GBP/USD Forecast: Cable Stands Firm Despite Hopes of Soft UK CPI

Economic

Forex

Summary:

GBP/USD has rallied 3.5% since April's low despite favourable yield differentials with the US. Yet price action on the daily and H4 charts suggests a minor pullback may be due.

It's been an interesting week for central bank watchers, as Canada and UK's inflation figures could sway bets over a potential June cut from the BOC or BOE. On Tuesday we saw the last of the three BOC's preferred CPI measures fall within their 1-3% target band. But what excited traders about a potential June cut was core CPI y/y slowing to 1.6% (below the 20% midpoint) and down to 0.2% m/m (0.6% previously). And that has generated some excitement that UK inflation data could follow suit. However, I remain apprehensive that it will soften fast enough (or at al) to give traders the confirmation of BOE they so desperately want.

Key data points head of the next BOE meeting:

CPI, PPI – May 22nd
Retail sales - May 24th
Employment, earnings – June 11th
BOE meeting – June 20th

GBP/USD Forecast: Cable Stands Firm Despite Hopes of Soft UK CPI_1

Yes, UK inflation is slowing. Yet it remains elevated relative to the BOE's % target and to the figures seen from Canada. CPI was still 1.2 percentage points above the BOE's 2% target at 3.2% in the prior report, and core CPI more than twice the target at 4.2% y/y. Average earnings less bonus are still at 6% and above the BOE's cash rate of 5.25%. Furthermore, the Citi Inflation Surprise Index (CISI) is higher for the first month in eight heading into today's inflation report, which suggests inflation may even heat up – if not remain flat at elevated levels.

The consensus estimates CPI to slow to 2.1% from 3.2%. And that is quite a drop, which risks disappointment. And a core CPI estimate of 3.6% y/y still may not tempt the BOE to signal a cut, especially with it expected to rise 0.7% m/m from 0.6% previously, with some measures of producer prices expected to also heat up.

On balance I suspect odds favour softer inflation overall, but not at a rate that could justify the BOE signalling a rate cut in June. And that leaves the potential for GBP to strengthen.

GBP/USD market positioning from the COT report:

Asset managers' net-short exposure to GBP/USD futures reached a record high three weeks ago. Since then we have seen a reduction of short exposure and increase in longs, which suggests real money account may have marked a sentiment extreme. If US data continues to soften to maintain the case of Fed cuts, it likely overshadows the potential for BOE cuts. Besides, we're not even sure if the BOE will cut as soon as June, so we may find that a weaker US dollar continues to support a higher GBP/USD in the months ahead.

GBP/USD Forecast: Cable Stands Firm Despite Hopes of Soft UK CPI_2

GBP/USD diverges from yield differentials

Cable has risen 3.5% since the April low, yet its rally has not been backed up by the 2-year yield differential between the UK and US. And that is because the US dollar has weakened on expectations of Fed cuts, although that is yet to be reflected by the bond market by lower US yields. If the bond market has is right, GBP/USD could be overvalued.

However, the 1-week and 1-month risk reversals for GBP/USD has been rising in tandem with GBP/USD which shows less put demand for the British pound in relation to the US (less downside perceived risk). It has edged lower this week in preparation for today's inflation print, presumably as downside protection in case inflation comes in softer than expected.

The daily chart of GBP/USD shows the bullish momentum is waning around the April high and two doji's have formed to show indecision. As GBP/USD is ignoring yields, GBP/USD appears poised to continue higher unless CPI data satisfies doves enough to bet on a June rate cut.

GBP/USD Forecast: Cable Stands Firm Despite Hopes of Soft UK CPI_3

GBP/USD technical analysis:

Prices are holding above the 1.27 handle and April high at the time of writing, and the daily chart shows the strength of the trend. However, the two doji's at the highs show a loss of momentum whilst the RSI (2) is forming a small bearish divergence within the overbought zone. RSI (14) is also approaching oversold, but not quite there yet. The 1-week implied volatility band implies a 68% chance GBP/USD will close between 1.2635 – 1.285 over the next week.

GBP/USD Forecast: Cable Stands Firm Despite Hopes of Soft UK CPI_4

The 4-hour chart shows that prices are effectively hugging the monthly R1 pivot despite intra-bar breaks beneath it. Yet price action is also choppy to show all may not be well at these highs for bulls. A bearish divergence is also forming on this timeframe.

I cannot help but wonder if a hotter-than-lived CPI print could mark a final burst higher for GB/USD before a retracement below 1.27 occurs and prices head for the support zone between 1.2635/45, which includes the weekly pivot point, 1-week IV band and prior swing high and low.

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Thomas

Cryptocurrency

Summary:

Bitcoin (BTC) declined by 0.80% on Tuesday, ending the session at $69,639.In contrast, ethereum (ETH) gained 3.50% on investor speculation about the SEC approving the first batch of ETH-spot ETFs on Thursday.

US BTC-Spot ETF Market Flow Data Raise Uncertainty About Demand

On Tuesday (May 21), bitcoin (BTC) declined by 0.80%. Partially reversing a 5.97% rally from Monday (May 20), BTC ended the session at $69,639.

The US BTC-spot ETF market saw total net inflows of $237.2 million on Monday (May 20). Significantly, the BTC-spot ETF market reported total net inflows for the sixth session.

However, flow data for Tuesday (May 21) suggested waning demand amidst uncertainty about a September Fed rate hike.

According to Farside Investors,

Grayscale Bitcoin Trust (GBTC) saw zero net flows on Tuesday, ending a four-day run of net inflows.Fidelity Wise Origin Bitcoin Fund (FBTC) saw net inflows of $25.8 million, down from net inflows of $64.0 million on Monday (May 20).Bitwise Bitcoin ETF (BITB) reported net outflows of $4.2 million, the first since May 1.VanEck Bitcoin Trust (HODL) saw net outflows of $5.9 million, a first since May 1.Excluding iShares Bitcoin Trust (IBIT), the US BTC-spot ETF market reported total net inflows of only $15.7 million.

Since January 11, 2024, the US BTC-spot ETF market saw total net inflows of $12,883.4 million. It remains a two-horse race in May. Since launch, IBIT And FBTC saw total net inflows of $15,700.7 million and $8,575.7 million, respectively.

However, there is uncertainty about the likely flow trends for a US ETH-spot ETF market. Investors could be holding off acquiring BTC-spot ETFs in anticipation of a US ETH-spot ETF market. Alternatively, demand has softened amidst investor uncertainty about the Fed interest rate trajectory.

Hong Kong ETF Market Gives No Insights Into Likely Demand for ETH-Spot ETFs

The Hong Kong crypto-spot ETF market gives no clues on whether a US ETH-spot ETF market could also thrive. According to Farside Investors, the HK BTC-spot ETF market has seen total net outflows of $14.8 million since launching on May 2. Furthermore, the HK ETH-spot ETF market reported total net outflows of $17.2 million.

Nevertheless, ETH gained 3.50% on Tuesday (May 21), extending the 19.23% breakout from Monday (May 20).

Bloomberg Intelligence ETF Analyst James Seyffart shared the latest ETH-spot ETF news, saying,

“UPDATE: It's happening. We have at least 5 of the potential Ethereum ETF issuers that have submitted their Amended 19b-4's in the last ~25 min. Fidelity, VanEck, Invesco/Galaxy, Ark/21Shares, & Franklin all submitted via CBOE.”

Seyffart added,

“Still a potentially long way from a launch. But these filings prove that all of the rumors and speculation and chatter have been accurate. Need to actually see SEC approval orders on all the 19b-4s AND THEN we need to see S-1 approvals. Could be weeks or more before ETFs launch.”

Grayscale filed its updated 19b-4 for the Ethereum Mini Trust earlier in the Tuesday session.

Amendments reportedly centered around the removal of staking.

The final deadline for VanEck Ethereum ETF is Thursday (May 23). Approvals could drive buyer demand for ETH. However, investors should follow flow trends after launch to ascertain demand and price trends.

Bitcoin (BTC) News Today: Spot ETF Inflows Slow as Focus Turns to ETH_1

Technical Analysis

Bitcoin Analysis

BTC sat well above the 50-day and 200-day EMAs, confirming the bullish price trends.

A BTC return to $70,000 could give the bulls a run at the $73,808 all-time high. A break above $73,808 would bring the $75,000 handle into play.

Fed chatter, US BTC-spot ETF market flow data, and ETH-spot ETF market-related updates need consideration.

Conversely, a BTC fall through the $69,000 support level could signal a BTC drop toward the 50-day EMA and the $64,000 resistance level.

With a 62.50 14-Daily RSI reading, BTC may return to the all-time high of $73,808 before entering overbought territory.

Bitcoin (BTC) News Today: Spot ETF Inflows Slow as Focus Turns to ETH_2

Ethereum Analysis

ETH held above the 50-day and 200-day EMAs, affirming the bullish price signals.

An ETH break above the $3,835 resistance level would support a move to the $4,000 handle. A return to the $4,000 handle could give the bulls a run at the March high of $4,091.

Conversely, an ETH fall through the $3,700 handle could signal a drop toward the $3,480 support level.

The 14-period Daily RSI reading, 72.14, shows ETH in overbought territory. Selling pressure may increase at the $3,800 handle.

Bitcoin (BTC) News Today: Spot ETF Inflows Slow as Focus Turns to ETH_3

Source: FX Empire

Risk Warnings and Disclaimers

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Economic

Central Bank

Forex

Summary:

Eurozone economy has been improving in 2024. But investors still anticipate an ECB rate cut in June…

ECB signals confidence in lowering rates

At their latest gathering, ECB officials decided to keep interest rates unchanged as expected but they sent clearer signals that they may start lowering them soon. At the press conference, President Lagarde said that the decline in inflation is comforting and that a few members felt sufficiently confident to cut rates.

Although she did not explicitly refer to a specific timing, a few hours after her speech, a report citing three sources close to the ECB discussion revealed that policymakers were expected to cut interest rates in June. How Will Eurozone PMIs Impact ECB Expectations?_1

How Will Eurozone PMIs Impact ECB Expectations?_1

Economy improves, but June cut a done deal

Since then, the CPI figures for April revealed that the headline rate held steady at 2.4% y/y and the core one slowed by less than anticipated, to 2.7% y/y from 2.9%. On top of that, the GDP data for Q1 pointed to a larger-than-expected rebound in Eurozone economic activity, after the bloc fell into a mild recession during the second half of 2023. According to the PMIs, the improvement continued in April, but investors remained convinced that the ECB will deliver its first quarter-point cut in June. They are pricing 40 more basis points for the rest of the year.

How Will Eurozone PMIs Impact ECB Expectations?_2

On Thursday, the flash PMI surveys for May are due to be released and the forecasts point to more improvement. That said, with ECB policymakers themselves continuing to signal a strong likelihood for a first rate reduction in June, investors are unlikely to scale back their June cut bets even if there is an upside surprise. They could however take off the table some basis points worth of cuts expected for the rest of the year, which could still prove positive for the euro.

Euro/dollar seeks opportunity to break 1.0885

From a technical standpoint, euro/dollar pulled back after hitting resistance slightly above the 1.0885 zone, which stopped the bulls from drifting north on April 9. However, the pair remains above the downtrend line drawn from the high of December 28 and above the 200-day exponential moving average (EMA), which currently coincides with the 1.0800 key support. How Will Eurozone PMIs Impact ECB Expectations?_3

How Will Eurozone PMIs Impact ECB Expectations?_3

Ergo, a better-than-expected set of PMIs on Thursday may encourage buyers to take the reins again and perhaps push the price above 1.0885. Such a move will confirm a higher high and perhaps pave the way towards the high of March 21 at 1.0930. A break higher could see scope for extensions towards the high of March 8 at 1.0980 or the psychological round figure of 1.1000, which offered resistance back on January 5 and 11.

On the downside, for the outlook to start looking bearish, the pair may need to drop below the key support area of 1.0725 as this will also take the action below the short-term uptrend line drawn from the low of April 16.

Risk Warnings and Disclaimers

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Alex

Economic

Stocks

Summary:

S&P 500 posts its 24th record this year with eyes on Nvidia.Chipmaker at heart of AI boom to report results Wednesday.

Asia stocks slipped after the S&P 500 crept to another record ahead of results from giant chipmaker Nvidia Corp. that traders see as a gauge for the sustainability of the bull market.

Shares in Japan and South Korea opened lower, while Australia’s equity benchmark climbed. Futures in Hong Kong pointed to small gains. The S&P 500 saw its 24th record this year and the Nasdaq 100 also posted a high as Nvidia edged up ahead of earnings due later today. US futures were little changed in early Asia trading.

The bar is high for Santa Clara, California-based Nvidia — whose shares have soared over 90% this year after more than tripling in 2023. Investors are waiting to see whether the poster child of artificial intelligence will be able to match the sky-high expectations surrounding the technology. The company’s revenue is expected to be buoyed by soaring demand in its data-center business.

“With markets trending upward and emotions in check, Nvidia’s performance will be pivotal in gauging the sustainability of the current market run and the potential for a more inclusive market rally,” said Mark Hackett at Nationwide.

The Reserve Bank of New Zealand and Bank indonesia are set to hold rates steady on Wednesday, while the minutes of the Federal Reserve’s latest meeting will also be released later in the day. The central bank in South Korea is expected to stand pat on Thursday.

Asian Stocks Struggle After US Hits Fresh Record_1

Treasuries steadied and the dollar was little changed after global bonds rallied on the latest sign that developed nations are finally getting a grip on inflation as Federal Reserve Governor Christopher Waller said the recent report on US price pressures was “a reassuring signal.” Australian yields were flat early on Wednesday.

Trading in Asia will likely be quieter with Singapore closed for a holiday. Gold, silver and copper consolidated near recent highs, while oil slipped after an industry report showed a jump in stockpiles.

Volatility Awaits

Stock investors are bracing for a spike in volatility, and upcoming events such as Nvidia’s earnings report can exacerbate any moves, according to Goldman Sachs Group Inc. strategists.

The bank’s measure of risk appetite hit the highest since 2021 last week, driven by optimism around economic growth and monetary policy, but momentum has slowed, the team led by Andrea Ferrario wrote.

The strategists point to CBOE Volatility Index options data that signal higher demand for hedges against sudden market declines, at a time when the gauge has dropped to historically low levels.

For Morgan Stanley’s Andrew Slimmon, there’s still plenty of room for the market to extend its gains from all-time highs.

Low expectations for equities and the preference for a 5% to 6% yield from Treasury bills suggests that markets are still in the “fear” part of the current cycle, the senior portfolio manager at the bank’s investment management arm said Tuesday.

Source:Bloomberg

Risk Warnings and Disclaimers

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Cohen

Economic

Bond

Summary:

As the trade war between the United States and China escalates, China is shrinking its holdings of U.S. bonds...

As the trade war between the United States and China escalates, China is shrinking its holdings of U.S. bonds.

The latest official U.S. capital flows data show that China's stash of U.S. Treasuries and agency bonds in the first quarter of this year fell by just under $40 billion and $10 billion, respectively, on a valuation-adjusted basis.

China is the world's largest holder of foreign exchange reserves with a stash of $3.2 trillion at the last count in April. The currency breakdown is not publicly known, but experts reckon no more than 60% of that is in dollars.

China may have the largest pile of FX reserves in the world but the biggest foreign holder of U.S. Treasuries is Japan, with almost $1.1 trillion. Flows data show that Japan's holdings of U.S. Treasuries rose by $51.4 billion in the first quarter.

This doesn't necessarily indicate outright buying or selling, and China's reduction could well be a result of Beijing choosing not to reinvest in maturing bonds. But the Japan-China comparison is instructive because of where they sit on the global geopolitical spectrum.

While the dollar is unlikely to be displaced as the dominant FX reserve currency any time soon, rising geopolitical tensions and the morphing of globalization into a world of polarized trading blocs could fray its preeminence at the edges.

Indeed, it's probably already happening. China's US Bond Shifts Put Dollar Under Geopolitical Spotlight_1

Total global FX reserves at the end of March stood at $12.33 trillion, according to the International Monetary Fund's COFER data, of which the currency composition of $11.45 trillion is reported in confidence to the IMF. The dollar's share was 58.41%, the lowest on record.

A desire on the part of many countries to distance themselves politically from the United States is emerging as one of the key drivers.

In a speech earlier this month, IMF First Deputy Managing Director Gita Gopinath said the increase in gold purchases by central banks over the last two years - the "most notable development" in global FX reserves over that period - points to this.

As Gopinath notes, despite its limited use in transactions, gold is generally viewed as a "politically neutral safe asset" which can be stored on home soil and be insulated from sanctions or seizure.

Chip, Chip, Chipping Away

Measuring FX reserve flows in a world divided into three blocs - a U.S.-leaning bloc, a China-leaning bloc, and a bloc of nonaligned countries - it is evident that the share of gold in the China bloc's total FX reserves has been rising for many years.

But that's not a trend driven solely by China and Russia, as one might expect, although China has clearly reduced its dollar exposure.

As Gopinath highlights, the share of gold in China's FX reserves more than doubled to 4.3% last year from less than 2% in 2015. During the same period, China's valuation-adjusted holdings of U.S. Treasury and agency bonds relative to total FX reserves fell to about 30% from 44%.

The share of gold in FX reserves of countries in the U.S. bloc, meanwhile, has remained broadly stable, evidence that "FX reserve managers tend to increase gold holdings to hedge against economic uncertainty and geopolitical including sanctions risk." China's US Bond Shifts Put Dollar Under Geopolitical Spotlight_2

China's US Bond Shifts Put Dollar Under Geopolitical Spotlight_2

It is the dollar, as the world's dominant currency and symbol of American hard and soft power, that is likely to suffer as geopolitical tensions encourage countries to increase their holdings of gold and other currencies.

But there is nuance within that, according to a recent paper, "Drivers of Dollar Share in Foreign Exchange Reserves," by New York Federal Reserve Bank economists Linda Goldberg and Oliver Hannaoui.

They analyze countries' geopolitical alignment with the United States through the prism of voting with the United States at the United Nations.

In general, the direct correlation between voting records and U.S. dollar share in FX reserves is weak - many nations with a low voting alignment with the United States, or which are subject to U.S.-imposed financial sanctions, are more likely to have a higher dollar share in reserve portfolios, not lower.

More specifically, however, the authors find that the countries with low voting alignment with the United States that are liable to reduce their dollar holdings are those with more than sufficient reserves to meet short-term liquidity and debt obligation requirements.

"A few countries with low geopolitical alignment with the US are responsible for much of the decline in dollar shares," the authors find. "Geopolitical considerations may bind mainly for countries already with large enough reserves to cover their precautionary liquidity needs."

Their research complements a 2022 IMF working paper by Barry Eichengreen, Serkan Arslanalp and Chima Simpson-Bell that showed reserve managers are also increasing their holdings of smaller and non-traditional reserve currencies in search for yield.

The dollar's role in global trade, financing, invoicing, and cross-border transactions is too great for it to be dislodged as the main FX reserve currency anytime soon. But geopolitical tensions may continue to chip away at it. China's US Bond Shifts Put Dollar Under Geopolitical Spotlight_3

China's US Bond Shifts Put Dollar Under Geopolitical Spotlight_3

Source: Reuters

Risk Warnings and Disclaimers

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Glendon

Economic

Summary:

Is Icahn Enterprises (IEP) a high-reward opportunity or a risky gamble? Dive deep into Carl Icahn's company, analyze its high dividend, and understand the controversies. Decide if IEP fits your investment strategy.

Icahn Enterprises (IEP) is a company unlike many others. Led by the legendary activist investor Carl Icahn, the company's holdings are primarily concentrated in a single asset: itself. This unique structure and recent stock price volatility have sparked debate among investors. Let's delve into Icahn Enterprises, exploring its past performance, current situation, and future prospects.

A Company Owning Itself

Carl Icahn's Influence: Icahn Enterprises reflects the investment philosophy and holdings of Carl Icahn. As of March 31, 2024, Icahn himself held over 57.4% of the company's outstanding shares (around 429 million shares), giving him significant control over its direction.

Investment Strategy: Icahn Enterprises focuses on acquiring undervalued assets and pushing for changes to unlock their potential. This strategy can involve taking activist stances in companies IEP holds stakes in. The company currently has holdings in various sectors, including energy, automotive, and consumer goods, but the performance of these holdings directly impacts IEP's own stock price.

Past Performance and Recent Scrutiny

Historic Highs and Drastic Drops: Icahn Enterprises has a history of significant price fluctuations. In May 2023, the stock price reached highs near $29 per share. However, following increased scrutiny over the company's structure, concerns about the underperformance of some holdings, and a broader market downturn, the price has fallen dramatically, reaching $16.70 as of May 24, 2024. This represents a decline of over 42% in one year.

High Dividend Yield: Despite the stock price decline, Icahn Enterprises offers a very high dividend yield, currently exceeding 28%. In 2023, the company distributed over $4.70 per share in dividends. This is achieved through significant distributions from its holdings.

However, some analysts argue that this payout may not be sustainable in the long run, especially if the underlying holdings underperform or IEP needs to retain capital for future investments.

Current Situation: Analyzing the Debate

Bullish Arguments: Supporters of Icahn Enterprises point to Carl Icahn's long and successful track record as an investor. They believe his activist approach can unlock value in the company's holdings and drive future price growth. The high dividend yield is also seen as an attractive feature for income-oriented investors, especially in a low-interest-rate environment.

Bearish Arguments: Critics highlight the risks associated with a company so heavily reliant on a single investor (Carl Icahn) and a single asset (itself). They express concerns about the following:

Concentration Risk: The company's performance is heavily tied to Carl Icahn's investment decisions and the performance of a relatively small number of holdings. If Icahn makes a bad investment or the market value of the holdings declines, IEP's stock price could suffer significantly.

Sustainability of High Dividends: The high dividend payout may not be sustainable in the long term. If IEP needs to retain capital for future acquisitions or the underlying holdings generate less cash flow, the company might be forced to reduce or eliminate dividends, which could further impact the stock price.

Looking Ahead: Uncertainties and Future Considerations

Earnings Performance: The upcoming Icahn Enterprises Q2 earnings report (expected in August 2024) will be closely watched for any insights into the company's financial health, the performance of its holdings, and its future dividend policy.

Future Acquisitions: Icahn's future investment decisions will significantly impact IEP. Investors will be looking for signs of diversification or strategic acquisitions that could strengthen the company's portfolio and reduce its concentration risk.

Market Volatility: The broader market environment will also play a role. Economic downturns or fluctuations in specific sectors where IEP has holdings could lead to increased volatility in the stock price.

Conclusion: A High-Risk, High-Reward Opportunity

Icahn Enterprises presents a complex investment proposition. The high potential returns from successful activist campaigns and the attractive dividend yield are countered by significant risks associated with its concentrated ownership structure, reliance on a single investor's decisions, and the potential for future reductions in its high dividend payout. Investors with a high tolerance for risk and a long-term investment horizon who are comfortable with the unique structure of Icahn Enterprises may find it appealing. However, for more conservative investors, it's advisable to wait for a clearer picture of the company's future direction, the sustainability of its high dividend, and any potential diversification efforts before considering investment.

Risk Warnings and Disclaimers

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Samantha Luan

Economic

Stocks

Summary:

Japan's Nikkei share average will rise 4.6 per cent by year end, supported by a firm corporate outlook and a solid global economy, according to equity market strategists in a Reuters poll.

The Nikkei is forecast to trade at 40,750 at the end of this year, according to the median estimate of 16 analysts polled May 13-21, up from Tuesday's close of 38,946.93.

Gains have been capped recently as local companies issued modest earnings forecasts at the peak of earnings season this month.

The index has been hovering below 40,000 since the beginning of April after hitting a record intraday high of 41,087.75 on March 22.

"Many Japanese companies made conservative annual forecasts but they are expected to raise their outlook toward the end of the year, which will lift the Nikkei," said Tomochika Kitaoka, chief equity strategist at Nomura Securities.

"And expectations for further progress in corporate governance reform will also push up share prices," he said.

Share buybacks and unwinding cross-shareholders driven by the governance change were behind the index's rally. The Nikkei has risen 16.4 per cent so far this year, following a 28.2 per cent gain in 2023.

"The U.S. economy is strong and will remain strong even if (Donald) Trump wins the presidential election," said Yugo Tsuboi, chief equity strategist at Daiwa Securities, who expects the Nikkei to be at 43,000 at the end of the year.

An upturn in the global economy will help the Nikkei to hit 44,000 before retreating to 40,500 at the end of the year, said Hikaru Yasuda, chief equity strategist at SMBC Nikko Securities.

Uncertainties about the yen's move against the dollar has also hurt sentiment the Japanese stock market, but some strategists said the negative impact of the currency's possible gain against the dollar will be limited.

The yen fell to a 34-year low of 160.245 per dollar late last month, before rebounding sharply in what traders and analysts suspected was several rounds of yen-buying intervention by Japanese authorities.

"If the yen strengthens, foreign investors may sell the Nikkei. But I expect the Nikkei to be at 40,000 at the end of this year even as the yen rises to 142 yen to the dollar because earnings of Japanese companies are on the rise," said Masayuki Kubota, chief strategist at Rakuten Securities.

Strategists also said the Nikkei is unlikely to correct 10 per cent or more in the coming three months.

"There are some potential risks, such as a deterioration of the U.S. economy and the chip boom, as well as tensions in the Middle East, but unless these things occur, the Nikkei is unlikely to fall below 35,000," said Shingo Ide, chief equity strategist at NLI Research Institute.

Source:Reuters

Risk Warnings and Disclaimers

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Thomas

Cryptocurrency

US BTC-Spot ETF Market Flow Data Raise Uncertainty About Demand

On Tuesday (May 21), bitcoin (BTC) declined by 0.80%. Partially reversing a 5.97% rally from Monday (May 20), BTC ended the session at $69,639.

The US BTC-spot ETF market saw total net inflows of $237.2 million on Monday (May 20). Significantly, the BTC-spot ETF market reported total net inflows for the sixth session.

However, flow data for Tuesday (May 21) suggested waning demand amidst uncertainty about a September Fed rate hike.

According to Farside Investors,

Hong Kong ETF Market Gives No Insights Into Likely Demand for ETH-Spot ETFs

Nevertheless, ETH gained 3.50% on Tuesday (May 21), extending the 19.23% breakout from Monday (May 20).

Bloomberg Intelligence ETF Analyst James Seyffart shared the latest ETH-spot ETF news, saying,

Seyffart added,

Grayscale filed its updated 19b-4 for the Ethereum Mini Trust earlier in the Tuesday session.

Amendments reportedly centered around the removal of staking.

Technical Analysis

Bitcoin Analysis

BTC sat well above the 50-day and 200-day EMAs, confirming the bullish price trends.

A BTC return to $70,000 could give the bulls a run at the $73,808 all-time high. A break above $73,808 would bring the $75,000 handle into play.

Fed chatter, US BTC-spot ETF market flow data, and ETH-spot ETF market-related updates need consideration.

Conversely, a BTC fall through the $69,000 support level could signal a BTC drop toward the 50-day EMA and the $64,000 resistance level.

With a 62.50 14-Daily RSI reading, BTC may return to the all-time high of $73,808 before entering overbought territory.

Ethereum Analysis

ETH held above the 50-day and 200-day EMAs, affirming the bullish price signals.

An ETH break above the $3,835 resistance level would support a move to the $4,000 handle. A return to the $4,000 handle could give the bulls a run at the March high of $4,091.

Conversely, an ETH fall through the $3,700 handle could signal a drop toward the $3,480 support level.

The 14-period Daily RSI reading, 72.14, shows ETH in overbought territory. Selling pressure may increase at the $3,800 handle.