Summary:

  • European stock markets have increased their gains after the moderately optimistic beginning of trading
  • FX market remains little changed but the US dollar is bid anyway
  • Bitcoin wipes off its crazy rises made over the weekend

The beginning of the fresh week has been relatively calm thus far but we could observe rising optimism across the European equity markets. After the mediocre start, buyers have rushed into the market which has lifted the stocks all around the world. Notice the beleaguered IBEX (SPA35) has already managed to erase almost all its loss from the morning irrespective of a crisis in Catalonia. Besides, commodity prices have remained quite listless so far, iron ore price has surged 2.6% though. In turn oil prices are trading flat while gold prices are sliding 0.4% at the time of writing.

On the FX front, one may spot that the US dollar is gaining a foothold in early trading being the strongest currency in the G10 space. This move could be a ramification of the Friday’s revelations pertaining to a tax reform. On the other hand, the euro and yen are among top losers as the former awaits the ECB decision later this week while the latter suffers from the fallout of the Japanese snap election. That said, the Swedish krona is the weakest in the G10 sliding all but 0.6%, there have been no stories related to this sell-off though. Now, let’s wrap up the latest events across the markets.

No surprises in Japan – Abe’s LDP along with its junior coalition partner secured a 2/3 majority in a lower house of parliament with 4 seats yet to be decided and Shinzo Abe is set to become the longest serving prime minister in Japan. His trick with early elections turned out a better result than in UK where May’s attempt to reinforce her grip backfired at her. In Japan opposition was too fragmented to take advantage of business scandals that seemed to weaken Abe just few months ago.

The European stock markets have kicked off the day quite benignly despite a further escalation of the Catalan crisis as Prime Minister Mariano Rajoy announced an unprecedented barrage of measures to stamp his authorities on the rebel region, ouster of the Catalan leader Carles Puigdemont could take place as well. When it comes to the German stock exchange it’s worth paying attention to a technical analysis where the DE30 has gotten back to a key technical support in form of an ascending trend line.

Does history repeat itself? If so, a rally seen on Bitcoin could keep on given another fork being just around the corner. Let’s pin down some details. The Bitcoin price surged above $6000 late Friday being predominantly driven by rising expectations before the upcoming split known as a fork which could take place as soon as this Wednesday.

The beginning of the week is relatively quiet as it usually tends to be however there will be big events going forward with the ECB decision being the most important one to watch. On top of this, the BoC will make a decision on rates as well and even as the probability of an increase is low, bear in mind that the Canadian central bank hiked rates twice in the third quarter despite equivocal expectations.