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Ethereum tops $400 & BOE Preview

ETH/USD – Weekly Candlesticks
Source: GKFX / MT4 (July 31, 2020)

Ethereum topped $400 this week after breaking out of a triangle bottom 3 weeks ago. The move can be viewed as confirmation of a long term bottom at $80. 
 

TAKEAWAYS


•    Silver surges 4% on Wednesday as gold moves on $2050 per oz
•    Ethereum reaches $400 & 2-year high
•    PREVIEW: Bank of England meeting
•    DAY AHEAD: US jobless claims, Uber earnings
 

MARKETS


A huge miss on the ADP payrolls report sent the US dollar tumbling lower again, supporting a rise in EUR/USD back to its high at 1.19.The euro strength comes off the back of record net long bets last week in futures and options markets according to COT data.

The price of silver led the charge for precious metals, playing some catch-up with the big surge in gold over $2000. Silver gained 4.4% to reach over $27 per oz and its highest since April 2013- and taking its year-to-date gains to over 48%.

Well-received earnings from Disney as well as the rising possibility of a larger US stimulus package helped propel US stock markets higher. Disney reported a big jump in Disney+ subscriptions and its intention to skips cinemas and send its new live action movie Mulan film straight to its own streaming service. 

European shares closed higher led by a 5% jump in Commerzbank shares. Markets in Asia were more mixed following a miss on China’s service sector PMI.
 

GURU WISDOM


The hard work in trading comes in the preparation. The actual process of trading, however, should be effortless. – Jack Schwager
 

$400 Ethereum


Ethereum (the coin is actually called Ether) has been compared to silver with Bitcoin as gold. It’s worth less, easier to mine, more plentiful and the price is often more volatile. This week the price struck $400 for the first time since July 2018 (see chart above). 

Notably, the Ethereum / Bitcoin ratio has been rising too, indicating greater price momentum with Ethereum. On previous occasions, Ethereum’s price rising faster than Bitcoin has been a bullish sign for other cryptocurrencies too.

The gains came alongside the launch of Ethereum 2.0 Testnet Medalla. Ethereum 2.0 has been a long-anticipated update to the Ethereum Blockchain technology, including improvements to scalability and security that should make it more widely appealing to users.

Bank of England


GBP/USD has been making strides this week on the weaker US dollar – but GBP has been choppier in cross currency pairs such as EUR/GBP – probably in anticipation of today’s BOE meeting. There are four things to watch 1) the rate decision 2) QE 3) the minutes 4) the quarterly inflation report.

If there is any volatility from the meeting- it will most likely be caused by the quarterly inflation report, which will give the latest forecasts from the Bank of England for the UK economy. That’s because markets have priced in a near certainty that interest rates will remain at a rock bottom 0.1% and that QE will be unchanged after the increase by £100 billion in June.

While economic data has been improving, fears of a second wave are also increasing – meaning perhaps the 2020 GDP forecast stays the same, while 2021 gets revised lower. 
 

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