Bitcoin hits its peak as markets take their Easter break whilst anticipating the Fed's CPI numbers next week
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CAPITAL FLOWS IN GLOBAL MARKETS
Bitcoin's Rally Still In Play
Bitcoin's rally this year has received a lot of attention. However, the coin's price appears to have hit a wall at US$28,000, a significant trading mark it has been hovering around for days.
After a 72% surge in the first three months of the year to end its greatest quarter in two years, the coin has been trading near that resistance region since March, more so after the bank-turmoil rally fizzled.
Still, seasonal patterns might provide a boost as it is now very close to breaking the US$30,000 barrier for the first time since June.
Despite the double-digit increase, Bitcoin's value is still down significantly from its all-time high of about US$69,000 in November of 2021.
Bitcoin has found support around the US$29,000 to US$30,000 region several times, but that zone currently serves as resistance to its upward movement.
A "spinning-top" candlestick pattern indicates resistance and suggests hesitation or a standoff between bulls and bears in technical analysis.
The focus will be on regulations after US prosecutors and authorities have widened their crackdown on suspected abuses in the digital asset business.
Fed's Test & an Upheaval in Stocks & Bonds Likely
The US Federal Reserve will be tested as US consumer prices - scheduled to be released next week - are seen staying firm.
The government's core consumer price index, which excludes food and energy costs, and more accurately represents the extent of underlying inflation hitting American families, is projected to show a 0.4% monthly jump on Wednesday.
Such a rise would be less than the 0.5% growth seen in the previous month, but it would be in line with the average seen from September to February, and it would maintain year-over-year levels stubbornly high.
Despite strains in the financial system and signs of an economic slowdown, this may tilt the scales in favour of another interest rate rise at the Fed's May meeting.
A jolt from a rise in oil prices will also likely compound the inflation puzzle for central banks.
After March, employment data showed the labour market remained tight last month, heightening the probability that the Fed has at least one more rate hike in store; US Treasury rates and the dollar rose in a short trading session on Friday.
Due to the Good Friday holiday, Wall Street was closed until Monday. In addition, on Friday and Monday, European markets are closed.
Beyond that, in the holiday-shortened trading week, risk assets may again feel the pain.
THE WEEK AHEAD
US inflation next week will be a major factor in determining how much farther the Fed will raise interest rates.
Though a rate decrease later in the year seems likely, given the current state of affairs, markets anticipate that the Fed will prefer to increase rates at least once more.
Since we are likely near the pinnacle of the economic cycle, the Bank of Canada is unlikely to adjust interest rates.
Macro Calendar: Key Events in Developed Markets
🇺🇸 United States: Fed's Course of Action
There is growing scepticism in the markets that the Fed can raise rates much more, but this may change with the release of the next CPI report.
An additional 0.4% month-over-month increase in core CPI would be more than double the pace needed to return the US to its 2% annual inflation rate objective and would raise expectations for the forthcoming FOMC meeting.
🇨🇦 Canada: Bank of Canada Likely On the Sidelines
After suggesting that rates are likely reached their top, the Bank of Canada is generally anticipated to leave them steady next week.
With recent banking upheaval posing downside risks for the global economy, a rate drop seems like the most likely next move for the central bank.
🇪🇺 Eurozone: February data will be key
This week is crucial for the Eurozone as we finally get our hands on first-quarter GDP figures.
After increasing in January and February, industrial production and retail sales continued their upward trends in March.
Given the volatility of these figures, the data for February will be crucial in deciding whether or not we will see a quarterly increase in consumption and production in the most up-to-date figures.
Asia Week Ahead: China's Growth Momentum Leads Agenda
The GDP of Singapore, the inflation rates and trade numbers out of China and Taiwan, the policy rate decision from the Bank of Korea, and the loan statistics from China are all on tap for the upcoming week.
Macro Calendar: Key Events in Asia Next Week
🇨🇳 China: Loan Growth & More
Next week, China will disclose loan data expected to affect the market significantly. Markets anticipate a rise in the new yuan loan in March to CNY4000 billion from February's CNY1810 billion.
The PBoC's RRR reduction and the large quantity of liquidity injection at the end of March point to this. Unless the economy requires more support, loan growth in the second quarter should be significantly lower.
Mild inflation is expected in China and Taiwan. Against this background, it makes sense for Taiwan to halt its policy rate temporarily rises.
However, the central bank may contemplate another rate increase in the second quarter due to concerns over a widening interest rate gap with the United States.
The international trade figures of China and Taiwan will be made public. Exports from both locations should decline annually, particularly in the electronic goods sector.
However, the strength of Chinese imports due to rising domestic demand should be maintained.
🇸🇬 Singapore: Slower Growth Likely
The GDP growth rate in Singapore is expected to drop to 2.4% YoY, up from the 2.1% expansion seen in the previous quarter but much slower than the 4.0% expansion seen in 1Q22.
High inflation at home and falling worldwide demand are only two problems facing the economy today.
Retail sales were low, while the economy's exports and industrial output fell.
🇰🇷 South Korea: Bank of Korea in Wait-and-Watch Mode
Since inflation is decreasing and underlying economic conditions are still poor, the Bank of Korea will not likely take action at its meeting next Tuesday.
However, hawkish commentary will gain traction due to the unknown factors contributing to the current oil price increase.
BLOCK BUSINESS INSIGHTS
Dollar's Dominance or New Crypto Trade Currency For BRICS Nations
The US dollar is fast losing its sheen, and several countries worldwide are now looking at alternative currencies to carry out international trade.
The Indian rupee and the Chinese yuan are fast emerging as alternatives. Now, a third front is a likely choice - A new currency for BRICS nations.
Aggressive, Expanded Scrutiny Leave Crypto Firms in Limbo
The head of the US Commodities Futures Trading Commission said last week that activity on the exchange Binance constituted a "very clear example of evasion," calling for swift and forceful action from American authorities.
In an interview with CNBC, CFTC chairman Rostin Behnam said, "This seemed to be a pretty clear case of evasion and something that we needed to step in aggressively with and do it as quickly as possible because this was an ongoing fraud - going back to 2019 - and ongoing violation of the Commodity Exchange Act."
Crypto Exchange Bittrex to Exit US Due to Regulatory Challenges
Bittrex, a cryptocurrency exchange launched in 2014 by three ex-Amazon employees, will cease operations in the United States because of the country's "no longer feasible" regulatory climate.
It's "not economically viable for us to continue to operate in the current US regulatory and economic environment," Bittrex co-founder and US CEO Richie Lai tweeted.
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