Trading Weekly: December 2nd 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:

• This week features a significant amount of economic data releases, with Powell's remarks closely scrutinized for insights into the future rate path.
• Both OPEC and NATO are holding key meetings this week, which may impact global markets and geopolitical dynamics.
• BTC remains in a holding pattern around $95,000 as market participants await clarity on inflows and outflows.

Crypto:

• BTC’s trading status: Rejecting $100,000 seems judicious. Excessive froth is neither sustainable nor credible for an asset aiming to assert a more meaningful place in portfolios. With BTC’s 56% market dominance and a $1.89 trillion market cap, there’s an exciting road ahead for true institutional adoption. This includes advancements in product development, liquidity management, and a mature hedging market, where market makers have meaningful balance sheets.
• ETFs: November saw BTC post record inflows of $6.5 billion, with $333 million committed on Friday alone. ETH ETFs also recorded all-time high inflows, totaling $1.1 billion.
• Options: Despite the focus on the topside, the current pause ahead of $100K has led to compressed volatility and selective short-dated put buying.
• Outlook: We still believe BTC will exceed $100,000 by Christmas. Unless there’s significant fundamental or material news (like regulatory pushback), we remain a dip buyer. We suspect we're not alone, and expect frustrated resting buyers in the $92,000–$88,000 range.

Backdrop:

• Market focus: Key data to watch includes ISM, JOLTS, factory orders, durable goods, and the Beige Book. Jobs data, along with Powell’s comments, will also be closely scrutinized. Currently, 64% of the market expects the Fed to cut rates by 25 basis points in December.
• Big Tech's dominance: US stocks continue to rise, with derivatives giant JPM projecting 3–4% gains into year-end, potentially taking the S&P 500 to 6,300. However, we are less optimistic and believe manufacturing needs to prove itself to justify these elevated levels.
• USD strength: The greenback has remained firm, reasserting its haven status. Trump’s warning to BRICS about excessive tariffs if they abandon the dollar has further bolstered its position. The DXY index is comfortably above 106.
• Global political and economic tensions: France faces government instability as the current administration teeters on the brink of collapse. Germany is mired in political and economic uncertainty, while the UK braces for a critical economic assessment from the CBI. In China, yields are plummeting as the PBOC is expected to step in with rate cuts.

On the radar:

Economic calendar highlights:

• US manufacturing ISM data exceeded expectations, with lower prices paid and higher employment figures. Key upcoming events include JOLTS and services ISM tomorrow, culminating with non-farm payrolls on Friday. Powell’s comments will be the highlight of the week.
• OPEC meets on December 5 to finalize output targets. While aggregated production rose in October after declines in August and September, the group’s resolve to support prices has seen higher supply contributions from non-members.

Inflation updates:

• CPIs from Sweden, Switzerland, and Turkey are due this week. Additionally, policy meetings are scheduled in Poland and India.
• Major companies reporting include Salesforce, Canadian banks, Dollarama, Hewlett Packard Enterprise, Kroger, Lululemon Athletica, Marvell Technology, Naspers, Prosus, Samsara, and Synopsys.

Global developments:

• China’s Caixin and official PMIs remain just above expansionary territory, and markets are hopeful for further PBOC rate cuts and stimulus.
• France’s government is on the brink of collapse, with Marine Le Pen supporting a no-confidence vote.
• South Korea’s CPI (forecast: 1.7% YoY) for December 3 would mark the third consecutive month below the Bank of Korea’s 2% target.
• Sweden’s CPI is forecast at 1.9% YoY, aligning closely with the Riksbank’s 2% target.
• Swiss CPI is expected to rise to 0.8% YoY (headline) and 1.9% (core), influenced by energy and base effects. The SNB’s target range of 0–2% suggests rate cuts could begin in 2025.
• Turkey’s CPI is forecast at 46.3% YoY (down from 48.6%), with hopes for a rate cut in December.
• South Africa’s GDP for Q3 2024 is expected to grow 0.5% QoQ and 1.1% YoY. The country also assumes the one-year G20 presidency this week.
• NATO foreign ministers meet in Brussels from December 3–4, while the OECD releases its economic outlook on December 4.

Upcoming European data:

• Poland’s rate decision (expected unchanged at 5.75%) is scheduled for December 4. The market anticipates rate cuts in 2025.
• The UK’s CBI economic forecast will be released on December 5.
• France’s industrial production data, Germany’s factory orders, and US payrolls (forecast 4.2%) are also due this week.
• German industrial production, expected on December 6, will likely reflect ongoing challenges, including domestic political instability, a struggling auto sector, and potential US tariffs.

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.

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