“The unpredictable rise of gold and Bitcoin amidst a stumbling stock market, hesitant yield, and a wavering dollar signifies a momentous shift in global markets, leaving investors both intrigued and cautious.”
Last week was marked by significant headlines that captured the attention of global investors. Bitcoin surged sharply, touching the 35k mark, while the US 10-year yield flirted with the 5% level. Major US stock indexes fell into correction territory, causing alarm bells to ring. Gold, acting as a safe haven, broke past the significant 2000 handle. The Japanese Yen momentarily dipped below 150 but managed to recover without intervention from the Bank of Japan.
The European Central Bank’s move to pause its rate hikes was highly anticipated. Meanwhile, the robust US Q3 GDP growth exceeded market expectations. Geopolitical conflicts in the Middle East added an element of unpredictability to the financial equation.
On the currency front, the Dollar secured the third spot despite its general strength. The Australian Dollar made notable strides, outpacing both the Dollar and the Yen. This uptick is supported by robust CPI data, solidifying expectations of an imminent interest rate hike by the Reserve Bank of Australia. Conversely, the Canadian Dollar emerged as the week’s weakest performer, influenced by the Bank of Canada’s decision to hold rates and growing consensus that the current rate cycle may have peaked.
In the stock market, major US indices registered declines, with the DOW, S&P 500, and NASDAQ dropping by -2.1%, -2.5%, and -2.6% respectively. Concerns over an impending economic slowdown and ongoing geopolitical strife in the Middle East weighed on market sentiment. The US 10-year yield flirted with 5% but fell short, and the Dollar Index maintained its bullish stance.
Gold and Bitcoin experienced strong rallies amidst global tensions. Gold broke the 2000 handle, driven by the international community’s appeals for a truce between Israel and Hamas. Technically, as long as support at 1953.28 holds, Gold’s bullish momentum is expected to continue.
Bitcoin’s rally is seen as a “flight to quality” amidst escalating global tensions and conflicts. Technically, Bitcoin’s pivotal resistance is at 38.2% retracement of 68986 to 15452. A sustained break of this threshold would suggest a bullish trend reversal.
EUR/CAD extended its rally following policy decisions by the Bank of Canada and the European Central Bank. The Bank of Canada held its policy rate steady, but analysts believe the rate cycle may have peaked. The European Central Bank also kept its main refinancing rate unchanged, emphasizing economic uncertainties. EUR/CAD’s recent rally is supported by these decisions.
Overall, last week’s financial markets experienced a downturn, with concerns over an economic slowdown and geopolitical tensions. Gold and Bitcoin soared, and EUR/CAD continued its upward march. Market observers are now grappling with the depth and speed of the anticipated deceleration in economic growth.