European and US stock futures are trading with caution as most stock averages are trading lower to kick start the week. Last week, we saw another record high on Wall Street, and most of the time, investors do adopt a cautious approach when stock indices begin to post record highs. However, the major reason for the stock futures to trade lower today is mainly that this week is immensely important for bulls and bears as we not only have some tech giants reporting their earnings, but we also have some key important events as well.
Fed and GDP
Investors will be closely watching the Fed’s two-day meeting, which is taking place this week. A lot is going to be in focus when it comes to this week. For instance, on the one hand, we have rising Delta variant cases not only in the US but across the globe. In addition to that, last week, we also see further weakness in the economic numbers, and the unemployment sector also started to show the massive recovery losing its mojo. In addition to this, we also have inflation which is running hot. The big dilemma for the Fed will be how they can balance the hawkish commentary with a dovish stance. If we look at the dollar index or Treasury bond yields, there are signs that the extra loose monetary policy is about to run its course, and the Fed is more likely to tighten the monetary policy sooner than later.
In addition to this, on Thursday, we will also get to see the US GDP numbers, which will be dissected by the market players. There is no doubt that we will see similar momentum in the GDP growth that we saw in the previous quarters. At the very best, this could be the last strong reading for the US GDP as the stimulus packages and excessively dovish monetary policy are both on the verge of changing their direction.
As for stocks, after the US market close today, it will be all about the Tesla earnings. Investors and traders will be looking at Tesla’s earnings very closely, and it is likely that Tesla’s earnings may set the tone for the tech stocks for the rest of the week as well. One particular thing that traders will be watching more closely will be the commentary from the CEO of the company. They would like to see further updates from him in terms of Tesla accepting Bitcoin. Remember, last week, Elon Musk made it clear that it is highly likely that Tesla will start taking Bitcoin to purchase Bitcoin again.
Bitcoin Bulls Are Back
Speaking of Bitcoin, the bulls are back in town, and this time it seems like they are back with a vengeance. Bitcoin is simply on fire, and the evidence of this came when the price didn’t fall like a knife when the price revisited the 30K price level more recently. It was clear at that moment that bears were completely out of energy, and the only way for the price was to move higher.
In addition to this, we also started to see last week a change in the bitcoin news flow. One of the biggest events was Elon Musk once again showing support for Bitcoin and indicating the fact that Tesla would likely start accepting Bitcoin again. Remember, it was Elon Musk’s tweet that broke the back of Bitcoin bulls at its peak. Of course, the big question for investors and traders is will the Bitcoin price continue to move higher now? And more importantly, will it reach its previous highs?
Well, let’s look at things from a fundamental perspective. It becomes clear that regulators in the US have fewer issues with Bitcoin’s existence than the last few years, and it seems more possible today that the SEC will pass the Bitcoin ETF—whenever that will happen. In terms of the bitcoin’s price action, we are more focused on the 45K price level, and once the price is above that price level, we are very likely to see some more bullish bets coming into the market.
In terms of precious metals, gold prices are holding on to their gains. There is no doubt that we are likely to see higher volatility for the gold prices this week, mainly due to the Fed meeting and the US GDP reading. The dollar index’s weakness is helping the gold price to move higher today, and we are likely to see more bullish momentum coming in when the price will cross above the 1821 mark. Bulls are likely to focus on the 1800 price mark, and as long as the price continues to trade above this, we may continue to see higher highs for the gold price.