Federal Reserve, Earnings, and Cryptos Dominate the Week. It has been an exciting week for market participants. Among the big news this week was the Fed meeting and the eventual interest rates announcement. Investors also looked forward to today’s job numbers.
The week has been extremely interesting for cryptocurrencies, which have dropped like a rock. The descent began on Monday and accelerated on Thursday when Bloomberg reported about an investigation on Bitfinex.
To starters, Bitfinex is one of the largest cryptocurrencies exchange in the world. Each day, the company processes transactions worth millions of dollars.
The current investigation is about the company’s product called tether, which the management claims, is pegged to the dollar. It is also about the claims that the company manipulates the pricing of bitcoin and other currencies.
As of this writing, bitcoin, ethereum, ripple, and litecoin are all down 28%, 23%, 39%, and 35% respectively.
This week saw mixed results for the cryptocurrencies with gold up by 10 basis points. This is because of gold’s relationship with the dollar, which has also fallen by 58 basis points.
Crude oil was also down this week following a report by EIA that showed a rise in inventories in the United States. The report came after another one by API, which showed more drawdown than expected.
As of this writing, WTI was down 53 basis points while Brent was down 153 basis points for the week.
Remember, in the short term, the buildup in inventories could continue as the maintenance season for the oil refineries near.
Corn was up 123 bps while Soybeans was up by 58 bps.
This week, global stocks fell led by Germany, whose DAX dropped by 373 bps. In Asia, the Nikkei, Shanghai Composite, and the Hangseng were down 151, 270, and 167 basis points respectively.
In Europe, as mentioned, the biggest losses were from Germany. It was followed by Stoxx and FTSE, which fell by 271 and 373 bps. DAX’s fall was associated with Deutsche Bank, which reported the third annual consecutive loss. In 2017, the bank had a loss of $2.3 billion, part of which was because of the U.S tax reform.
Another German-centric scandal also reared its ugly head today as Deutsche Bank was fined $70 million by the CFTC (U.S. Commodity Futures Trading Commission) for manipulation of the ISDAFIX benchmark.
As of this writing, the U.S futures show that the Dow, S&P, and NASDAQ will lose 249, 253, and 257 basis points unless something changes. Remember, this week saw blowout earnings from the biggest companies in the country including Google, Amazon, Microsoft and Apple.
This week, the Fed held its final meeting with Yellen as chair. In the meeting, the Fed left interest rates unchanged and projected three more rates hikes this year. Investors expect rate hikes in March, June and December.
Today, the Bureau of Labor statistics released the jobs numbers for January that beat analysts’ expectations. According to the bureau, the economy created 200K jobs in January against the analysts’ expectations of 184K.
The unemployment rate remained steady at 4.1% while the hourly wage growth was in line with analysts’ expectations of 0.3%. The rise in wages was the fastest since the economic crisis.
Following the news, the dollar rose by 37 basis points against the Euro and 61 basis points against the pound.
For the week, the dollar was little changed against the pound and 38 basis points lower than the pound.
Next week, the earning season will continue to dominate the market. The main companies to release their earnings will be: Panasonic, Ryanair, Sysco, Aramark, BNP Paribas, Chipotle Mexican Grill, Cummins, General Motors, S&P Global, and Walt Disney among others.