Asian Open: Fed Stand Pat, Dollar down, Ethereum at New highs

With the Fed showing little interest in scaling back their ultra-easy policies, cryptocurrencies such as Ethereum continue to look attractive to investors.

Crypto 8

Asian Futures:

  • Australia’s ASX 200 futures rose 6 points (0.085%), the cash market is currently estimated to open at 7070.7
  • Japan's Nikkei 225 futures are down -130 points (-0.45%), the cash market is currently estimated to open at 28923.97
  • Hong Kong's Hang Seng futures are up 128 points (0.44%), the cash market is currently estimated to open at 29199.34

European Friday close:

  • UK's FTSE 100 index rose 18.7 points (0.27%) to close at 6963.67
  • Europe's  Euro STOXX 50  index rose 3.12 points (0.08%) to close at 4015.03
  • Germany's DAX  index rose 42.91 points (0.28%) to close at 15292.18
  • France's CAC 40 index rose 33.22 points (0.53%) to close at 6306.98

US Friday close:

  • The Dow Jones fell -164.55 points (-0.48%) to close at 33,820.38
  • The S&P 500 fell -3.54 points (-0.084553%) to close at 4,183.18
  • The Nasdaq 100 fell -58.662 points (-0.42%) to close at 13,901.62

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No surprises from the FOMC meeting

The Fed left policy unchanged as widely expected, although added that inflation has risen due to “transitory factors” such as the “basing effect”. This basically means the fed will continue to look past inflation overshoots, so there will be no change of policy.

The S&P 500 printed a new intraday record high but failed to hold onto earlier gains, closing the day with a bearish Rikshaw Man Doji pattern (on a closing basis, the index has effectively closed flat for the past three days). The Nasdaq 100 fell to a four-day low but found support at its 10-day eMA. The Dow Jones fell to a three-day low but ultimately remains rangebound between 33,678 – 34,256. Its hard to build a bear case, there is also a hesitancy to break higher imminently on Wall Street.

Yesterday’s weak CPI print helped send the ASX 200 to a two-day high, and Tuesday’s bullish hammer reaffirmed support at 7,000 which suggests a swing low is in place. So, whilst our bias remains bullish above 7,000, we need to see a break above 7,100 to confirm trend resumption.

Ethereum Continues to go From Strength to Strength, Bitcoin Stalls at Resistance

Another day, another new record for Bitcoin’s little brother Ethereum (ETH/USD). And there could be more of that to come, as the Fed continue to keep their ultra-easy policies in place and institutional investors continue to pile into the crypto space with their ultra-easy cash. Ethereum is currently 2% high on the day whilst Bitcoin (BTC/USD) is down around -1%.

However, bullish momentum on Ethereum is beginning to show signs of exhaustion as it approaches 2,800, whilst Bitcoin has stalled near a resistance cluster. Given Bitcoin is not at its all-time high, it may be the better vehicle for bears to test the waters against the crypto space over the near-term.

  • Bitcoin has fallen from its record high and breached the prior swing low at 50,500, warning of a change in trend.
  • A small bearish hammer formed at a resistance cluster (comprising 20, 50-day eMA’s, 50% retracement level and 55,555 swing low).
  • A break of 53,330 assumes bearish continuation, whilst a break above the hammer high bring the 61.8% Fibonacci level into focus.

Forex: US dollar falls to nine-week low post-FOMC

The US dollar index (DXY) printed a large bearish engulfing candle after a small, two-day pullback, which strongly suggests the swing high in place at 91.13. Given it closed just beneath 90.63 support yesterday, we remain bearish below yesterday’s high and would be keen to see any small volatility retracements within yesterday’s range to consider fading into, or simply wait for a break of yesterday’s low to assume bearish continuation.

  • Commodity FX embraced the weak dollar environment with NZD/JPY, NZD/USD and CAD/JPY at the top of the leader board, whilst USD/CAD and GBP/NZD found themselves in the relegation zone.
  • AUD/USD traded to a high of 0.7800 having found support at its 20-day eMA with a bullish hammer on the daily chart.
  • NZD/USD broke to a new cycle high with a bearish outside day, and a break above 0.7270 swing high (bearish engulfing candle) assumes bullish continuation.

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Commodities: Gold embraces lower yields and weaker dollar

A weaker USD and lower treasury yields lifted gold prices by Gold 0.3%, which currently trades around 1781. Having found support above the 10, 20 and 50-day eMA’s and printing a bullish hammer, we’re becoming a little more confident that prices are ready to retest and possible break above 1800.

Oil prices are also building some traction, seeing WTI briefly touch a one-month high and brent rise to a six-day high overnight. We’re now looking for WTI prices to build support above 62.27, where a break above yesterday’s high is required to assume trend continuation.

Up Next (Times in AEST)

You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.

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