Bitcoin initially buoyed by Mnuchin’s comments
Steve Mnuchin added his voice to the President’s in expressing concerns about cryptocurrencies, with Libra and bitcoin naturally at the top of the list of those being spoken about.
Mnuchin was naturally more reserved with his criticisms but highlighted a number of the same issues around illicit uses and money laundering but came across more wary than opposed to them altogether which was certainly the message we had from Trump.
Bitcoin rose back towards $11,000 following Mnuchin’s comments but trades back in the red again this morning. Traders don’t seem to know how to take the news of increased levels of scrutiny for cryptos but at the end of the day, if they want mass adoption, this can only be a good thing. It just is likely to take time, although the way these markets move, they don’t suggest traders have much patience for that.
The area around $9,500-10,000 is looking like increasingly important support for bitcoin having been protected on a couple of occasions but failing to generate any real upside momentum after. A break below here could see it find early support around $9,000 but at that point the damage may be done.
Below here $8,500 and $7,500 look interesting levels but as ever, it can be quite the wild ride in the cryptocurrency space which brings with it a strong element of unpredictability.
How are the rest of the markets trading?
Markets are trading very flat on Tuesday, a theme we may become accustomed to this week as we head into what could be a very interesting summer.
With central banks turning far more dovish in a bid to support the economy and equity markets, attention is shifting to companies who will report second quarter earnings over the coming weeks. This week the focus will primarily be on the banks and in particular, Goldman Sachs and JP Morgan on Tuesday.
The US is widely expected to have entered into an earnings recession in the second quarter which makes the outlooks for these firms all the more important. Citigroup got us off to an okay start but highlighted a few challenges that will likely be repeated by its peers over the coming days, most notably related to trading revenues and lower interest rates.
Sterling tumbles despite strong wage growth
Sterling has taken a tumble this morning to trade back at its recent lows. The declines started early in European trade and have continued throughout the morning. The decline accelerated when the pound broke below 1.25 against the dollar and is now pushing 1.2450. Various Brexit reports may have contributed to the decline, but its interesting that the UK jobs report failed to slow the decline.
While unemployment was unchanged and the claimant count rose, wages were strong which if sustained and no deal can be avoided would surely strengthen the case for no rate cuts and maybe even rate hikes. Unfortunately, traders are finding it hard to look past no-deal risks or at the very least a delay and hard Brexit, which continues to weigh on the currency.
For a look at all of today’s economic events, check out our economic calendar.
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