Bitcoin Rally in APAC Trade as Market Sentiment Clears
Bitcoin, BTC/USD, Market Sentiment, China, Technical Outlook – Talking Points
- APAC Markets Set to Trade Higher as Risky Assets Recover
- US dollar falls as traders look past recession fears
- BTC/USD on track to break past confluent resistance
Wednesday’s Asia-Pacific Outlook
Asia-Pacific markets are expected to open higher after stocks and other risky assets rallied in New York overnight. The benchmark S&P 500 rose 2.76% as traders dismissed disappointing corporate earnings reports. An easing in bets on the Federal Reserve rate hike is supporting risk taking, with traders betting that the Fed may need to halt the hike sooner than expected.
The DXY US dollar index fell for the third day despite the Atlanta Fed’s GDPNow update for the second quarter posting a weaker number, falling to -1.6% from -1.5% after the weak housing data in the United States. The euro took advantage of the situation, further benefiting from stronger bets on rate hikes for the European Central Bank meeting later this week. Overnight index swaps show almost a 50% chance that the ECB will hike by 50 basis points. However, this leaves the EUR/USD open for a pullback if the ECB disappoints.
Natural gas prices in Europe have fallen despite a crippling heat wave across much of Europe. A Reuters report, citing familiar sources, said the Nord Stream 1 pipeline appears to be resuming operations as planned. The European Commission is set to present a proposal that would reduce demand for natural gas in the European Union over the winter, according to Reuters.
Crude oil prices rose, benefiting from the risky trend in the markets and a weaker US dollar. A report from the American Petroleum Institute (API) showed a buildup of 1.86 million barrels in US inventories for the week ending July 15. Still, supply remains extremely tight around the world and prices could continue to rise if recession fears ease further.
China’s 1-year and 5-year Loan Prime Rates (LPR) are due for update today. Bloomberg consensus forecasts show these LPRs remaining unchanged at 3.7% and 4.45%, respectively. However, a reduction in the 5-year LPR would not be too surprising after a series of mortgage boycotts across the country in recent weeks. Reserve Bank of Australia Governor Philip Lowe will speak from Melbourne at 9:10 a.m. AEST. The Aussie dollar stands to gain if Mr. Lowe adopts a hawkish tone.
Notable events of July 20:
- Australia – Westpac Leading Index MoM (June)
- China – Preferential Lending Rates (July)
- Japan – 6-month bill auction
Click here to see today’s full economic calendar
BTC/USD Technical Outlook
BTC/USD is on track to record a daily close above a confluent resistance level consisting of a resistance level from June, a descending trendline from March and the 50-day simple moving average. Meanwhile, MACD is on track to break above its midpoint, while the RSI oscillator is strengthening above its midpoint. The next major hurdle for the bulls is a support level that was in place from early May to early June.
BTC/USD daily chart
Chart created with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter