Jump to content

Softer US data sends USD down and gold up amid crypto ‘liquidity crunch’


MongiIG

Recommended Posts

A slowdown in US retail sales data has led to a drop in the US dollar, sending the EUR/USD trade comfortably back up above parity.

 Jeremy Naylor | Writer, London | Publication date: Wednesday 09 November 2022 

This drop in USD has helped gold which also seemed to receive a leg up as cryptos fell on reports of a ‘liquidity crunch’. That phrase was used by the CEO of the crypto currency exchange, Binance as it agreed a merger with another large exchange FTX.

 

USD falls

The dollar fell yesterday afternoon as the US Redbook index rose at its slowest pace since March 2021. Now the Redbook is a weekly index that measures same store sales. In other words, it's a retail sales monitor. Yesterday it rose by 7.6% during the first week of November following a 9.7% increase in the previous week.

Now it hasn't showed a contraction. But what this has done is it's given an extra steer lower to the us dollar. And indeed yesterday at the low point, the dollar, we had the lowest print on the US dollar basket since 13 September this year.

Currency market little changed this morning on from the lows that we had yesterday as the market awaits the results of the mid-term elections.

EUR/USD

I want to show you what's been happening with the EUR/USD trade because significantly we are now quite a nice space above this parity line, the blue dotted line here. Not quite as high as we were intraday back on the 26th of October but very close to levels not seen now since the mid-September period. So something like around about eight-week highs for the EUR/USD trade.

What this means for gold

Now, what this has done is this has steered money into precious metals, and you can see yesterday was the second substantial rise we've seen in the last four days for the price of gold, consolidating at these recent highs.

Yesterday we had the highest intraday print seen since the 6th of October on the price of spot gold. Spot silver though has managed to break the highs that we had back on the 4th of October and is now trying to tempt traders to trade above the 200-day moving average, this line here. This is the highest print we've seen for silver since the 22nd of June this year. So silver is an outperformer in the markets.

Cryptos

Now that move into gold also coinciding yesterday with a move out of cryptocurrencies. Now there's an extra story here with this crypto space. Bitcoin breaking support falling below 17,500 at one point yesterday for the first time since December 2020. Another crypto has followed.

The cryptocurrency market tumbled after Binance and FTX, the world's two biggest crypto exchanges, agreed to merge to address what it's called a liquidity crunch in this particular area of the market. But interestingly as we see money coming out of crypto it's going into gold.

There has always been this tacit implication that crypto is stealing some of gold's allure. So, if we see this continuation of this move lower for crypto we could well see some more trade higher in gold. Ether not quite as low as Bitcoin, but nonetheless on the way down.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      23,001
    • Total Posts
      95,344
    • Total Members
      43,621
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    dCortel
    Joined 25/09/23 22:13
  • Posts

    • The cryptocurrency industry has grown rapidly in recent years, with the total market capitalization now exceeding $500 billion. However, the industry still faces a number of challenges, including security and on-chain efficiency which is one of the biggest challenges in the cryptocurrency industry, because in recent years, there have been a number of high-profile hacks of cryptocurrency exchanges & wallets, and traders are faced with high cost of on-chain transactions. All of which summed up to make cryptocurrency trading less efficient. In order to address these issues, exchanges are seen taking up the responsibility of solving the problems and I've seen Bitget, a leading cryptocurrency derivatives exchange, recently partnering with Cobo, a leading provider of digital asset custody and security solutions. This partnership is aimed at enhancing the security and efficiency of cryptocurrency trading, which will allow users to seamlessly execute cross-exchange transactions, enabling users to capitalise on arbitrage opportunities without having to deposit their funds directly on exchanges. This could significantly reduce on-chain transaction gas costs and make crypto investments more efficient and cost-effective. Developments like this, if it could be capitalised on would take away bad players from the industry, make crypto a safe place and increase its adoption, but how wide would it cover for the whole users in the crypto space and even Bitcoin?
    • Stock Market Report S&P 500 - NASDAQ 100 - RUSSELL 2000 - DAX 40 - FTSE 100 - ASX 200. Elliott Wave Analysis Summary: Elliott Wave (iv) of  c) of 4 Flat Correction for US Indices and DAX. Trading Strategies: Once Wave (iv) has reached its 38.2% retracement level, short term traders can start to look for short trade setups into Wave (v) of c) of 4. The longer term Video Chapters 00:00 SP 500 (SPX)  11:01 NASDAQ (NDX) 12:39 Russell 2000 (RUT) 14:20 DAX 40 (DAX) 19:37 FTSE 100 UKX (UK100) 23:18 ASX 200 (XJO) 29:08 End Analyst Peter Mathers TradingLounge™ Australian Financial Services Licence - AFSL 317817 Source: tradinglounge    Access Trial    
    • I think bitget will be the obvious option cos binance that use to be a good option isn't finding it rosy atm with regulatory bodies and speculations around the health of the exchange aren't friendly to feel safe with them atm
×
×
  • Create New...
us