February 17, 2021

UK Inflation Data Jumped Higher, Bitcoin Back Above 50K

UK Inflation Data Jumped Higher, Bitcoin Back Above 50K

European and US stock futures are trading higher today. The Dow closed at a new record high yesterday; the index posted its eighth consecutive days of gains. The shares of Salesforce led the move for the 30 stock index. The S&P 500, meanwhile, declined 0.06%, while the Nasdaq Composite fell 0.34%. Apple was the main stock that negatively impacted the tech-heavy index; it declined 1.6%. 

Forex

The British Pound recorded two back-to-back days of losses yesterday. The GBP/USD pair hit a fresh 35 months high. Inflation data was the focus for the day. Higher oil prices have fuelled inflation around the world, and the UK has also seen the influence of this as well. The forecast for the CPI was 0.6%, while the actual reading jumped to 0.7%. 

A factor that has been providing an enormous amount of a tailwind for the Sterling is the remarkable vaccine rollout. There is no doubt that vaccine will continue to pay its dividends handsomely in the coming days. 

Gold

Gold prices are under selling pressure, and traders have pushed the price towards their two week low. The major reason behind this move was primarily due to the currency strength, expressed in the dollar index value. Basically, the stronger than expected Empire State Manufacturing Index in the New York region spurred risk appetite.

Today, we are likely to see higher volatility for the precious metal as there are two important economic events that will be unfolding. Firstly, we are going to get the US retail sales number -one of the most critical data points that tells us about the health of consumer spending.

The recovery in the gold prices is hinging on the outcome of the retail data. A strong retail sales number is likely to push the dollar index higher, which means a further lower move for the yellow metal.

On the flip side, if we do see a weakness in the economic number, gold prices are likely to witness a massive spike as they have been under tremendous selling pressure. The forecast for the retail sales is 1.1%, while the previous reading was at -0. 7%

Later in the day, we are also going to get the US FOMC Meeting Minutes. Remember, the Fed Chairman said not too long ago that the Fed is in no rush to increase the interest rate or change its monetary policy stance. He also made it clear that the US economy is a long way away from achieving full employment.

Oil 

WTI crude and Brent oil Continue to trade higher because of supply disruption in the US. A historic winter storm in Texas caused the supply disruption. As long as refineries in the Houston area remain disordered, oil prices are likely to continue their upward climb.

In the medium to short term time frame, oil prices are likely to range between 55 (support) to 65 (resistance). There are greater chances that we may see a retracement in the coming days for oil prices as they have gone too far and too fast. A major catalyst for oil prices is the OPEC meeting in April, during which the cartel is expected to increase its supply, but only modestly. 

Bitcoin 

Bitcoin prices are back above the 50K price mark today. As we mentioned yesterday, there are a number of factors that are really supporting the Bitcoin price. Among all of them, it is the involvement of the US corporates that have spurred the rally.

Bitcoin traders know that they are only halfway to achieving their main price target; the actual price which Bitcoin is likely to hit in the coming days under the current momentum is the 100K price level. More adoption and other companies following the footsteps of Tesla can easily push the price towards the above Bitcoin price target. 

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