as consumer spending is a major driver of the US economy. The University of Michigan survey has proven to be an accurate indicator of the future course of the US economy. The survey publishes a preliminary, mid-month reading and a final print at the end of the month. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.

Read more.

Last release: Fri Jun 14, 2024 14:00 (Prel)

Frequency: Monthly

Actual: 65.6

Consensus: 72

Previous: 69.1

Source: University of Michigan

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Mexican Peso slumps as post-election losses mount

June 15, 2024 05:05   FXStreet   Market News  

  • Mexican Peso down as judiciary reform fears continue to weigh on investor sentiment.
  • Presumptive President Claudia Sheinbaum reassures investors but echoes President AMLO’s proposal for elected judges.
  • Banxico ready to act against volatility, while Fed’s unchanged rate decision and consumer sentiment data bolster USD/MXN.

The Mexican Peso’s downtrend continued Friday, with the emerging market currency depreciating by 0.48% as market participants were still nervous about the judiciary reform. Presumptive President Claudia Sheinbaum reiterated Thursday that the reform is a go, emphasizing that judges should be elected, agreeing with President Andres Manuel Lopez Obrador’s proposal. Therefore, the Peso continues to weaken, and the USD/MXN trades at 18.44.

Mexico’s presumptive President Claudia Sheinbaum reassured investors that they shouldn’t be concerned about the reforms. She said, “Mexico’s economy is healthy, strong, and [there is] nothing to worry about.”

Meanwhile, Bank of Mexico (Banxico) Governor Victoria Rodriguez Ceja said on Wednesday that the central bank is attentive to volatility in the Mexican currency exchange rate and could act to restore “order” in markets.

Across the border, the latest Federal Reserve (Fed) decision to keep rates unchanged and projection of just one interest rate cut in 2024 cushioned the Greenback and boosted the USD/MXN to 14-month highs.

A survey by the University of Michigan (UoM) showed that consumer sentiment amongst Americans deteriorated further, blamed on inflation and incomers. Joanne Hsu, the Director of the Consumers Survey, said that “Assessments of personal finances dipped, due to modestly rising concerns over high prices as well as weakening incomes. Overall consumers perceive few changes in the economy from May.”

Daily digest market movers: Mexican Peso trims some of Thursday’s gains

  • In February 2024, AMLO put forward several proposals to the Mexican Congress. These include a Supreme Court reform that suggests electing Supreme Court ministers through popular vote; an electoral reform aimed at electing electoral commission councilors by popular vote and reducing multi-member representation; and a reform of autonomous bodies that proposes dissolving the transparency body.
  • Mexican Peso depreciation could weigh on Banxico decision to ease policy on June 27 despite last month’s dip in core prices. Therefore, keeping interest rates higher could prompt deceleration in the economy and increase the odds of a possible recession.
  • Mexico’s economic docket for next week will feature Aggregate Demand, Private Spending, and Retail Sales data. Despite that, the USD/MXN exchange rate continues to be driven by political uncertainty about the changes to the Mexican Constitution that threaten the state of law.
  • Morgan Stanley noted that if Mexico’s upcoming government and Congress adopted an unorthodox agenda, it would undermine Mexican institutions and be bearish for the Mexican Peso, which could weaken to 19.20.
  • The UoM Consumer Sentiment Index in June fell to 65.6 from 69.1 and missed the consensus of 72. Sentiment dropped to its lowest level in seven months. Inflation expectations for the next twelve months are expected to remain at 3.3%, unchanged, and for a five-year period, they are foreseen at 3.1%, down from 3.3%.
  • Latest US inflation report increased the odds of a Fed rate cut in September from 46.7% to 62%, according to CME FedWatch Tool.
  • December’s 2024 fed funds futures contract hints that investors expect 39 basis points of rate cuts by the Fed through the end of the year.

Technical analysis: Mexican Peso prints losses as USD/MXN slides below 18.50

The USD/MXN pair is upwardly biased despite retreating below 18.50. Although momentum is tilted in the seller’s favor, according to the Relative Strength Index (RSI), they need to push the USD/MXN exchange rate below the April 19 high of 18.15 if they would like to keep the exotic pair trading within the 18.00-18.15 range.

On the buyer’s side, if USD/MXN breaches 18.50, the next resistance level would be the year-to-date high of 18.99, followed by March 20, 2023, high of 19.23. A breach of the latter will sponsor an uptick to 19.50, ahead of the psychological 20.00 mark.

Inflation FAQs

Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.

The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.

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Australian Dollar tallies losses on Friday but secures weekly gains

June 15, 2024 05:05   FXStreet   Market News  

  • AUD/USD continues its decline as markets gear up for RBA’s decision next week.
  • Federal Reserve’s projection of higher interest rates continues to bolster USD.
  • Australian calendar was empty on Friday, and USD suffers minimal intraday losses on soft UoM figures.

The Australian Dollar (AUD) experienced additional losses against the US Dollar (USD) despite strong labor market data from Australia reported earlier in the week, which prompted for a more hawkish Reserve Bank of Australia (RBA). The demand for the US seems to be growing thanks to interest rate revisions, which saw Federal Reserve (Fed) members forecasting fewer rate cuts this year. Additionally, the Greenback retained its strength despite soft University of Michigan (UoM) figures reported during the European session.

The Australian economy has shown signs of weakness yet the persistent high inflation is prompting the Reserve Bank of Australia (RBA) to delay cuts, which may limit its decline. The RBA meets next Tuesday, and investors will look for further clues. Markets are pricing the first rate cut only for May 2025. Still, risks are skewed toward an earlier start.

Daily digest market movers: Australian Dollar sustains sell-off, markets digest UoM figures from the US

  • No significant highlights were detected from the Australian economy on Friday.
  • On the US side, Consumer confidence deteriorated with the University of Michigan’s Consumer Sentiment Index decreasing to 65.6 from 69.1 in May. This reading came in below market expectations of 72.
  • The Current Conditions Index declined to 62.5 from 69.6, and the Consumer Expectations Index fell to 67.6 from 68.8.
  • The survey details revealed that the one-year inflation expectation remained stable at 3.3%, while the five-year inflation outlook rose to 3.1% from 3%.
  • Earlier in the week, stronger-than-expected Employment data for May bolstered speculation that the Reserve Bank of Australia (RBA) would maintain its Official Cash Rate at its current levels for the year.
  • In addition, the Australian Unemployment Rate reduced to 4.0% as projected from 4.1% in April.
  • On the Fed’s side, market hopes for rate cuts have persistently clashed with the Fed’s own rate cut expectations through 2024, and according to the CME’s FedWatch Tool, rate markets maintain over 60% odds of at least a 25 basis-point rate trim on September 18.

Technical analysis: AUD/USD sellers persist, outlook turns negative

The Relative Strength Index (RSI) now sits below 50 and points downwards indicating a negative momentum. Meanwhile, the Moving Average Convergence Divergence (MACD) prints steady rising red bars hinting at persistent selling pressure.

The short-term outlook has turned negative as the pair fell below the 20-day Simple Moving Average (SMA) toward 0.6613, indicating a loss in buying steam. If this trend continues, the 100 and 200-day Simple Moving Averages (SMAs) could serve as potential barriers around the 0.6560 area.

Australian Dollar FAQs

One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

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AUD/JPY Price Analysis: Buyers consolidate, sellers challenge the 20-day SMA support

June 15, 2024 05:02   FXStreet   Market News  

  • The AUD/JPY pair witnesses further descent, as the ongoing profit-taking causes it to approach the reinforced 20-day SMA support.
  • Should the bulls manage to establish robust support at the 20-day SMA, the next potential target appears to exist within the 104.50-105.00 price range.

In Friday’s session, the AUD/JPY pair further descended as buyers continued to realize their profits, which led to the pair falling briefly below the 20-day Simple Moving Average (SMA) at 103.60, only to regain ground above the 104.00 mark. This bounce-back signals that the 20-day SMA has assumed the role of a robust support line. Nevertheless, the ongoing consolidation phase suggests a lack of drive for a significant surge.

On a daily scale, the Relative Strength Index (RSI) now reads 56, a slightly lower figure from Thursday’s reading of 57. This indicates a marginal downward trend, signaling a potential easing of the previous upward momentum. Conversely, the Moving Average Convergence Divergence (MACD) continues to print flat red bars, signifying a stable selling momentum.

AUD/JPY daily chart

To wrap up, the AUD/JPY pair exhibits signs of ongoing consolidation, despite Friday’s further descent, with trading activity concentrated around the 20-day SMA. The range of 102.00-104.00 for the imminent sessions could be indicative of continued side-ways trading as bulls look to consolidate the gains from May’s rally that propelled the pair near the 105.00 mark.

Nonetheless, the consolidation could suggest the bulls are preparing for the next upward movement, potentially aiming for the 104.50-105.00 range once again. In contrast, a breach of the 20-day SMA could tempt the bears, with further supports lining up at 102.60, and the long-term 100 and 200-day SMAs, which reside in the 100.00 and 98.00 zone.

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MicroStrategy increases convertible notes offering to $700 million in plan to acquire additional Bitcoin

June 15, 2024 05:02   FXStreet   Market News  

  • MicroStrategy has added an additional $200 million to its initial convertible notes offering as it looks to acquire more Bitcoin.
  • Bitcoin fell below $66K on Thursday, raising investor fears.
  • Bitcoin miners may be among top sellers.

MicroStrategy, led by CEO Michael Saylor, announced an increase in its initial convertible notes offering from $500 million to $700 million in a press release on Friday. Meanwhile, Bitcoin dropped below $66K, with on-chain data suggesting miners are the major sellers.

Largest Bitcoin holder increases convertible notes offering to acquire more BTC

In a press release on Friday, business intelligence firm MicroStrategy announced additional plans to raise the sale size of its convertible senior notes to $700 million.

Also read: Bitcoin Weekly Forecast: Has BTC found a local price bottom?

The firm had initially released an announcement on Thursday, revealing its plans to offer $500 million in aggregate principal amount of convertible senior notes due 2032 in a private offering to institutional buyers.

The offer is intended to be open until June 17, with an option for early buyers to purchase an additional $100 million of notes within the first 13 days of its issuance.

Being the largest single Bitcoin holder with 214,400 BTC, MicroStrategy may be looking to acquire extra Bitcoin with the convertible notes sale, promising an annual yield of 2.25%.

Read more: Why Bitcoin remains sideways despite record BTC ETF inflows

Furthermore, Bitcoin’s price fell in the early hours of Friday, dropping to around $65K from a previous price of $70K earlier in the week. This has sparked concerns among investors, with several analysts speculating that prices may drop to $60K.

On-chain data suggests that miners may be playing a major role in Bitcoin’s recent descent as mining pools have seen increased BTC transfers.

Founder and CEO of CryptoQuant, Ki Young Ju, believes that a break-up from Bitcoin’s hashrate 18-month upward trend may indicate that certain Bitcoin mining companies are liquidating their holdings. 

Also read: Bitcoin long positions signal retail traders attempt to buy the dip

“Bitcoin’s hashrate 18-month upward trend has broken, suggesting some miners are capitulating,” said Young Ju.

BTC Network True Hashrate

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