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"Buy Bitcoin" or Quarterly reports in the offing

"Buy Bitcoin" or Quarterly reports in the offing

Sent signals for the last week:

NO CORE INFLATION [M/M] pair felt by 30 points on the sell

The Bank of Canada expectedly hiked the interest rate and, most importantly, gave hope for another hike this year. The dollar suffers from low inflation, and the markets set themselves up to the ECB policy tightening this fall. Quarterly reports begin next week.


Rumors emerged about the QE reduction in September

Information appears in the press that the current level of the ECB incentive program may bother management. A whisper goes round that the ECB September meeting may be key and turning point for QE!


More and more doubts about the next Fed’s rate hike

The primary driver for the dollar this week was Janet Yellen’s speech, who spoke before the US Congress. Investors heard assurances of the Regulator's commitment to the tightening monetary policy, low inflation was attributed to the seasonal factor. The Fed’s head assured the Congress from the rostrum that a target band of 2% could be achieved at year-end.

Nevertheless, the issue of inflation remains key to the market, as this indicator is the one that can significantly reduce the probability of another Fed’s rate hike, which has already been raised twice this year. Key FOMC members have repeatedly voiced their concerns about the weakening inflation. As such, inflation data published on Friday crashed the dollar since the CPI fell by -0.1% once again. At the same time, negative data on the increase in retail sales were published. It seems that the chance of a rate hike for December dropped by 10% after this and is 45% at the moment.

The funny thing is that during the broadcast of Janet Yellen's speech, one of the attendees got into the frame, who raised the plate "BUY Bitcoin" – of course, he was immediately pulled out by security, but it seems that cryptocurrencies keep the public on the alert. They say the Fed decided to study the technology and prospects of blockchain in more detail.


No changes

The Australian market fell into the euphoria of positive sessions, which began last Friday.

Monday passed without news; data on housing loans and business confidence growth (NAB index) for June supported the market on Tuesday.

Ahead-of-target macroeconomic indicators with statistics release in Australia is already a habit, traders react violently, buying local currency.

The fall of the New Zealand dollar on Tuesday against the overall positive dynamics of strengthening Asian currencies triggered minor news from the usual point of view. Data on consumer spending using plastic cards were released below forecasts, showing zero dynamics.

Reversal and sharp strengthening of the currency occurred on the PRC news – traders regarded the export volume, which grew much higher than expected, as a signal to buy, as over 20% of the volume of exports of New Zealand's products falls on the Chinese market.


Pound is optimistic this week

Synergy played off – both of the dollar weakness and positive news for the pound:

- positive dynamics of the labor market was published on Wednesday

- McCafferty (voting member, MPC) said that he wanted not only to hike interest rates next month but also to start to tighten QE

- inflation is significantly turned up

- while the Brexit process is on its way.

It seems that the markets will pay special attention to CPI UK published next Tuesday


We can expect more from the Bank of Canada

The Bank of Canada has taken the expected decision by raising the rate. This did not become a surprise for the market, as prices reflected 95% of such a course of events the day before. BUT CAD strengthening was caused by accompanying text minutes, thanks to which expectations of another interest rate hike strengthened.

There are two opinions at the moment: the Bank of Canada will either raise the rate in October or follow the Fed’s rate hike.

In any case, the chances of another Bank of Canada interest rate hike this year are quite high! This will become the mainstream for the nearest CAD quotations development.

What is expected next week

The NZ CPI quarterly report will be published overnight Monday into Tuesday morning, and it should not be overlooked since it is inflation and a quarterly report.

If the UK CPI exceeds the forecasts on Tuesday at least by +0.1%, then wait for the pound strengthening, because inflation growth to 3% against the background of talks about the Bank of England interest rate hike is quite above target 2%. If the indicator is below the forecast, no such a strong movement is expected, since the CPI significantly exceeds the data of the target level.

Traditional oil on Wednesdays.

Australia's labor market on Thursday night. Mario Draghi will rock the Euro well Thursday afternoon, as the markets have already set themselves up for the ECB's tightening monetary policy in the fall.

Friday can tickle your nerves once again, as we will have to turn on the conflict prevention system between the simultaneous CA CPI + CA Retail Sales – Core again.

Sent signals for the last week:

NO CORE INFLATION [M/M] pair felt by 30 points on the sell

A full calendar of upcoming trading events that you can use for algorithmic trading can be found on the trading signals