April 13, 2021

Look For Inflation Data; Bitcoin and Coinbase IPO in Focus

Look For Inflation Data; Bitcoin and Coinbase IPO in Focus

Wall Street experienced lacklustre price action yesterday, and US futures aren’t looking healthier today either. That is because investors have become hesitant to take big bets for two specific reasons. Firstly, there are concerns that US inflation data, which is due today, could bring higher volatility. This could be especially true if we see a massive increase in the inflation reading. Secondly, earnings season is about to begin, and investors would like to see how big corporates feel about the global economic recovery. 

Geopolitical Tensions 

Investors are feeling a bit more optimistic on the geopolitical front, following the report that the US Treasury Secretary isn’t going to label China as a currency manipulator in her first semi-annual FX report. There is no doubt that tensions between China and the US haven’t eased to the extent that many were hoping for under Biden’s administration, but this is a step in the right direction. The last thing investors want to see is two superpowers not getting along. 

Forex 

The Eurozone’s currency has shown strong resilience, even though there is absolute chaos on the coronavirus vaccine front in the EU. Some of the eurozone’s biggest economies, including France and Spain, have seen immensely slow vaccine rollout, which has had a negative influence on their economies. However, if we look at the Euro’s performance against the dollar, we can see that the currency has performed quite well as it has moved over 200 pips higher since the beginning of this month. 

In addition to this, we have started to see economic numbers printing a more optimistic reading. For instance, on Monday, we saw Consumer Spending jumping up by 3%, and spending data is also backing up the argument that consumers are spending. So, what we can say about the Eurozone is that despite the grim outlook, traders are still interested in pushing the currency higher, and they aren’t threatened by a delay in recovery. Of course, a lot of this is also because of the European Central Bank’s unwavering support. The ECB will be coming under the spotlight later this week when it will decide its interest rate. 

Traders should also not undermine the potential strength in the dollar index as well. Today, we are going to get the US inflation numbers. 

Chinese Data Fails to Impress 

The Chinese economic data failed to impress investors today as the headline numbers were extremely underwhelming. The Chinese exports jumped 30.6% from a year ago, and the import number rose 38.1%. The hope was to see much significant improvement in the export number, and analysts were expecting the export data to come in at 35.5%.

India Becomes The Second Worst Country 

On the Covid front, India seems to have lost control of the situation to a large extent, as it has become the second-worst country adversely influenced by the coronavirus. The WHO has also raised alarms about the ongoing coronavirus pandemic situation and said that Covid cases are increasing exceptionally, and there are over 4.4 million cases a week. 

Cryptos and Coinbase 

Bitcoin continues to trade near its all-time high as Coinbase prepares itself for its US IPO listing, which is taking place tomorrow. Coinbase having an IPO is big news for Bitcoin as it sends a very clear signal that regulators aren’t going to take that much of a tougher stance against the cryptocurrency. Coinbase’s IPO is likely to bring more money inflow for Bitcoin, and more importantly, it is also going to increase the odds of a Bitcoin ETF finally getting the green light from US regulators as well