Trump Drubs Biden in Meme Coins

Cryptocurrency

Summary:

Donald Trump has taken a commanding lead over Joe Biden - in the world of political meme coins, at least.

Crypto tokens linked to former President Trump have leapt in volume and value in recent weeks as the November U.S. presidential election heaves into view and the arch-rivals prepare for their first public debate.

The universe of the so-called "PolitiFi" tokens is tiny, with a combined market value of about $1 billion. A majority of those are linked to Trump, who has presented himself as a champion for cryptocurrency although he hasn't offered specifics on his proposed crypto policy.

Of the top 10 political meme coins by market value, seven are based on Trump, with many playing on Trump's Make America Great Again slogan, such as MAGA and MAGA Hat, according to crypto platform CoinGecko, while only one - Jeo Boden - is related to President Biden, CoinGecko data shows.

The largest token linked to a political figure, MAGA, trades under a ticker called TRUMP on exchanges and was launched in late August 2023. Its market value has leapt as high as $775 million in June from nearly nothing at the start of the year.

By comparison, Jeo Boden, which launched in March this year, jumped to as much as $648 million days after its launch before gradually sliding to $87 million.

Forrest Przybysz, a cryptocurrency trader and CEO of Sistine Research, says meme coins by their nature are not only highly speculative but also driven by attention cycles.

"The more attention a token can hold and maintain, usually the higher it's price will go ... he added. "Trump is an attention magnet. Therefore he is the ideal subject for a meme token."

"We should expect price and speculation on a Trump-based meme token to rise as we get closer to the election."

Political tokens are a fraction of the $46 billion market value of meme coins - hyper-speculative, volatile and risky cryptocurrencies often driven by internet jokes - which are themselves a niche segment of the broader $2.3 trillion cryptocurrencies, per Coingecko estimates.

The origins of some of the tokens are obscure and debated on social media by traders wary of a "rug pull", where investors deposit money in phony projects only to find the coin's developers have vanished with the money.

Of the top 10 biggest political tokens, which typically aim to capitalize on the increased attention on political figures ahead of elections, eight were launched between May and June this year, CoinGecko said.

"Meme coins are similar to nonfungible tokens in terms of being a bit of collectors' item. The idea is that you monetize public attention," said Yan Liberman, co-founder at crypto research firm Delphi Digital.

However, trading these tokens is easier said than done. Few, if any, are listed on the biggest centralized exchanges such as Coinbase or Binance. Most of the tokens are traded in ether or solana pairs on smaller exchanges, each typically have a market value of below $100 million and trade for fractions of a cent apiece. Trump Drubs Biden in Meme Coins_1

Questionable Legitimacy

Biden and Trump are neck-and-neck in national opinion polls. A presidential debate between the two candidates on Thursday will be a critical event five months before the Nov. 5 vote.

Traders on Polymarket, a crypto site where users place bets with stablecoins on future events, were betting on a 59% chance that Republican challenger Trump would unseat Democratic incumbent Joe Biden.

Political tokens bank on the popularity of political figures to gain traction, enticing retail investors with satirical or humorous names: "Funny is certainly an authentic big driving force of which tokens do well," said Delphi Digital's Liberman .

Trump hasn't said he endorses or backs any crypto token in his name. However, his slamming of Democrats' attempts to regulate the sector has boosted his popularity among these tokens, Liberman said.

The broader crypto industry is spending tens of millions of dollars ahead of the U.S. election to boost crypto-friendly candidates. Investor twins Tyler and Cameron Winklevoss donated $2 million in bitcoin to support Trump last week but a report said the donation was refunded as it exceeded the maximum amount allowed under federal law.

Analysts at Bitfinex said: "These tokens have turned into speculative assets themselves in terms of the election results."

Source: Reuters

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Forex

USD: Action is elsewhere until Friday

The dollar continues to lack a significant trend and remains to the topside of a two-month trading range. US interest rate volatility remains subdued and that means interest has resumed in the yen-funded carry trade. USD/JPY continues to hover just below 160 as the yen softens again, while some of the big beasts hit hard on the recent carry trade unwind – e.g., the Mexican peso – continue to recover. It seems that there is not quite enough bad news to justify short positions in expensive currencies like the Mexican peso. Additionally, the low volatility environment makes it more difficult for Japanese authorities to intervene at 160. We suspect they had been hoping for the US rates cycle to turn lower by now and be the key driver of a lower USD/JPY.

Instead, the dollar remains sidelined ahead of two key event risks later this week. Thursday night sees the first presidential debate between President Biden and Donald Trump on CNN. It may be too early to expect this, but we will want to see whether the dollar responds to who 'wins' the debate. A positive outcome for Trump could see the dollar edge higher. But the bigger market mover this week will be Friday's core PCE inflation read. Should it meet expectations of a 0.1% month-on-month reading, we suspect the short-end of the US curve can come lower and take the dollar with it. However, most of any dollar downside will be felt against the likes of the Australian dollar and the Norwegian krone, rather than against the euro.

The US data calendar is quiet today apart from what is expected to be a modest dip in US June consumer confidence. DXY to trade well within a 105.00 to 106.00 range.

EUR: National Rally says the right things

French:German yield spreads have narrowed a little and the euro has edged up after representatives of France's National Rally (RN) party have said the party will respect the nation's budget rules. However, the plan to cut EUR7bn in taxes still seems to exist – partially funded by slashing France's contribution to the EU budget. Our eurozone macro team sees continued stress here and we would therefore warn against chasing EUR/USD back to and over 1.08, since there are still many possibly bearish chapters to play out here. One of those could be the Leftist Alliance doing a little better than expected in Sunday's elections. And while bond investors will welcome soothing words from the RN about France's budget trajectory, our team suspects it is too early for the party to be making significant concessions to its manifesto.

We therefore expect that the euro will struggle to sustain a rally over the coming weeks and that key euro cross rates, such as EUR/AUD and EUR/NOK, will come lower. These moves should accelerate should US inflation indeed come in on the low side.

EUR/USD may therefore struggle to break to the topside of its 1.0660-1.0760 range.

GBP: Sterling rates look priced too close to the US

Looking at forward curves, it is remarkable that UK interest rates remain priced so close to the US. Both price around 45bp of rate cuts this year and both have a terminal rate for forthcoming easing cycles around the 3.30/3.40% area. Our conviction view this summer is that UK rates will be repriced lower starting with a rate cut in August. And this should lead to a lower pound.

We will not hear anything more from the Bank of England until after the 4 July general election now. But thereafter, we would be looking for the more dovish members of the seven who voted for unchanged rates last week to make their voices heard. Uncertain developments in the eurozone suggest EUR/GBP may struggle to break back above 0.8490 in the short term. But a cross rate like GBP/NOK could come lower over the next month if both US rates come lower and the BoE doves emerge in July.

CAD: More disinflation, more cuts

Canada publishes CPI data for May today, and we expect another inflation slowdown in line with consensus expectations. Headline CPI is seen decelerating from 2.7% to 2.6% year-on-year and the core inflation metrics may also keep inching lower.

This is the second big piece of Canadian data since the Bank of Canada cut rates on 5 June. Earlier this month, jobs data showed a slowdown in hiring in May, with unemployment ticking higher and full-time employment dropping.

The Canadian dollar has been trading gradually stronger since the June cut, largely on the back of generally supportive sentiment, higher oil prices and distance from the EU political turmoil. Still, as we expect three more rate cuts by the BoC this year, we continue to expect the loonie to be a laggard in the pro-cyclical space this summer.

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Warren Takunda

Economic

Forex

Robert Howard, a Reuters market analyst, says a rise to post-Brexit highs would be due to a combination of outcomes involving the French and UK elections.

"EUR/GBP could slide to 0.80 for the first time in eight years if Emmanuel Macron's centrist alliance does worse than expected in a French parliamentary election and the UK's pro-business Labour Party wins a 'goldilocks' majority next week," says Howard.

A fall in Euro-Pound to 0.80 would give a Pound to Euro exchange rate conversion of 1.25. The last time Pound Sterling commanded such a purchasing power was in 2016 when the UK voted to leave the European Union.

"A worse-than-predicted showing from Macron's centrist alliance would raise the prospect of either the far-right National Rally or left-wing New Popular Front unexpectedly winning a National Assembly majority – a shock which could hit the euro hard," says Howard.

Current polling suggests such an outcome is unlikely, with no party on track to score a majority. This would deliver a 'hung parliament', whereby no major changes would be enacted.

Howard says political paralysis after the French election might also be negative for the euro, "especially if accompanied by civil unrest or violence".

Pound Sterling Could Sling-shot 1.20 against Euro Says One Analyst_1

Above: EUR/GBP could fall to 0.80 (GBP/EUR to 1.25) says a market analyst.

To be sure, losing control of the legislature is not ideal for the reformist agenda of Emmanual Macron, but it is by no means a worst-case scenario for the Euro.

In fact, we have seen the Euro recover over recent days as markets prepare for such an outcome and the tail-risk of a majority for either the far left or far right fades.

"The pound, meanwhile, may benefit if Labour's expected majority is perceived to be neither too big nor too small," says Howard. He explains this would mean a majority of "perhaps around 160 seats".

Pound Sterling Could Sling-shot 1.20 against Euro Says One Analyst_2

Above: "GBP looks too strong relative to some cyclical indicators" - HSBC.

However, an analysis from HSBC says the UK election will be a non-event for the Pound.

"We are not convinced that the upcoming elections would necessarily be positive for GBP. Instead, we believe GBP remains beholden to rates and will likely be on a path of gradual weakness in the coming months," says Paul Mackel, head of FX research at HSBC.

Mackel says that with poll results largely in Labour's favour, the market is likely already positioned for such a result. Some analysts argue a Labour government would be more pro-EU, but HSBC questions what that would mean.

For example, closer alignment on defence and veterinary issues are hardly game changers. Instead, the UK would need to head towards joining the EU customs union, which Labour has ruled out.

HSBC thinks interest rates and the Bank of England ultimately matter. "GBP's strength is stretched," says Mackel, "the start of the BoE’s easing cycle should be a catalyst for a reassessment of the currency."

HSBC forecasts Pound-Dollar to end the year at 1.25, and Euro-Pound at 0.84 (Pound-Euro at 1.19).

Source: Poundsterlinglive

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Alex

Economic

Political

The coming US presidential election is one in which prices matter a lot. The inflation rate has dropped dramatically in these past two years of the Biden administration; yet it and the economy still rank as the top issues for voters. And the price that now matters the most is that political perennial — the one at the petrol pump. It is where presidential politics collides with the global oil market.

Just two months ago, in mid-April, the prospect of direct conflict between Israel and Iran led to world oil prices spiking to over $90 a barrel, with fears of worse to come. But the geopolitical premium quickly receded, and there was no major disruption of supply. The market adapted to the remapping of Russian oil trade under western sanctions resulting from the war in Ukraine, as well as the rerouting of tankers owing to Houthi attacks in the Red Sea. Meanwhile demand has not been as strong as anticipated, and high interest rates have been weighing on consumption. On the supply side, the surge of oil from the western hemisphere — led by 13.2mn barrels per day of US production — continues to flow into the market.

By the beginning of this month, oil exporters were looking at Brent prices that had started to fall into the high $70s, with the prospect of going lower. In response, on June 2 OPEC+ decided to roll over its almost 6mn barrels per day of agreed and “voluntary” cuts, with a gradual increase slated to begin in October.

In the weeks since, oil prices have rebounded, to the mid-$80s. And they could certainly go higher with the summer increase in demand, as motorists take to the road, and the risk grows of an Israel-Hizbollah war that could draw in Iran. On top of that, the onset of hurricane season adds the danger of a major storm disrupting the huge oil complex in the Gulf of Mexico and along the Gulf coast.

Political incumbents get blamed for higher petrol prices, even if their influence is limited; and they try to do something about it. In September 2000, with vice-president Al Gore and Texas governor George W Bush locked in a close race and oil prices at a ten-year high, the Clinton administration released oil from the Strategic Petroleum Reserve. During the 2012 election year, when prices at the pump hit $4 a gallon, President Barack Obama travelled to Oklahoma where he, in effect, dedicated the southern part of the Keystone pipeline system, making sure to add: “My administration has approved dozens of new oil and gas pipelines.”

But the Biden White House has made far more use of the Strategic Petroleum Reserve than any previous administration. It began releasing oil in November 2021, three months before Russia’s full-scale invasion of Ukraine, when prices were rising quickly with the post-Covid rebound in demand. The purpose, said the president, was to help solve what he called the “problem of high gas prices”. The administration subsequently released much more when the war in Ukraine created an upheaval in global oil markets. Altogether it has drawn down over 40 per cent of the total supply that was held in the reserve when the administration began. It has, however, recently been gradually adding back some supply.

What tools does the administration have to respond to rising prices in the global oil market? The most obvious is further releases from the SPR. Another option is to reach out to Saudi Arabia to put more oil back into the market sooner rather than later. Riyadh may want to avoid undermining the OPEC+ framework that it has built. But it has also emphasised being responsive to changing market conditions, and it is clearly keen to advance the potential US-Saudi strategic partnership that is under discussion.

A further option would be to allow more flexibility in the production and distribution of the different summer grades of petrol. Some in Congress will inevitably urge banning petrol exports, as they have before, but that would be deeply damaging to the credibility of the US as a reliable energy supplier.

The most recent national petrol price is around $3.45 a gallon, which a top Biden adviser recently called “too high for many Americans”. It is when prices begin to approach $4 a gallon that the political heat really begins to rise. And they could well get there over the summer and into early autumn if crude oil prices go up. Any president running for election would be striving to damp down the cost of petrol in an election year. But at a time when prices in general are at the top of voter concerns, it will certainly be a key priority for the Biden administration to prevent prices at the pump from flowing into the ballot box.

Source:Financial Times

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Economic

Stocks

Asia Open

The Asian session looks set for a slight drift higher in today’s session, with Nikkei +18%, ASX +0.64% and KOSPI +0.13%. Overnight, Wall Street faced another day of unwinding in tech, with artificial intelligence (AI)-darling Nvidia entering correction territory being the key story. That said, nine of the 11 S&P 500 sectors ended the day in the green, which suggests that market sentiments continue to lean towards risk-taking but is more of near-term positioning readjustment in place. The rotation towards value may potentially help to offer some support for the region (except growth-sensitive ), accompanied by a weaker US dollar and a tick lower in US Treasury yields.

Attention will continue to revolve around the Japanese yen as well, with the USD/JPY trading just shy of the previous intervention level of 160.20. Further jawboning has resurfaced from Japan's top currency diplomat, Masato Kanda, but as per past instances, verbal impact will likely be limited in capping the yen weakness in the absence of more concrete action. The recent Bank of Japan (BoJ) minutes do show that policymakers have left the door open for a rate hike in July. If it materialises, that will have a greater impact in driving the yen strength.

The Nikkei is slightly higher in today’s session, but the subdued gains do not offer much conviction of a sustained turnaround yet as the index treads in its broad consolidation state. Caution around upcoming BoJ policy settings may remain in place, as policymakers leaned slightly hawkish in the minutes. The Hang Seng Index (HSI) managed to stay afloat above its June low, with some rotation to laggards potentially helping to drive some positive inflows in the near-term.

China A50: Bullish momentum abates with index dipping below support confluence

The China A50 index has retraced more than 7% since May this year, with a recent break below a rising channel pattern and its daily Ichimoku Cloud support suggesting some near-term weakness in place. A look at its daily relative strength index (RSI) also reflects a move back below is mid-line, which suggests near-term downward momentum. Any bounce may have to overcome the 12,300-12,400 range to offer more conviction of buyers taking control. Otherwise, a further drift lower may seem to be the likely story, which may leave the 11,600 level on watch as crucial support. Asia Day Ahead: Where’s Next For China A50?_1

Asia Day Ahead: Where’s Next For China A50?_1

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Samantha Luan

Economic

Central Bank

Forex

Trading in the Asian session has been quiet today and is expected to remain so during the European session, given the empty economic calendar. However, Yen continues to be a significant focus among market participants. Discussions are emerging about the possibility of USD/JPY surging through the 160 level, which is currently perceived as the intervention threshold for Japanese authorities, reaching 170 in a rapid manner.

The primary driver behind this speculation is the substantial interest rate gap between the US and Japan, which is unlikely to narrow significantly anytime soon. Today's data from Japan, showing a further slowdown in business-to-business service inflation in May, does not bolster the case for BoJ to hike rates again in July. Additionally, intervention alone, without substantial market participation in buying Yen, is considered insufficient to reverse the currency's course.

Attention will also turn to Canadian Dollar later in the day with the release of Canadian CPI data. BoC Governor Tiff Macklem has stated that he does not want to ease monetary policy "too quickly," aligning with the expectation that BoC will not deliver back-to-back rate cuts in July. Stronger-than-expected inflation readings today would likely prompt BoC to maintain its current stance for longer before considering the second rate cut in this cycle.

Technically, USD/CAD's extended fall from 1.3790 suggests that rebound from 1.3589 has completed. Corrective pattern from 1.3845 is now extending with the third leg. Deeper fall would be seen to 1.3589 support, or even further to 100% projection of 1.3845 to 1.3589 from 1.3790 at 1.3534. Canadian CPI Takes Center Stage; Yen Stabilizes in Quiet Trading_1

Canadian CPI Takes Center Stage; Yen Stabilizes in Quiet Trading_1

In Asia, at the time of writing, Nikkei is up 0.72%. Hong Kong HSI is up 0.41%. China Shanghai SSE is down -0.10%. Singapore Strait Times is up 0.25%. Japan 10-year JGB yield is up 0.0099 at 1.001. Overnight, DOW rose 0.67%. S&P 500 fell -0.31%. NASDAQ fell -1.09%. 10-year yield fell -0.009 to 4.248.

Fed's Daly: We have two goals, one tool, and a lot of uncertainty

San Francisco Fed President Mary Daly, in a speech last night, discussed the ongoing challenges with inflation and the labor market. Daly remarked that the inconsistent inflation data this year has not built confidence. While recent figures are promising, it remains uncertain if the path to sustainable price stability is secure.

While, the labor market has been slow to adjust, with only a slight increase in the unemployment rate, Daly warned that "we are getting nearer to a point where that benign outcome could be less likely. "

Emphasizing Fed's situation with "two goals, one tool, and a lot of uncertainty," and Daly stressed that "policy has to be conditional" and policymakers have to "think in scenarios."

Daly outlined the possible policy responses to different economic scenarios. "If inflation turns out to fall more slowly than projected, then holding the federal funds rate higher for longer would be appropriate."

Conversely, "If inflation falls rapidly, or the labor market softens more than expected, then lowering the policy rate would be necessary."

Daly also addressed a middle-ground scenario, saying, "If we continue to see gradual declines in inflation and a slow rebalancing in the labor market, then we can normalize policy over time, as many expect."

BoC's Macklem monitoring wage growth for further moderation

BoC Governor Tiff Macklem emphasized overnight that the central bank doesn't want monetary to be "more restrictive than it has to be,". Yet he also cautioned against lowering borrowing costs "too quickly" as it could undermine progress on controlling inflation.

Macklem pointed out that although wage growth remains above pre-pandemic levels, there are signs that the labor market is rebalancing and inflation is moderating, which could reduce compensation pressures.

"Wages tend to lag adjustments in employment," he explained, adding, "Going forward, we will be looking for wage growth to moderate further."

Australia's Westpac consumer sentiment ticks up but still deeply pessimistic

Australia's Westpac Consumer Sentiment rose 1.7% mom to 83.6 in June. However, the index remains deeply pessimistic, well below neutral level of 100. Although assessments of personal finances and buyer sentiment have become less negative, concerns about inflation, interest rates, and economic growth continue to weigh heavily on consumers.

The sub-index tracking the ‘economic outlook for the next 12 months' fell -5.7% mom to 78.5, marking its lowest level since last October. In contrast, the ‘economic outlook for the next 5 years' sub-index saw a slight improvement, rising 2.1% mom to 94.1.

Regarding RBA monetary policy, Westpac noted that the upcoming Q2 CPI data, due on July 31, will be crucial. Westpac expects the update to confirm that weak demand is still exerting disinflationary pressure. This should provide RBA with sufficient confidence that upside risks are not materializing, reducing the likelihood of a rate hike.

Looking ahead

The economic calendar is empty in Europen session. Canada CPI is the main focus later in the day. US will relase house price index and consumer confidence.

USD/JPY Daily Outlook

A temporary top should be formed at 159.92 in USD/JPY and intraday bias is turned neutral first. Further rise will remain in favor as long as 157.70 resistance turned support holds. Sustained break of 106.20 and 100% projection of 151.86 to 157.70 from 154.53 at 160.37 will confirm long term up trend resumption, and pave the way to 161.8% projection at 163.97. Nevertheless, firm break of 157.70 will turn bias back to the downside for channel support (now at 156.23) first. Canadian CPI Takes Center Stage; Yen Stabilizes in Quiet Trading_2

Canadian CPI Takes Center Stage; Yen Stabilizes in Quiet Trading_2

In the bigger picture, there is no sign of long term trend reversal yet. Further rally is expected as long as 150.87 resistance turned support holds. Decisive break of 160.02 will target 100% projection of 127.20 to 151.89 from 140.25 at 164.94. Canadian CPI Takes Center Stage; Yen Stabilizes in Quiet Trading_3

Canadian CPI Takes Center Stage; Yen Stabilizes in Quiet Trading_3

Source: ActionForex

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Thomas

Central Bank

Economic

The Bank of Japan is dropping signals its quantitative tightening (QT) plan in July could be bigger than markets think, and may even be accompanied by an interest rate hike, as it steps up a steady retreat from its still-huge monetary stimulus.

Hawkish hints delivered over the past week highlight the pressure the central bank faces in the wake of renewed yen falls, which could push inflation well above its 2% target by raising import costs.

Notwithstanding a market shock or severe economic downturn, a rate hike would be on the table at each policy meeting, including July's, said three sources familiar with its thinking.

"Given what's happening with inflation, interest rates are clearly too low," said one of the sources. "Much depends on upcoming data, but a July rate hike is a possibility," another source said, a view echoed by a third source.

The BOJ kept interest rates steady around zero this month.

However, the board debated the need for a timely hike with one member signaling the chance of doing so to prevent cost pressures from pushing up inflation too much, a summary of the meeting showed on Monday.

That was largely read as a sign the bank is gearing up for near-term action.

Governor Kazuo Ueda told reporters after the meeting that a rate hike next month cannot be ruled out.

Hiking rates at the July 30-31 meeting could have a huge impact on markets, as the BOJ also intends to announce a detailed plan on how it would trim its massive bond buying and reduce the size of its $5 trillion balance sheet.

Ueda has said the BOJ could make a "sizeable" cut to its bond buying, suggesting the scale of reduction could be large to ensure markets shake off the shackles of yield curve control - a policy that was ditched in March.

As with other central banks, the focus of the BOJ would be to craft a QT plan that avoids causing unwelcome spikes in bond yields.

But concerns over the weak yen also require the QT plan to be ambitious enough to avoid underwhelming market expectations and triggering sharp declines in the currency.

The trade-off means the BOJ will likely announce a plan to trim monthly buying at a steady, set pace, while leaving some flexibility to adjust the speed as needed, the sources said.

While there is no consensus within the bank on the details, one idea being brainstormed is a design similar to the U.S. Federal Reserve's that mechanically trims buying, albeit with more flexibility.

The BOJ can do this by indicating a narrow range, instead of a set figure, at which it will trim bond buying. It can also insert an "escape clause" that pledges to slow or temporarily halt tapering if markets become too volatile, the sources said.

The bank will taper across various bond maturities in a way that does not cause distortions in the yield curve, they said.

The BOJ will hold a meeting with bond market participants on July 9-10 to collect their views on what kind of plan will work, a move one board member said was aimed at ensuring it can trim buying "to a greater extent," the June meeting summary showed.

Izuru Kato, chief economist at Totan Research and a veteran BOJ watcher, said the central bank must balance the need for exchange rate stability with the need for bond market stability.

For that reason, it may look to deepen the cuts to its bond buying each quarter.

"If the yen keeps weakening, the BOJ could do both the taper and a rate hike in July," Kato said. "Just going with a taper might not be enough to prevent the yen from falling further."