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Forex Market Analysis: USD & Stocks Updates 10 Jan 2024

January 10, 2024

Analyzing USD Stability and Stock Market Trends

CURRENCIES:

  • Stagnant US Dollar: The US dollar remains relatively unchanged in today’s opening trade, leading to a state of uncertainty for USD pairs.
  • Consolidation Phase: The US dollar index is currently consolidating its recent upward movement. The lack of direction from the rates market is expected to persist until the release of the upcoming US inflation report on Thursday at 13:30 UK time.
  • Market Expectations: Financial markets are currently factoring in a total of 150 basis points in US interest rate cuts for the year. The initial 25 basis point adjustment is anticipated at the March 20th FOMC meeting.
  • Chart Analysis: The US dollar index chart illustrates a short-term consolidation, with last Friday’s jobs report candle acting as a constraining factor. Conflicting moving averages, including the 20-day sma supporting the dollar index and the 50-/200-day sma forming a potential negative ‘death cross,’ present a mixed outlook.
  • Fibonacci Retracement: The dollar index is positioned on the 61.8% Fibonacci retracement of the mid-July to early-October movement.

Financial Markets Analysis:

STOCK MARKET:

  • Market Turbulence: The crypto community experienced a surge in Bitcoin’s price to nearly $48,000 following an apparent announcement on X (formerly Twitter) by the Securities and Exchange Commission (SEC) regarding the approval of spot Bitcoin exchange-traded funds (ETFs).
  • SEC Chair’s Clarification: Within fifteen minutes, SEC Chair Gary Gensler declared the message as “unauthorized” and inaccurate, stating that the SEC’s X account had been “compromised,” and the tweet was unauthorized. He emphasized that the SEC had not approved spot Bitcoin ETFs.
  • Price Fluctuation: Bitcoin’s value retreated to $45,500 after Gensler’s clarification, resulting in a loss of $63 billion in market value within minutes.
  • Official Statement: The SEC, through a spokesperson, clarified that the unauthorized message on X was not made by the SEC or its staff. The agency confirmed unauthorized access to its X account and pledged to investigate the incident.
  • ETF Approval Speculation: The incident added to the market frenzy around the potential approval of Bitcoin ETFs, seen as a significant development for widespread acceptance of the cryptocurrency.
  • Market Expectations: Some applicants anticipated SEC approval on Wednesday, with trading potentially commencing on Thursday. However, Gensler’s statement contradicted these expectations.
  • Notable Applicants: Major names on Wall Street, including BlackRock and Franklin Templeton, applied for spot Bitcoin ETFs. JPMorgan Chase and Goldman Sachs offered assistance to these money managers.
  • Industry Impact: Stakeholders believe that spot Bitcoin ETFs could attract substantial capital into Bitcoin, potentially elevating its price.
  • Price Prediction: Analysts estimate that financial products related to spot Bitcoin ETFs could attract $10 billion or more in investment flows by the end of 2024, potentially pushing Bitcoin’s price higher.
  • Crypto Risks Warning: Gensler, in a recent statement, reiterated the risks associated with crypto investments, emphasizing their volatility and susceptibility to insolvency.
  • Optimistic Outlook: Despite past challenges, the crypto industry anticipates wider acceptance and regulatory clarity, with optimism surrounding Bitcoin’s “halving” in April and potential interest rate cuts in 2024.
  • Long-Term Prediction: Analysts predict Bitcoin reaching $150,000 by 2025, considering various factors, including regulatory developments and industry changes.

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