Coinbase tumbles 15% at its market debut, triggering a move lower in the Nasdaq-100 index, but gold and oil are well bid as the dollar’s weakness continues
The US dollar continued its weakening trend that started Tuesday when inflation data exceeded expectations. As such, the EUR/USD traded close to 1.20 without quite reaching it, the AUD/USD is up over a hundred points since the start of the trading week, and the USD/JPY corrects from highs.
Cryptocurrency exchange Coinbase made its debut as a public company yesterday. Valued at over $100 billion, Coinbase is larger than the NYSE and the Nasdaq combined. Although it lost about 15% during its first trading day, the first day/week after an IPO is rarely relevant to the future evolution of a company’s share price.
The tech sector in the United States was affected by Coinbase’s decline. The tech-heavy Nasdaq-100 ended the day almost 1.5% lower, which may be a mere correction in an otherwise bullish market.
In Europe, stock indices continue their steady rise. The German DAX remains well bid above 15,000 points, as does the UK’s FTSE100 which finds buyers above 6,850.
Commodities denominated in dollars have advanced because of the US dollar’s decline this week. The most notable rise is the WTI crude oil price, which went above $63. Gold also trades with a bid tone as the market appears to have formed a double bottom pattern below the $1,700 mark.
The European session is light on economic data, so the focus today is on the North American session. Investors will have the chance to check the health of the US consumer as the retail sales data is due. Also, the Philly Fed manufacturing index will provide insight into the manufacturing sector. The day ends with a couple of Federal Open Market Committee (FOMC) members holding speeches.
Markets to Watch
The Gold, GBP/USD, and EUR/JPY markets are in focus today.
Gold formed a possible double bottom and now struggles at the neckline. A break higher opens the gates toward the measured move seen at over $1,800 and will further put pressure on the dollar. However, it would not be the first time when the gold price and the dollar moved higher together, so investors should also be prepared for a divergence.
Cable formed a similar pattern to gold, although the price action that followed the second bottom is still in its incipient phase. The bullish divergence with the RSI suggests that the upside is the path of least resistance, but more strength is needed until the pattern completes.
The EUR/JPY pair is forming a possible triangle as a reversal pattern. The 130 round number proves to be tough resistance as the market still hovers around it, unable to find strength for more continuation. A move below the lower edge of a triangle should trigger more weakness.
Winners and Losers
The dollar remains weak across the board as the EUR/USD pair builds energy to break above 1.20. European equities, however, are well bid, fueled by this week’s announcement that the European Commission will seek EUR 800 billion from international financial markets.