Renminbi Likely To Draw Fire As Trade Tensions Mount

Bitcoin [BTC] has struggled to turn bullish over the last couple of days as its price continued to trade under $67k.

However, the entire trend might change soon as a key indicator hinted at a possible price increase that could allow the king of cryptos to touch $86k in the coming weeks or months.

The bears dominated the last week, causing most cryptos’ prices to drop, and BTC was not an exception. According to CoinMarketCap, BTC witnessed a major price correction on the 6th of June.

The coin’s price had dropped by over 4% in the last seven days. At the time of writing, BTC was trading at $66,344 with a market capitalization of over $1.3 trillion.

However, Ali, a popular crypto analyst, recently posted a tweet highlighting a fact that gave hope for a price increase. As per the tweet, BTC’s mining cost was $86,668.

If historical trends are to be considered, then BTC’s might begin a bull rally soon, as it has always surged above its average mining cost.

AMBCrypto then analyzed Glassnode’s data to find out how miners were behaving while BTC’s mining cost touched $86k. We found that they have intent to sell.

This was evident from the massive dip in its miners’ net position change, showing that miners were not confident in BTC and hence chose to sell their holdings.

Miners’ balance also registered a decline over the past few weeks.

Since miners were exerting selling pressure on BTC, AMBCrypto planned to take a look at other datasets to find whether BTC would remain bearish.

AMBCrypto’s analysis of CryptoQuant’s data revealed that BTC’s net deposit on exchanges was high compared to the last seven days’ average.

The king of cryptos’ Coinbase Premium was also red, meaning that selling sentiment was dominant among US investors. On top of that, Bitcoin’s NVT ratio registered a sharp uptick on the 15th of June.

A rise in the metric means that an asset is overvalued, which indicates a possible price correction.

Things looked even worse, as most market indicators looked bearish. For instance, the MACD displayed a bearish advantage in the market.

The Chaikin Money Flow (CMF) registered a decline and was resting well under the neutral mark. BTC’s Relative Strength Index (RSI) was also under the neutral mark.

These indicators suggested a further price decline.

Nonetheless, BTC’s price had touched the lower limit of the Bollinger Bands. Whenever that happens, it hints at a northward price recovery in the coming days.

Despite the significant financial market turbulence and pronounced currency fluctuations that several East and Southeast Asian economies have faced this year, the situation is not a mirror image of the 1997 Asian financial crisis. The region's economies have shown a remarkable resilience, with the likelihood of systemic financial risks remaining low. However, caution is still warranted in certain economies, which in turn, increases the appeal of Chinese assets.

Since the beginning of 2024, the stock and financial markets in East and Southeast Asian economies have been volatile. In mid-April, major stock indices in Indonesia, the Philippines, Thailand, and Vietnam, as well as more developed markets like Japan and South Korea, saw significant declines — from 4 percent to 9 percent. Additionally, some East and Southeast Asian economies' currencies have depreciated significantly against the US dollar, averaging a 5 percent drop as of mid-May, with the Japanese yen declining by about 10 percent.

Despite these fluctuations, the situation differs from the 1997 Asia financial crisis. First, before the 1997 financial crisis, a substantial influx of hot money into East Asia inflated property and stock prices. And when this capital rapidly exited the East Asian markets, asset prices and currencies plummeted. This time, the depreciation of East Asian economies' currencies has been marked by a high-interest rate period for the US dollar, without the influx of hot money.

Second, many East Asian economies had rigid exchange rate regimes before the 1997 financial crisis, which, while superficially eliminating the risk of exchange rate volatility, made them vulnerable to collapse when risks accumulated. Today, however, most East Asian economies have more flexible exchange rate systems, where currency depreciation can both signal and reduce risks.

Third, after the 1997 financial crisis, East Asian economies began accumulating foreign exchange reserves. These reserves are now relatively sufficient, providing a buffer against risks.

East Asian economies' currencies have depreciated this year due to both external and internal factors. Externally, the frequently changing US Federal Reserve's interest rate policy has played a key role in the depreciation of East Asian economies' currencies. After the fourth quarter of 2023, global commodity prices surged, and although markets initially expected the Fed to cut rates in 2024, rising inflation reduced these expectations. The rising yield of the US' 10-year Treasury bonds also strengthened the dollar, causing East Asian economies' currencies to depreciate.

Internally, the insufficient economic resilience of some East Asian economies has been a contributing factor to currency depreciation. For example, although the Bank of Japan abandoned its policy of negative interest rates in March, the move did not exceed market expectations. Combined with rising US Treasury yields, this led to the further depreciation of the yen. The limited tightening by the Bank of Japan reflects Japan's relatively weak domestic economy, which has prevented the country from taking more aggressive measures to improve the situation.

Similarly, Vietnam's economic performance has been underwhelming. The country's economy is weighed down by the real estate sector, which has even begun affecting the banking industry, further dragging down the Vietnamese dong.

Despite these factors, the risks are controllable. As the United States' economic indicators weaken and inflationary pressure subsides, US Treasury yields will likely decline, potentially easing the depreciation pressure on East Asian economies' currencies.

The Chinese yuan, too, has depreciated against the US dollar this year, but by only 1.53 percent till mid-May. This is much less than those of other East Asian economies' currencies, which highlights the yuan's relative stability. Unlike the stock markets in many East Asian economies, which have mirrored US market volatility, the Chinese stock market has performed relatively well, especially after bottoming out in February, with its gains exceeding 10 percent. And the growing investment value of Chinese assets will likely support a stable yuan.

The trajectory of China's stock market and currency might progress independently, with little influence on the US market and dollar movements. As real estate and local debt risks gradually subside, the robust fundamentals of China's economy will also help mitigate the external shocks.

Nevertheless, in an increasingly interconnected global economy, fluctuations in East Asian and international financial markets will impact China's financial market. So, government departments need to maintain market stability by preventing the changes in the policies of the Fed and the European Central Bank from impacting the Chinese economy.

Besides, investors should carefully monitor the economic trends in the US and the European Union, especially the policy shifts of the Fed and the European Central Bank. Additionally, understanding the financial dynamics and potential risks in the East Asian economies is crucial for making informed investment decisions.

China’s industrial expansion slowed in May while retail spending beat forecasts in a sign that imbalances in the economic recovery may be easing.

Industrial production rose 5.6% in May from a year ago, the National Bureau of Statistics said Monday. That compares with April’s increase of 6.7%, and a median forecast of 6.2% in a Bloomberg survey. Retail sales accelerated, climbing 3.7% compared with a forecast of 3%.

The retail numbers are encouraging after years in which Chinese households were reluctant to spend, despite government efforts to boost consumption. China turned to export-led growth instead as companies sold their products abroad, powering a factory boom that helped offset the housing slump and keep economic growth on track.

But that strategy faces growing uncertainties as major partners erect new trade barriers that threaten the export engine. Last week, the EU followed the US by imposing hefty tariffs on Chinese electric cars.

Investment in property development plunged 10.1% in the first five months of 2024 from a year earlier, after dropping 9.8% in the January-April period. That weighed on fixed-asset investment, which rose 4% in January-May, compared with growth of 4.2% in the first four months — even though there’s been a pickup in government bond issuance to fund infrastructure spending.

The urban jobless rate was 5%, the same as in April.

China’s central bank on Monday kept a key interest rate unchanged for the tenth straight month, as liquidity in the financial system remains ample amid weak credit demand while the yuan still faces downward pressure with the US Federal Reserve reinforcing the high-for-longer message.

China rolled out a program in April that offers incentives for businesses and households to upgrade old machinery, in a bid to boost consumption. The People’s Bank of China is providing as much as 500 billion yuan ($69 billion) in cheap loans to 21 banks to encourage them to lend to technology start-ups and companies that carry out the upgrades. Beijing and local governments are offering a combined 11 billion yuan in subsidies to help consumers purchase new cars.

Late last month, China also unveiled a broad rescue package to prop up housing sales as a credit crisis was engulfing some of the country’s biggest real estate developers. It relaxed mortgage rules and encouraged local governments to buy unsold homes. Still, many investors and analysts caution that the financial incentives aren’t big enough and trial programs in several cities have shown progress can be slow.

The second week of June was, actually, very intense, characterised by the FED’s bulletins on rates of interest, the publication of American inflation for the month of May, along with the standard communication of the weekly variation in crude oil inventories and the latest reviews on the OPEC and AIE market. The ensuing market dynamics have influenced the shopping for and promoting currents the value of Brent futures attacking the resistance within the $83.50 per barrel space however with out exceeding the $83.34 threshold.

Among the primary drivers of the eighth are the choices and indications of the June 12 assembly of the Federal Reserve on rates of interest and the simultaneous publication on the change in weekly crude oil inventories. The respective bulletins stimulated opposing market currents which in flip stored the value steady throughout the $83.34-81.19 Bll vary after breaking the static resistance within the $81.40 Bll space.

The FED’s choice to maintain rates of interest unchangedsaying that for the entire of 2024 there’ll in all probability be just one lower (as highlighted by the dot plots), had a direct influence available on the market curbing expectations of progress in oil demand. This information interprets right into a stabilizing impact on the greenback, which, given the identical energy available on the market, tends to make oil (exchanged in {dollars}) dearer for consumers utilizing completely different currencies, thus lowering international demand and placing downward stress on Brent costs.

The different announcement issues crude oil inventories within the United States, forecast a lower of 1,200 million barrels in comparison with a rise of three,730 million at present. Despite the manufacturing cuts introduced by OPEC, shares rose on issues about attainable rallies because of increased summer time consumption. However, the market is pricing in vital decreases in inventories within the second half of 2024, leading to a discount in provide with bullish implications within the worth per barrel.

Further operational concepts come from publication on information referring to the US Consumer Price Index. Expectations of a CPI worth of three.4% had been crushed. As underlined by economists and operators a number of occasions, the “final mile” typically stays essentially the most difficult to journey, which is why the goals of bringing inflation again to a degree of round 2% nonetheless stay distant, due to this fact justifying the selection of holding charges unchanged and saying just one potential lower throughout 2024. Inflationary stress might have bearish implications on the value of Brent over a medium-term time horizon, particularly if the greenback maintains its present energy available on the market.

It arrived this week OPEC month-to-month report but additionally the medium-term outlook of the International Energy Agency (IEA). The former, which printed its newest month-to-month report on the oil market final Tuesday, maintained its bullish forecasts on demand progress for each this 12 months and 2025. In explicit, OPEC expects international demand for Oil will develop by 2.2 million barrels per day in 2024 and an additional 1.8 million barrels per day in 2025.

Global oil demand, based on IEA forecasts, it should stabilize round 106 million barrels per day in the direction of the tip of this decade in comparison with round 102 million barrels per day in 2023. The company warns that “slowing demand progress and rising provide have put international oil markets on observe for a big surplus this decade,” sure reads within the report.

The worth of Brent futures listed on the ICE in the course of the present week has been topic to robust stress which sees shopping for currents momentarily prevail.

After interrupting a bearish section on the finish of July 2023, the Brent future entered a lateral section which triggered the value to fluctuate on the ranges of $96-72.73/Bll alternating rising and falling phases. After testing assist on the long-term bullish trendline (mild blue) within the first week of June 2024, Brent tried to reverse the bearish development of May. The worth of the long run has certainly the primary two essential static resistances had been damaged on the upside (in yellow) on the $78.66/Bll and $81.40/Bll ranges supported by good buying volumes.

In line with the continued macroeconomic dynamics, the graph means that there could also be a possible upward race within the quick time period, which can be confirmed on the trendline breakout of the 14-period RSI chart. In a medium-long time period time horizon, nevertheless, the eventualities are nonetheless tough to interpret because of the persistence of the laterality of the development. In truth, we observe the narrowing of the differential between the bounds of the historic trendlines whose break will outline the brand new major directionality. It will due to this fact be It is crucial to observe the essential ranges of the primary assist and resistance areas. Specifically, a attainable breaking of assist on the dynamic trendline and subsequent affirmation under the static assist within the $74.75/Bll space might outline it bearish state of affairs; vice versa, one affirmation above the $84.58/Bll space and shutting past the dynamic trendline of resistance, could be the primary ones driver to seek for new relative highs (from November 2022) within the $98.75/Bll space.

Malaysia is emerging as a data center powerhouse in Southeast Asia and the continent more broadly as demand surges for cloud computing and artificial intelligence.

Over the past few years, the country has attracted billions of dollars in data center investments, including from tech giants like Google, Nvidia and Microsoft.

Much of the investments have been in the small city of Johor Bahru, located on the border with Singapore, according to James Murphy, APAC managing director at data center intelligence company DC Byte.

"It looks like in the space of a couple of years, [Johor Bahru] alone will overtake Singapore to become the largest market in Southeast Asia from a base of essentially zero just two years ago," he said.

Johor Bahru was named as the fastest growing market within Southeast Asia in DC Byte's 2024 Global Data Centre Index.

Asian stocks fell as concern over France’s political crisis stoked anxiety in global markets, while traders awaited policy decisions from major central banks due this week.

Equity benchmarks in Japan and South Korea declined while those in Australia fluctuated. Benchmark 10-year Treasuries slipped and US equity futures were little changed. Markets including Singapore, India and Indonesia are closed for holidays.

The flight to haven assets came as risk sentiment turned sour, with a gauge of global stocks falling the most in two weeks as the fallout from France’s snap parliamentary election threatened to spill over into the rest of the European Union. The greenback inched higher and traded around its highest since November. The euro steadied after falling the most in two months last week. French bond futures edged lower in early Asian trading. Last week, the spread between French and German bonds widened the most on record.

“The investor uncertainty over ballot boxes shows up again – with the last two weeks highlighting the risks of volatility despite expectations for governmental changes – start with South Africa, continue to Mexico and now throw in Europe with the surprise French election,” said Bob Savage, head of markets strategy and insights at BNY Mellon. “In the next month, fears are rising about snap election risks in Japan and Germany given the weak government support showing up in polling there.”

The People’s Bank of China is expected to inject some extra cash when it rolls over its medium-term lending facility on Monday, but most economists project it will leave the rate on the funds unchanged at 2.5%. The decision comes ahead of key data including industrial production, retail sales, home prices and property investment as policy makers implement measures to prop up the real estate market.

“The market will pay particular interest to housing price data, seeking evidence that the government’s recent efforts to stabilize the downward spiral in the property market are taking effect after 10 straight months of falling house prices,” Tony Sycamore, market analyst at IG Australia Pty, wrote in a note.

A coalition of France’s left-wing parties presented a manifesto to pick apart most of Macron’s seven years of economic reforms and set the country on a collision course with the EU over fiscal policy. Far-right leader Marine Le Pen said she won’t try to push out President Emmanuel Macron if she wins France’s snap parliamentary election, in an appeal to moderates and investors.

Days after the Federal Reserve pared back projections for US monetary easing this year, policymakers from the UK to Australia are likely to signal this week that they’re still not convinced enough about disinflation to start lowering borrowing costs themselves. Emerging market policy makers, including in Indonesia and Brazil, are also likely to push back on rate cut expectations.

Federal Reserve Bank of Minneapolis President Neel Kashkari at the weekend said the central bank can take its time and watch incoming data before starting to cut interest rates, echoing sentiment from Cleveland Fed President Loretta Mester who still sees inflation risks as tilted to the upside.

US stocks struggled to gain traction Friday after a gauge of consumer sentiment sank to a seven-month low as high prices continued to take a toll on views of personal finances. The S&P 500 closed mildly lower, led by a drop in industrial shares. Tech outperformed, with Adobe Inc. up 15% on a strong outlook. The Stoxx Europe 600 slid 1%, while France’s CAC 40 Index extended losses to over 6% last week, the most since March 2022.

This week, traders will also be watching inflation readings in Europe and the UK to help finesse bets on the global monetary policy outlook. Meantime, a swath of Federal Reserve officials including Dallas Fed President Lorie Logan, Chicago Fed President Austan Goolsbee and Fed Governor Adriana Kugler are due to speak.

In commodities, oil held its biggest weekly advance since early April as traders waited for Chinese trade data that will provide a snapshot on the economic strength of the world’s top crude importer.