Several largest American companies will publish their financial results this week. BTCUSD and XAUUSD are skyrocketing. What's going on in the markets?
Big Tech Stocks and Crypto Surged
- Gold has the biggest monthly drop since 2013 due to the hawkish Fed. The central bank claimed it might tighten the policy soon, which sent gold prices below $1800.
- Oil is falling as traders expect OPEC+ members to increase oil output at an upcoming meeting on Thursday.
- Cathie Wood’s Ark Invest filed for the creation of a Bitcoin Exchange Traded Fund (ETF), that boosted all cryptocurrencies. BTC/USD has jumped above $35,000.
- Some of the giant tech stocks rocketed to fresh records on Monday. Facebook won the dismissal of two monopoly lawsuits and surged above $350.00 for the first time in its history.
- Apple and Amazon jumped and airlines and cruise operators dropped as the reflation trade waned.
The reflation is the expectation of a return to global economic growth after the crisis (the Covid-19 pandemic). Central banks offer huge financial support (decrease rates and increase bond buys) and inflation is getting too high. These conditions are good for cyclical stocks such as banks, energy producers, cruise companies, airlines, etc. Since the Fed said it would start cutting bond buys soon – reduce the financial help, the reflation trade has waned, and all these cyclical stocks dropped, while big tech stocks rocketed.
USD/JPY has reversed to the upside due to the strong US dollar. It has even crossed the 50-period moving average, confirming the bullish momentum. It’s likely to rise to the mid-line of Bollinger Bands at 110.75. The move above it will drive the pair to the psychological mark of 111.00.
EUR/USD has reversed down and it looks like the correction is over and the pair will fall further. The breakout below the 1.1900 support will press the pair down to the low of June 21 at 1.1850. Just in case, if the pair crosses above the recent highs of 1.1950, it may rally up to the 200-day moving average of 1.2000.
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