Jumping right in on this week's edition of "Monday Madness," we'll first take a look at the GBP / USD pair. GBP/USD's reversal from 1.2529 holds at 1.2439, and the pair ticks up to 1.2475. This 1.2% weekly gain against the USD makes for the British Pound's best performance in nearly a month. These gains come off the back of recent speculation that EU and UK negotiators were "softening their positions."
Positive Brexit news and positive thinking isn't the only factor pushing the market up, however. PM Boris Johnson recently announced plans for significant fiscal stimulus. Furthermore, the Bank of England (BOE) has expressed doubts about its QE program and initiatives, making the UK one of the only countries with public opposition to this type of governmental monetary intervention. At least in the short term, these recent developments have given the sterling some respite amongst traders and investors.
USD / JPY traded on Friday in a thin band, as volumes stay small alongside a US holiday. This compact range for the USD / JPY, between 107.04-108.17, seems to be a result of both positive and negative news in both countries. As economic statistics such as home buying and employment rates rise, so does the case count of COVID-19 in the US and the rest of the world. Fundamentally, the market seems to be at a crossroads for the USD / JPY pair, and until there is resolution, we may continue to see tight ranges between 106.50 and 108.00 - which would be less than ideal for most traders' purposes.
For EUR/USD, the pair has since been unable to find a new direction. For three weeks in a row, the price has hovered at around 1.1200, seemingly "lifeless," as reported by FXStreetNews. Recent reports show the two economies are not at rates they were pre-COVID, but they are on the right road, and at a faster pace than anticipated. And yet, the currency pair remains at a standstill. This lack of action in the EUR / USD market shows that despite the good news, investors & traders are still wary of the long-term response and management of the current financial problem. On the US side, the Federal Reserve has promised to continue to boost the economy, the critical factor behind the profits from stocks, regardless of sentiment. During this same time, the EU has been unwilling to decide on a stimulus plan. Despite the world of difference between these two policies, neither seem to inspire enough confidence in the investing world.
Now heading into BTC/USD, it took a sharp dive on Wednesday and consolidated for a minor recovery around $9100 on Friday, amid sluggish trading conditions across the crypto area. Bitcoin, the most popular digital asset, is likely to extend its range of play in the middle of a prolonged (July 4th), weekend vacation in the US. At the time of the release, it holds $167.23 billion in Market Cap and trades about $9000, conservatively steady.
Last up is Ethereum (ETH/USD), the world's largest altcoin by market cap has stalled somewhat on the charts, with ETH struggling to show a remarkable uptrend since the first week of June. ETH was already a long way off the peaks it recorded in January-February 2020 around the time of publishing, traded at $226.42. For now, the ecosystem of Ethereum is waiting patiently for ETH 2.0 to take off., while Elon Musk, CEO of Tesla, claimed he was neither pro nor against Ethereum, adding that he would not build anything on it.
In conclusion, economic recovery across significant markets has counteracted fearing looms around Covid-19. We could imagine that "economic" stimulus and recovery, and COVID will be the preeminent themes for the rest of 2020, teetering between restoration and economic breakdowns. With each country having its stimulus policies and economic climates, alternative digital assets such as ETH and BTC seem to be one of the assets to have in your wallet if you're betting against central banking.
This Week in Finance History:
July 3rd, 1884: Charles Dow created the first modern American stock index, the Dow Jones Index. Dow's original index consisted of just 11 stocks. Nine of the 11 stocks were railroads: Chicago & North Western, Delaware, Lackawanna & Western, Lake Shore, New York Central, St. Paul, Northern Pacific, Union Pacific, Missouri Pacific and Louisville & Nashville. The other two stocks in Dow's original index were steamship company Pacific Mail and telegraph company Western Union.