the daily chartist

Daily market recap for 13.06.2018

published 3 years ago


 Bitcoin continues with the drops as mentioned from the previous recap that this is highly plausible. Price is still under heavy pressure. Depending on the timing we may see an early coverage of the gap opening from Monday before the price goes down again to 5855 and 5460. Or the gap coverage will be a delay for the price to test these two bottom levels from 06.02.2018 and 11.11.2017 respectively. Unfortunately, it seems that Crypto market is moving into its worst phase of existence as with the large drops, mining difficulty has risen to the roof and mining services have now stopped as they are on a loss now. We will say how the price will play out in between these two bottom levels as the price may take a technical break and wait for a further catalyst to shift the sentiment and the overall market direction. 

 The Euro ended with a slight rise after it has fallen 50 pips on Fed rising rates from 1.75% to 2.00%. What made the Euro climbing back up was actually Powell's statement and the Q&A after that. Here are the highlights once again:

 The press conference ended. Here are the highlights of Powell's statement:

  • US economy is doing very well
  • Now sees 4th hike in 2018 as more likely
  • Fed to hold press conferences after every meeting from January 2019
  • The Fed Central tendencies will remain on an quarterly basis
  • Recent inflation data have been encouraging but too soon to declare victory
  • Recent rising oil prices will likely push inflation above 2% over next few months but should be transitory
  • Fed expects to make further gradual increases in interest rates
  • Over the next year or so interest rates will move close to neutral levels
  • The FOMC rate forecast 2.38% at end of 2018, 3.13% in 2019 and 3.38% in 2020
  • Balance sheet reduction is proceeding smoothly
  • Fed to hold press conferences every month starting from January 2019

 The following answers from the Q&A section:

  • Nothing has happened since March to change his view on inflation
  • FOMC continues to think they are just about at 2% goal but wanted to be sustainable
  • FOMC generally believes fiscal policy will provide meaningful support to demand over the next 3 years
  • Fed is strongly committed to 2% inflation target, barriers to changing that very high
  • Economy has strengthened since we began for guidance
  • Now was an appropriate time to remove forward guidance
  • Fed contacts report concerns on US trade policy are rising
  • Right now we don't see any impact on trade policy in any data
  • Today is another sign US economy is in great shape
  • FOMC see fiscal policy moves as supporting demand
  • Slow pace of wage gains a bit of a puzzle
  • Fed keep open mind, will monitor data
  • No one really knows for certainty what is the natural rate of unemployment
  • Uncertainty is why we have been gradually raising rates
  • there is no sense in Feds models that inflation will move significantly higher if unemployment rate falls further
  • we won't overreact to inflation being above 2%
  • FOMC sees financial vulnerabilities as moderate
  • Feds patience in hiking rates has borne fruit 
  • Rates will soon be neutral - assuming we stay on this path of gradual rate rises. We are getting there but not there yet.
  • When interest rates approaches neutral it would no longer be appropriate to keep accommodative language in policy statement
  • great environment for people to find jobs
  • The yield curve is flattening in response to the Fed tightenings.

 The price has managed to break above 1.18000, even though for a moment and it stopped there. I think that with the events from Yesterday the USD will actually stay subdued as the statement was a bit more hawkish. Still, my view for the price of the EUR/USD is to reach the 200DEMA around 1.19500 - 600. You can read the full FOMC statement here.

 Crude oil had a good run up on Wednesday also. DOE crude oil inventories saw a draw of -4143K vs. -1246K expected - higher draw of crude stocks.

  • Crude Oil inventories see a draw of -4143K vs -1246K expected
  • Gasoline draw -2271K vs +1000K estimate
  • Distillates -2101K vs 500K estimate
  • Cushing -687K vs -955K last week
  • US refinery utilization 0.3% vs -0.10% estiamte
  • Crude Oil implied demand 19591 vs 18850 last week
  • Gasoline implied demand 10486.1 vs 9514.3

 The surprising info gave a push to the Oil and rose almost to 66.90. Price now is nearing the 61.8 Fibo retracement, slipping away from the Bearish scenario for now. Do not forget that we have OPEC meeting placed at 20 - 21 June in Vienna.