Traditional Markets
It was a perfect play by the European Central Bank. They’ve been worrying for months about the strength of the Euro and finally, at the 90th minute, they managed to pull off a power play that brought the ball all the way to the goal line.
The timing was impeccable. On Wednesday, the ECB’s counterpart in the United States announced a more aggressive monetary policy and plans to raise their interest rates more rapidly than expected.
At the same time, a decision was expected from the ECB to end their “money printing” stimulus package very soon.
During the press conference yesterday, the ECB not only confirmed the market’s expectations by announcing an end to the stimulus as of September but they also surprised everyone by indicating that they will not be raising their interest rates until the summer of 2019.
See, while everyone was concentrating on the striker (stimulus) and expecting him to kick the ball into the goalkeeper’s hands, he actually kicked it to his teammate (interest rates) who nobody was watching.
They haven’t quite won the match just yet though. Looking at the chart of the EUR/USD, we can see that they failed to carry the Euro below the critical level of $1.15 and therefore any further downward pressure will be difficult to maintain.
Tiki-taka Stocks
The new policy divergence doesn’t seem to be affecting the stocks too much and with the US trade war expected to be notched up today, it seems they have other things on their mind.
Here’s a graph of the Dow Jones, which has been moving back and forth for most of this year without any real progress. Notice how it’s just taken a turn downward, towards the 50-day moving average (blue line).
Crypto Celebration
The reaction from the crypto market yesterday was one of delayed gratification. In the United States, the authorities have been particularly ambiguous about the legal status of cryptocurrencies over the last few years.
While it was rather clear that Bitcoin itself should not be classified as a “security” the status of coins like Ether and Ripple’s XRP has remained a question. If a token is considered a security, it has some rather extreme implications for any person or business who traded it, including sizable fines and even the possibility of jail time for hodlers.
So, yesterday’s headline was certainly a cause for celebration :
The reaction was quick and clear across the entire crypto industry. Here we can see all of the cryptocurrencies traded on the eToro platform.
Even though gravity does seem to be getting the better of the cryptos this morning, the announcement couldn’t have come at a better time. Here we can see the long-term chart of Ethereum and the beautiful bounce off the long-term trend line that the news has caused.
Now that Amecia seemingly has the freedom and security to trade Ether, this paves the way for big institutions like the CBOE and others to add Ethereum futures to their crypto offerings.
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