Stocks attempt to recover from recent declines; EURUSD hits 7-week lows

Summary:

• Stock indices bounce after heavy morning session

• EURUSD hits 7-week low, where next?

• Small declines in crypto space as China to release blockchain standards

• Top 3 charts this week: BRAComp, USDJPY, Soybean

European equities began today heavily with the ITA40 falling once more and dragging down its peers. In a recurring theme of late, the main cause of the weakness is coming from Italy with bond yields rising once more after the finance minister delivered a downbeat assessment of the country’s fiscal outlook. Having said that, while this situation looks unlikely to be resolved in a positive manner any time soon, there is only so many times that markets can discount what is essentially the same piece of bad news. It is worth pointing out that while yields have been on the rise in the past week or so, the increase has been fairly steady and not anywhere near as abrupt as the spike seen back in back in May. We’ve seen an attempt at a recovery as the day has wore on and the DE30 looks set to crucially hold above the 11715 level once more.

The rise in US yields to their highest level in several years has caused a resurgence in the US dollar in the past few weeks and the other main theme in the markets at present, namely political instability in Italy, has weighed on the Euro. Taken together it shouldn’t be too surprising that this is negative for the EURUSD, but after the world’s most popular pair hit its lowest level in more than 7 weeks today, there is some suggestion that the selling could be overdone. From a fundamental point of view, the recent news flow has been near constantly negative for this market and as such contrarian traders may be asking how many times the market can discount the same bad news.

Cryptocurrencies on the whole are trading a little lower today with the biggest declines seen in Ripple which is off by 2%. Dash is the only market of the 5 that trades in the green on the European close. On the fundamental front there’s some interesting news from China, where blockchain standards are being developed by the China Electronics Standardization Institute (CESI). Three blockchain standards, which will be probably released this year, will cover issues of smart contracts, privacy and cryptocurrency deposits as reported by China Money Network. According to Li Ming, the director of the research lab, the standards will serve as basis for other national and global standards. The standards will include, for example, information security standards, or process and method standards. A need for the international blockchain standards was stressed by several figures from the industry as the use of the technology is increasing.

For our top 3 charts this week we focus on the BRAComp, USDJPY and Soybean. More can be found here.