Summary:
- Stock rally continues with US markets hitting fresh record highs
- Risk-on flows weigh on Gold which drops to monthly low
- Cryptocurrenices come roaring back with Bitcoin reclaiming $4000
- Cautious Carney put the brakes on GBP rally
Stock market bulls have begun the week on the front foot with all major indices looking to end the day higher. The US is leading the charge with the US500 moving above the psychological 2500 level to post yet another all-time high.
Gold prices have extended the declines seen last week with the precious metal falling down to its lowest level of the month around $1310. For the second week in a row the market has gapped lower with a rising appetite for risk assets as seen by the move up in stock markets this morning, leading to investors exiting Gold positions.
Elsewhere, cryptocurrencies are on course for a day of bumper gains with Bitcoin moving back above $4000 and rising just shy of 10%. Last week’s panic amidst a broad sell-off has now subsided somewhat, but there remains the nagging question of whether traders have become too complacent in believing that every dip presents a buying opportunity.
It’s been a quite data on the economic calendar with the biggest event occurring just before the European close as BoE Governor Carney delivered a speech in Washington. Last week was characterised by a surge higher in the pound after a trio of positive developments saw the currency enjoy its best week since 2009.
Following a higher than expected CPI and hawkish shift in the BoE minutes, the final boost came on Friday when well-known dove Vlieghe, gave a hawkish speech suggesting that even the most dovish members were on board for a rate hike in the coming months. Against this backdrop GBP bulls had high expectations heading into Governor Carney’s speech, and his tone has been not as hawkish as some may have hoped.