Bitcoin Seasonals. Really?

Ashraf Laidi AshrafLaidi.com

Watch out FX traders. Wednesday was another tumultuous day in the currencies following BoC hike and US dollar initially continued to wilt but caught a strong bid late in the evening. Overnight, Aussie jobs slowed to a higher level than was expected but unemployment edged up, capping AUD at 0.80. Earlier today, US Philly Fed survey eased as well as US jobless claims. Here is a chart suggesting a possible January-February seasonality in Bitcoin's price change. Could it be a result of Chinese selling Bitcoin in January to help Chinese New Year purchases?

The Bank of Canada delivered a rate hike that was 90% priced in but left the market with few clues about what's coming next and when. The initial reaction in USD/CAD was higher on talk of a dovish hike but the commentary from Poloz didn't back that up. He spoke about wanting to get back to 2.50%-3.50% and increased confidence the economy was on track. At the same time, he spent half the press conference talking about NAFTA risks.

After hitting 1.2520 USD/CAD slowly reversed down to the lows of the day at 1.2370 but part due to a broad US dollar selloff. At the same time, cable soared to a post-Brexit high of 1.3940 as part of a rout on the dollar.

However the selling stopped after the Beige Book. It offered a slightly more-optimistic take on wages and the economy. Earlier in the day, Dallas Fed President Kaplan also made a hawkish shift, saying that his base case is now three hikes this year with the possibility of more.

With that, the dollar began a broad reversal and cable fell back to 1.3820 – more than 120 pips from the high. The euro also fell below 1.22 and USD/JPY rose to 111.30. As part of the same move, bonds sold off and US 10-year yields rose to 2.59% while gold suffered a $10 decline, which is the worst in five weeks.Through it all, the S&P 500 ripped another 26 points higher to close just below the record high.

Sorting through all the 'why' in the market right now is a mammoth task. More important is the 'what' and that's heightened volatility. It was evident in FX lately and it could spread. If so, that's a broader negative for stocks and risk appetite.

It's getting close to the time for caution.

Author

Ashraf Laidi

AshrafLaidi.com

Ashraf Laidi is an independent global markets strategist with over 15 years' experience. He is author of "Currency Trading & Intermarket Analysis", and founder of AshrafLaidi.com.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.