Current US stock market remains optimistic. Most central banks around the world are still observing the progress of interest rate cuts, while a few have already entered a cycle of interest rate cuts. In the cryptocurrency market, there is a clear lack of liquidity, with significant decrease in BTC volatility and trading volume.
Last Week’s Important Information:
The US has included Japan, Taiwan, and seven other countries in its watch list for currency manipulation.
The Japanese yen has significantly depreciated, with CPI and core CPI lower than expected.
Most central banks around the world are still observing the progress of interest rate cuts, while a few have already entered a cycle of interest rate cuts.
Eurozone CPI data has been released and is in line with expectations.
US retail sales are significantly lower than market expectations.
BTC volatility has reached historical lows, with decreased trading volume. Market is closely watching the expectations of interest rate cuts.
This Week’s Highlights:
Conclusion:
The US market sentiment remains optimistic, with a slight correction on Friday, but the current trend of capital party continues.
Non-US countries are slowly entering a cycle of interest rate cuts. The Bank of Japan and the Ministry of Finance are weak and cautious in foreign exchange interventions and tightening of funds, to avoid disrupting the hard-earned economic growth and inflation after more than twenty years of delay. The yen weakened.
This week will be a relatively quiet period with not much news. The possible major fluctuations that can be observed are still in the yen and other minor currencies, or the impact brought by the release of detailed PCE data on Friday night. The majority of major cryptocurrencies and technology stocks continue to have a strong upward trend.
In the recent cryptocurrency market, there is a clear lack of liquidity, with significant decrease in BTC volatility and trading volume. Apart from the approval expectation for the ETH spot ETF, there are no other major catalysts. Expectations of interest rate cuts have become the main factor driving price trends in the short to medium term.
The US Treasury has included Japan, Taiwan, and seven other countries in its watch list for currency manipulation, although the actions of the Japanese Ministry of Finance and the Bank of Japan in foreign exchange markets are actually not as frequent as the market imagines.
The significant depreciation of the yen has led to an increase in import prices, resulting in a 2.8% year-on-year increase in Japan’s Consumer Price Index (CPI) in May, lower than expected. The core inflation rate also rose to 2.5%, remaining above 2% for 26 consecutive months, but still lower than market expectations of 2.6%.
The market has sold off the yen to nearly 160, benefiting exporters and expanding Japan’s recent trade surplus.
Several countries have also announced new rounds of interest rate decisions. Australia, Brazil, and the UK have maintained their interest rates, while Switzerland has lowered its interest rates. Most central banks around the world are still observing the progress of interest rate cuts, while a few have already entered a cycle of interest rate cuts.
Eurozone CPI has been released, with CPI rising to an annual increase of 2.6% and core inflation rising to an annual increase of 2.9%, both in line with expectations and not causing significant changes in the market.
US retail sales decreased by 0.1% month-on-month on Tuesday, far below the market’s expected 0.2% increase. This maintained the optimistic sentiment in the stock and bond markets until Friday’s slight correction. In the bond market, the yield on US 10-year Treasury bonds fell to 4.20% after the data was released on Tuesday, and then slowly climbed back to around 4.30% in the following days. The US dollar index also rose from 104.80 to 105.50.
BTC volatility has reached historical lows, with decreased trading volume, presenting a state of liquidity scarcity. BTC and ETH prices continue to fluctuate widely, and compared to the two major mainstream currencies with stronger consensus, the decline of minor currencies is relatively more severe, with continuous fund withdrawals. At the same time, due to the recent strong performance of the US stock AI sector, funds seem to be more inclined to flow into targets such as NVDA in the short term.
In short, there is a lack of visible liquidity in the overall financial market, and with the absence of major and eye-catching catalysts in the cryptocurrency market in the short term, the concept of “US stock vampire altcoins” has emerged in the market, which is not without reason. In the current market situation, the topic of interest rate cuts in the cryptocurrency market has gradually converged with the overall market. This is why we need to constantly pay attention to the overall economy.
Monday and Tuesday will see the release of various data, official speeches, and meeting minutes in the Eurozone. It is expected that the market will further push the euro lower and there will be limited upside potential. The reasons are the recent weak data in Europe, more dovish attitudes of officials, and the unstable political situation in various regions, all putting pressure on the euro.
In the US, there will also be federal government bond auctions, official speeches, new home sales, and other information on Tuesday and Wednesday, but their impact on the market is limited.
Thursday will see durable goods orders and, as usual, initial and continuing jobless claims, combined with Tokyo core CPI and industrial production data released by Japan on Friday, which may once again bring impact to the yen and other risky assets.
Finally, on Friday night Taiwan time, the US will release PCE price index, University of Michigan consumer confidence index, and inflation expectations. This will be the most important data release of the week, and financial markets may silently experience major events during our sleep or party time.
The current international situation is turbulent with events such as the sharp decline of JPY, the rise of far-right forces in Europe, and uncertainty about interest rate expectations, resulting in low visibility for the future market. The cryptocurrency market is currently experiencing visible liquidity depletion, and the attitude towards the interest rate game is clearly leaning towards the US stock market. In the absence of liquidity, any slight movement in the data can cause significant fluctuations, so caution is required in operations.
Stay tuned.
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