Morning Commentary: The Other Fish in the Sea

Foreign Exchange - Morning Commentary
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Alan Rose
Alan Rose
Foreign Exchange Senior Trader
Global equities are taking a breather today from the euphoria that has been driving them higher in June, primarily propelled by the hope and promise of lower U.S. and global interest rates. The global interest rate market does not share the same confidence about the future sustainability of the U.S. and global economy as G7 interest rates continue to be suppressed and remain near their most recent lows. As for the U.S. dollar (DXY) today, the DXY index has stabilized after four straight days of declines.
 
We spend a lot of time analyzing the impact interest rates, equities, and commodity prices have on the U.S. dollar (DXY) and the impact the U.S. dollar has on these other mainstream asset classes. As G7 interest rates have collapsed over the past weeks and geopolitical tensions have risen in the Middle East, two other investments have been on the move and have been rising sharply.
 
One traditional safe haven investment during times of uncertainty is gold. Gold has been on the march and is up for the sixth day in a row. It is at or near six-year highs fueled by lower G7 interest rates, a weaker U.S. dollar, and an increase in Middle East tensions. The other investment that has been on the march higher is Bitcoin. Bitcoin had a meteoric rise in 2017 only then to collapse. Bitcoin prices hit their lowest in the beginning of this year, but starting in March they began to rise and have since almost tripled and are higher for the fifth day in a row.
 
It is somewhat understandable that other types of investments are attracting investment flows during these uncertain times.  The simultaneous rise of gold and Bitcoin will need to be monitored as market indicators of investor’s need to find alternatives when uncertainty and a lack of confidence is on the rise.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
  • U.S. home prices measured by the S & P Case-Shiller National Home Price index came in mixed for the month of April. Compared to April 2018, national home prices rose by 3.5% in April, which was down from the 3.7% rise in March. However, the 10-city composite index rose 2.3% YoY up from the 2.2% rise in the March. Las Vegas saw the sharpest price increases with gains of 7.1% followed by Phoenix with a gain of 6.0%.
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