- Oil lower given the risk-off tone on Wall Street
- Gold falls as dollar rises as bets on Fed rate hikes lock in
- Bitcoin is rallying back towards the upper limits of the key area
Oil
Crude oil prices are drifting lower as most energy traders remain on the sidelines until we get a clearer picture of the global growth outlook. There have been plenty of headlines, but nothing is moving oil today as prices look set to stay above $80 given all the supply challenges.
Rising tensions between China and the US are not unnerving investors. Over the weekend, China began military exercises around Taiwan. The US has also deployed a guided missile submarine to the Middle East. Negotiations on the Iran nuclear deal appear to have stalled completely, and now the US is trying to stabilize that region as it has accused Iran of targeting oil tankers with drone strikes.
The near-term outlook for crude oil demand will soon become clearer. This week we will find out if the US economy is entering the recession pool or if it is going to cannonball into it. Wall Street should have a firm grasp on the economy’s trajectory after it gets a key inflation report, the latest retail sales numbers and bank earnings along with their respective outlooks for the US consumer.
Gold
Gold falls as Wall Street becomes more confident that the Fed will go ahead and continue raising interest rates. With much of Europe on holiday, demand for bullion appears to have ground to a halt. The dollar was ripe for a short-term bounce, and that is also helping to drag down gold. Gold should continue to hover around the $2000 level, but if dollar strength remains, key support could come from the $1970 region.
Bitcoin
Despite broad weakness in most risk assets, Bitcoin continues to hover above the $28,000 level. It seems that Bitcoin Hodlers are still unsure that the Fed is likely to deliver another rate hike and that the US economy is headed for a recession this year. It seems that many traders are convinced that the dollar’s days are numbered as it will slowly lose some of its preferred reserve currency status and that crypto will be one of the beneficiaries.
It’s somewhat impressive that Bitcoin is slightly higher on a day that has stocks, oil, gold and high-beta currencies down around half a percentage point. Bitcoin’s ceiling remains the $30,000 level, and how it behaves when trading north of that will determine whether the next big bull phase is upon us.
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With more than 20 years of trading experience, Ed Moya is a senior market analyst at OANDA, producing up-to-date intermarket analysis, coverage of geopolitical events, central bank policy and market reactions to corporate news. His particular expertise lies across a wide range of asset classes, including currencies, commodities, fixed income, equities and cryptocurrencies. During his career, Ed has worked with some of the leading forex brokers, research teams and news departments on Wall Street, including Global Forex Trading, FX Solutions and Trading Advantage. Most recently, he worked with TradeTheNews.com, where he provided market analysis on financial data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks, including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most respected global news outlets, including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
