Safe-havens rally as markets brace for global rate cutting cycles; Bitcoin continues to Sizzle

Safe-havens are performing nicely at the start of the trading week.  Gold is up 1.0%, while the Swiss franc is higher by 0.5%.  Investors are convinced central banks will follow the Fed’s lead of delivering fresh stimulus to the markets.  Expectations are growing for the Fed to deliver a 50-basis point rate cut at the July 31st meeting.  Markets are also anticipating many emerging market central banks to use a plethora of instruments to deliver easy monetary policy in addition to rate cuts.

Gold

Gold bulls are back in control as stronger Fed easing expectations grow and as military conflict risks grow in the Middle East.  Price so far has been unable to take out last week’s high which was also six-year high.  The question is no longer will the Fed ease, but by how much? The Fed historically likes to kick on an easing cycle with a bang and a 50-basis point cut should become the base case.  On Friday, Minneapolis Fed Kashkari, a non-voter, noted that he called for a 50 bps cut at the FOMC meeting this week.

Bitcoin

Bitcoin rose to a 15-month high, settling slightly below $11,000 as cryptocurrencies embrace Facebook’s launch of their own digital coin.  Mainstream acceptance was one of the strongest arguments for crypto bears and it appears that Libra, the social media giant’s launch of their stablecoin is showing that digital currencies are here to stay.  Eventually, Libra could become Bitcoin’s biggest competitor, but right now it is validating the crypto space and sending all the major digital coins higher.  Libra will now have to deal with a ton of regulatory scrutiny, but that won’t matter in the bigger picture for crypto traders of other coins.  Bitcoin traders are reinvigorated and we could see further bullish momentum.  Libra will be backed by fiat currencies, which ultimately allows it to be more stable than Bitcoin.  Bitcoin volatility is likely to persist, with $12,000 and $15,000 as the next two critical resistance levels.

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