Ransquawk

Volatility contained as traders close their books

The potential for a year-defining move in one of the G7 currencies in the next week still exists but more and more traders are planning to look on as spectators rather than getting involved and risking what they have made in a year that has been tough to predict with move and counter-move often whipping them out of positions.

If there has been a lesson to be learned this year it is the importance of where stop losses are placed in relation to significant chart points. It is without doubt that there have been opportunities this year particularly for long-term positioning. The move in the common currency from 1.0400 to 1.2000 was, with hindsight, predictable although the unpredictability of President Trump would have deterred most people.

The ranges that are being seen currently are typical for the time of year but the potential for a large move rests with Sterling over an agreement to move to stage two of Brexit negotiations. That remains in doubt despite many analysts attaching high levels of probability to a solution being found. They also probably believe in unicorns!

U.S. Hike to be determined by Non-Farms

Next week’s FOMC meeting will be Janet Yellen’s last. Once Jerome Powell is confirmed as the new Fed. Chairman, Mrs Yellen will go quietly, in contrast to her two most recent predecessors who were feted in some circles and condemned in others for their handling of various economic issues that occurred during their tenure.

The start of a new era will begin with the Fed in a tightening bias although the support for such an attitude is far from certain. There has been no definitive statement from the Fed that they see the need for higher rates going forward due to a specific set of factors that will need to be controlled. The rate hikes of the past twelve months have been to calm equity markets that were starting to overheat because of “cheap money”

The potential for the dollar index to climb to test resistance at 94.00 is clear but it is hard to see where the catalyst could come from unless there is a significant event in the Eurozone, for example, fresh elections being called in Germany.

For now, the index remains hemmed in between 94.00 and 92.50. The move by Donald Trump to recognize Jerusalem as the capital of Israel has so far had little effect on the market.

It cannot be ignored any longer!

Define bubble! It is true to say that those who are buying assets that are behaving like a bubble will never see the error of their ways until it is too late and then will see their error only too quickly.

Is Bitcoin in a bubble? There is no end of material to read supporting the argument that this is a genuine new phenomenon just as there are those we say that no matter how high it goes it will collapse and people will again have been destroyed by greed. History tells us that striped tulip bulbs have no value and being given a monopoly to trade is no guarantee of success.

With the opening of futures trading this weekend, the acid test for Bitcoin approaches. The scale of increases has been nothing short of phenomenal with it taking 1789 days to reach $1,000 and less than a day to move from $13k to $14k.

Apart from a money-making opportunity, my interest is more in depth. I am very interested in anything that undermines the monopoly that banks have created where people are still convinced that any financial transaction must involve a bank as the manager of the transfer of value. Now banks are canvassing Governments, who are also worried about their monetary policy, to put in place regulation and are also considering delving into the cryptocurrency market even though this is a party they are not invited to!

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