Market Commentary - December 17, 2020
The value of Bitcoin, the world’s well-known cryptocurrency, has reached $21,800, hitting a new high with an increase of 11.9%. The price of Bitcoin has already surged by more than 400% this year from a low point of around $4500 in March. As some of the biggest institutions in the world, including big companies in Wall Street and multinational payment companies, are more into cryptocurrency, bringing with their capital and expertise, this may make consumer interest in it. In addition, the coronavirus pandemic and the need for safe-haven global monetary policy opening and releasing are also important point of Bitcoin's recent surge. It is reported that 63% of Bitcoin investors surveyed stated that their decision to invest in Bitcoin was affected by the coronavirus pandemic. Bitcoin seems to have something in common with safe-haven assets, such as scarcity, not much correlation with traditional financial markets.
The U.S. Federal Reserve announced to maintain close to zero interest rates unchanged. The Federal Reserve said it will buy at least $120 billion in bonds every month. The Federal Reserve said, “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.” The Dow closed at 30,154 points, down 44 points (0.1%); the S&P 500 index reported at 3701 points, up 6 points (0.2%); the Nasdaq closed at 12,658 points, up 63 points (0.5%).
Flash PMIs in Europe this month showed the economy far exceeded expectations, with manufacturers reporting strong growth by performance from German, French and UK. However, German’s largest economy was in a stricter lockdown again.
Figure 1 (Source: IS Prime): BTCUSD Daily
Headliner to Review
In the US, The F lash Services PMI dropped from 58.4 to 55.3 while Flash Manufacturing PMI dropped slightly from 56.7 to 56.5. The monthly rate of retail sales in the United States fell 1.1% month-on-month in November, which was worse than the market's expected drop of 0.3%; core retail sales fell 0.9% month-on-month, which was far below expectations, reflecting that the retail market recovery under the pandemic was worse than expected.
In Canada, CPI m/m decreased from 0.4% to 0.1%, which was slightly better than the expectation 0.0%. Wholesale Sales m/m increased from 0.6% to 1.0%, which was better than the expectation 0.7%.
Headliner to Watch
UK official bank rate is expected to remain unchanged at 0.1%.
US Unemployment Claims is expected to decrease from 853,000 to 817,000. Philly Fed Manufacturing Index is expected to decrease from 26.3 to 20.1.
SNB Policy Rate is expected to remain unchanged at -0.75%.
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Topics: Market Commentary