Trading Weekly: 25th November 2024

Each week, we bring you our concise overview of key global economic events, market data and significant developments in traditional finance and digital assets set to shape the week ahead.

Summary:

• BTC has taken a breather ahead of $100,000. The upward momentum has been enthusiastic, but measured pull backs are healthy.?
• At the same time, investors are buying end 1Q25 BTC call spreads ?– all encouraging signs for investors.
• On the lookout this week for Fed Minutes, US PCE and confidence, and inflation data from Tokyo.

Crypto:

• BTC hit up against the $100,000 hurdle, with $438 Mio leaving the EFTs (after 5 solid days of inflows).? The pull-back to where we are now c. $92,000 is a healthy (letting the steam out) correction and the bull move remains intact. USDT has fallen back to par on off-ramping; think this can be a dip buying opportunity.
• In options, BTC call spreads are trading for the end of 1Q25, with the 20/25 delta wings commanding a not so egregious 5 vol premium at 65%.
• Use any pull-backs to $86,000-88,000 as dip buying opportunities. Very much targeting at least $100,000 for Christmas – who knows maybe people focus Black Friday / Cyber Monday $$ on allocating to their 401k’s as the new administration is very likely to be a Thanksgiving table topic.

Backdrop:

Setting the stage for the rate path… all eyes to the FOMC minutes and to core PCE Core to read the December FOMC tea leaves.

Fed speak discussing US economic conditions has echoed Powell (i.e. a December cut isn’t a done deal and pause is a possibility); hawk Bowman opined disinflation has already?stalled. Core PCE deflator, the Fed’s preferred gauge for underlying inflation, bottomed in June at 2.6%, but is expected to uptick to 2.9% into year end. Household and business expectations will be scrutinised, as will consumer confidence; and hopes are that a decisive Republican sweep will have lifted both uncertainty and the mood.

Dollar strength buttressed by a positive view of the US economy and potential tariffs; DXY holding 106; averaging >105 for the last month.? Consider buying CHF and YEN as a defensive diversifier. WTI <$70 (just) in hopes of an Israel- Hezbollah ceasefire.

On the radar:

It may be a holiday shortened week with the US closed for Thanksgiving, but there’s a lot to look forward to, most especially US October PCE data and the November FOMC minutes.

We're also tracking inflation reports out of the euro area, Tokyo and Australia. On growth, look out for 3Q GDP from Canada, Sweden, Turkey and India.

On the policy side, the BOK is expected to hold rates, Nigeria to hike and NZ to cut.

• FOMC minutes from 6-7 Nov. out on 26 Nov. Fed cut 25bp cut on 06Nov and fed-speak has been more hawkish since. Don’t expect comments around how the incoming administration could shape future policy decisions.
• UK government aims to cut welfare bill on 26 Nov; CBI warn Labour’s hikes will lead 50% of business to cut jobs.
• G-7 foreign ministers?meeting in Fiuggi and Anagni, Italy, through Nov. 26.
• US core PCE deflator (Fed's preferred inflation gauge) on 27 Nov; ?f/c 2.8% (prior 2.7) with an upward bias to 2.9% into year end.? Given the Fed’s 2% target and recent more hawkish Fed speak, expectations for a Dec cut now at 56%.
• Germany headline inflation on 28 Nov; f/c 2.5% yoy on base effects; core HICP inflation f/c 3.5%yoy.
• Euro-Area Flash Inflation on 29 Nov; headline f/c 2.2 yoy (prior 2%) on base effects from fuel; core f/c unchanged at 2.7% yoy.
• Tokyo CPI on 29 Nov; core inflation (excluding fresh food) f/c to climb to 2.2% yoy (1.8% prior) - underscores the BOJ’s thesis that inflation is gathering pace.
• Turkey 3Q GDP on 29 Nov; f/c -0.2% qoq and 2.3% yoy (vs 0.1% qoq and 2.5% yoy in 2Q24); the 50% policy rate has dented growth.
• Canada 3Q GDP on 29 Nov; f/c 1.9%yoy (prior 2.1); government spending and investment were the 2Q growth drivers and have likely faded. BoC likely to return to a neutral policy stance.

Disclaimer

Zodia Markets (UK) Limited (No. 13360649) is registered with the United Kingdom Financial Conduct Authority (Firm Reference 954558) under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 in respect of its activities in cryptoassets only. Registered address: 1 Basinghall Avenue, London, EC2V 5DD.

Zodia Markets (UK) Limited is also a Money Services Business registered with FinCEN in the United States, MSB Registration Number 31000244063837.

Zodia Markets (Ireland) Limited (No. 698195) is registered and supervised by the Central Bank of Ireland for Anti-Money Laundering and Countering the Financing of Terrorism purposes only (Firm Reference C453607) under the Criminal Justice Act 2010 to 2021. Registered address: 36 Dame St, Temple Bar, Dublin, Ireland, D02 EF64.

Zodia Markets (Jersey) Limited (No. 125434) is registered in Jersey and supervised by the Jersey Financial Services Commission as a Virtual Asset Services Provider and for the conduct of Investment Business (Class A), Firm Reference IB7800. Registered address: No 1 Grenville Street, St Helier JE2 4UF.

Trading Weekly Newsletter Disclaimers – Digital Assets: Trading in digital assets carries a high level of risk and may not be suitable for all investors. The value of digital assets can fluctuate significantly and may result in significant loss. You should carefully consider your investment objectives, level of experience, and risk appetite before deciding to trade in digital assets. The information provided in this Trading Weekly Newsletter is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation, or which would subject us to any registration requirement within such jurisdiction or country. The information provided in this Trading Weekly Newsletter is not intended to be, and should not be construed as, investment, financial, or other professional advice. You should consult with a financial advisor or other professional to determine what may be best for your individual needs. We do not guarantee the accuracy or completeness of any information in this Trading Weekly Newsletter. We will not be liable for any errors or omissions, or for any actions taken in reliance on the information provided. The information provided in this Trading Weekly Newsletter is subject to change without notice. We reserve the right to modify or discontinue any services provided in this Trading Weekly Newsletter without notice. By accessing and using this Trading Weekly Newsletter, you acknowledge and accept the risks and limitations associated with trading in digital assets, and agree to hold us harmless for any losses or damages resulting from your use of this Trading Weekly Newsletter or the services provided on it.