Daily Analysis Report 17 Jan '2022

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EnclaveFX
Jan 17, 2022
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 Cryptocurrencies Review of the last week and the predictions for this week:

The cryptocurrency market attempted to grow in the preceding week. As a result, the most valuable assets improved their positions. BTC was trading at 42800.00 (+1.2%), while ETH was trading around 3300.00 (+3.5%). The BNB coin has reclaimed the third position and is currently trading at about 485.00 (+10.2%). USDT is currently trading at 1.0004 (+0.02%), while SOL is trading at approximately 148.00 (+4.5%). By the conclusion of the week, the overall market capitalization had risen to 2.051 trillion dollars. BTC’s market share has dropped to 39.55 percent.

Because there are no evident fundamental growth causes, the market’s upward trajectory is likely to be speculative. The general weakness of the US dollar, which was accompanied by high inflation in the US and investors’ fears about the US Federal Reserve’s ability to control it this year, gave support for digital currencies and other alternative assets.

Traders are paying close attention to US leaders’ remarks. Gary Gensler, the head of the US Securities and Exchange Commission (SEC), skirted the subject of whether ETH is security in an interview with CNBC, claiming that the commission does not make general legal guidance. Companies that gather money from citizens and offer them profits, according to Gensler, may be subject to securities regulations. He also emphasized the importance of establishing legal frameworks that allow investors to obtain all relevant information from bitcoin startups before investing. The SEC continues its case against Ripple, claiming that the XRP coin constituted security and that its management broke US law when it was created. Ripple’s lawyers are attempting to obtain an explanation from the regulator as to why it deems XRP to be secure while numerous other currencies, including ETH, are not, implying a prejudice on the part of the agency. In this scenario, Gensler’s failure to comment on the status of ETH could signal the regulator’s weakness and Ripple’s chances of winning the lawsuit. At a Senate hearing on Tuesday, US Federal Reserve Chairman Jerome Powell committed to producing a report on the prospects for a national digital currency (CBDC) shortly, which would be a significant step toward developing a digital dollar. Powell also stated that CBDC would not drive private stablecoins out of the market and coexist.

According to Bloomberg sources, the potential of introducing a stablecoin backed by the US dollar by PayPal Holdings Inc. is worth highlighting from the financial sector news. According to company employees, the new currency should facilitate the expansion of payments and the security of clients. The product is currently under development and is pending regulatory approval in the United States. Meanwhile, Visa Inc., in partnership with ConsenSys, is working on a technical solution for employing state digital currencies in regular transactions. The corporation’s management stated that it has already held conversations with numerous central banks. Customers will use CBDC to make payments at any location that accepts Visa cards once the new solution is implemented. Corporation staff studied small companies in nine countries and discovered that 24% are ready to accept digital currency payments this year. The public’s continuous adoption of crypto assets is forcing Visa Inc. and other large financial companies to expand their cryptocurrency offerings, which is unsurprising. Finally, it was revealed this week that Tesla Inc. is planning to sell some of its products in exchange for DOGE and SHIP tokens. Payment mechanisms are currently being tested, but no purchases have been made. Given Elon Musk’s unwavering support for digital assets, particularly DOGE, it’s safe to expect that payments in cryptocurrencies will be allowed soon.

Most cryptocurrency prices are expected to consolidate or fall further in this week.

 Key Releases for this week:

United States of America

The dollar is losing ground against the yen and has a shaky relationship with the pound and the euro. Investors are paying close attention to statements made by US Federal Reserve officials about the country’s high inflation rate. Philadelphia Fed President Patrick Harker said yesterday in an interview with CNBC that the current price increase required immediate response since it is more resilient than previously projected. Three or four rate increases are expected this year to correct the problem, according to the official. President of the Chicago Fed, Charles Evans, had a similar sentiment, but he believes that three rises would be the most acceptable. Indeed, the most recent data indicates that inflationary pressures in the US economy are increasing. The December producer price index numbers, which were released yesterday, were no exception, with a YoY increase of 9.7%. The core producer price index came in at 8.3 percent, which was higher than market estimates. The December retail sales results in the United States were disappointing today. Their volume fell by 1.9 percent instead of the projected 0.1 percent, which could be due to the Omicron outbreak, which is preventing purchases.

Eurozone

The euro is losing ground against the pound and the yen, but its performance against the dollar is more uncertain.

The trade balance report for the Eurozone announced today was disappointing. Instead of rising to 7.6 billion euros in November, the indicator declined by 1.5 billion euros. At the same time, import payments increased by 32.0 percent, while export income increased by just 14.4 percent, owing to a significant increase in oil and gas export prices to European countries. In terms of the good news, it’s worth mentioning that European businesses fared well during the second wave of the coronavirus pandemic. Eurozone finance ministers recognized this at a meeting on Monday, according to Reuters sources. The number of bankruptcies in European enterprises was lower than projected, mainly to the efficiency of the Eurozone’s national liquidity support measures, which totaled 2.3 trillion euros. According to the official, business support measures can be maintained for a long time as long as the total debt of enterprises continues to rise.

United Kingdom of Great Britain

The pound is rising versus the euro, decreasing against the yen, and fluctuating against the dollar.

The November GDP figures for the United Kingdom were released today, and they were favorable. After dropping to 0.2 percent a month earlier, the British economy increased by 0.9 percent, returning to pre-pandemic levels. However, some experts believe that the GDP indicator will fall again in December-January, as the next wave of the Omicron coronavirus will be factored into the calculations. The service sector and retail commerce, both of which have been aggressively recovering up to this point, maybe the hardest hit. In response to these figures, Chancellor Rishi Sunak stated that the government would continue to support the economy with subsidies, loans, and tax advantages for enterprises.

Japan

The yen continues to gain ground versus its main rivals, the pound, the dollar, and the euro.

Japan released its December data on the price index for corporate products today. It was –0.2% on a month-over-month basis and 8.5 percent on a year-over-year basis. This was the second-largest increase after the 9.2% increase in November. An increase in wholesale prices could drive Japanese businesses to shift costs to consumers, causing consumer inflation to rise, putting it closer to the goal level of 2.0 percent. The JPY’s stance is bolstered by media reports that Bank of Japan officials are exploring the idea of hiking the rate, despite the country’s insufficient rate of price growth.

Australia

The AUD is losing ground against its key rivals, the EUR, GBP, USD, and JPY.

The Omicron coronavirus outbreak continues to put pressure on the Australian dollar, as do data on Chinese imports released today. According to December statistics, the volume of products imported into China fell from 31.7 percent to 19.5 percent, much lower than predictions of 26.3 percent. China remains Australia’s most important commercial partner, yet recent data suggests that sales of Australian goods and raw resources to China may be declining. The Australian housing market numbers for November, released today, were favorable. The number of housing loans climbed by 7.6%, while the volume of real estate investment rose by 3.8 percent.

Oil

Oil prices are attempting to rise.

Investors remain optimistic about the growth of oil demand this year, as the governments of the world’s top oil-consuming countries are not in a rush to impose severe restrictions in response to the Omicron pandemic and the OPEC+ participants’ capacities are still insufficient to meet market demands. China may soon transfer some of its strategic stockpiles of oil to the market, but this move is unlikely to have a long-term impact on the oil market.