NIBA Journal - Insights from the National Introducing Brokers Association

Tracing Bitcoin’s Potential As A Store of Wealth

At its high, bitcoin had rallied close to 280 percent in the first six months of 2019 with much of that move occurring in June alone. If this move had occurred in a vacuum it would certainly be significant. However, when we add in some other interesting macro movements and events it begins to unlock the mystery of what bitcoin is and what it could eventually be. Easy Money Cycle Both gold and bitcoin were hovering near cycle lows in December of 2018 when the first hint was given that the Fed’s hiking cycle was near completion and a different direction would soon be adopted. A movement to easier monetary policy, in most cases, would be accompanied by a weakening dollar. That’s not what happened. The dollar remained relatively strong through May, bolstered by the counterbalance of concurrent increasing monetary stimulus in Europe. Since November The German 10-year yield has...

By NIBARead article

CME Updates

July 9, 2019

3 min read

What Higher Volatility Could Mean for Futures Traders in Q3

Regardless of the chosen trading strategy or even the instruments traded; results generally cycle from feast to famine. A friend of mine, Linda Raschke, once said: “The minute you think you have found the key to trading, I promise you the markets will change the lock.” The roller coaster ride that comes with any given futures or options trading strategy is not unlike how the markets themselves behave. If you need a reminder, check out a monthly crude oil chart spanning the previous two decades. The price of West Texas Intermediate light sweet crude oil has seen the $20s and the mid-$100s, and to and fro. Two Kinds of Traders Futures trend traders tend to make money as markets are trending, which is generally less than 30 percent of the time, but they experience frequent and expensive stop outs in a sideways trading environment. Futures swing traders attempting to buy...

Market Update: The Three Pillars of Markets

Jack Bouroudjian discusses interest rates, earnings and confidence — the three pillars of market fundamentals — ahead of Fed Chair Jerome Powell’s congressional testimony this week. He also covers why this time of year is critical for market participants. The post Market Update: The Three Pillars of Markets appeared first on OpenMarkets. Source: CME Open Markets - Market Update: The Three Pillars of Markets

Market Update: The Three Pillars of Markets

Jack Bouroudjian discusses interest rates, earnings and confidence — the three pillars of market fundamentals — ahead of Fed Chair Jerome Powell’s congressional testimony this week. He also covers why this time of year is critical for market participants. The post Market Update: The Three Pillars of Markets appeared first on OpenMarkets. Source: CME Open Markets - Market Update: The Three Pillars of Markets

Gold’s Relationship to the Dollar, Chinese Renminbi Is Changing

Gold prices have been on a wild ride. Between 2000 and 2011, they rose from $280 to around $1,900 per ounce before falling back to $1,050 in 2015. Currently, they are trading close to $1,300 an ounce. Gold has made similar-sized moves when priced in the Chinese renminbi (CNH). From a CNH perspective, prices rose from 2,000 to 12,000 between 2001 and 2011 before falling back to 7,000 in 2015. Currently, it’s trading near 9,000 CNH (Figure 1). The similarity in performance reflects the stability of CNH versus the U.S. dollar, staying within about a 25 percent range during the past two decades. Is Gold a Hedge for Chinese Growth? China’s economic growth sent the prices of most commodities soaring from 2001 until 2011. Many commodities, including wheat, copper, aluminum, platinum, soybean oil and crude oil have had strong positive correlations with both the “Li Keqiang” index (a narrow but...

Gold’s Relationship to the Dollar, Chinese Renminbi Is Changing

Gold prices have been on a wild ride. Between 2000 and 2011, they rose from $280 to around $1,900 per ounce before falling back to $1,050 in 2015. Currently, they are trading close to $1,300 an ounce. Gold has made similar-sized moves when priced in the Chinese renminbi (CNH). From a CNH perspective, prices rose from 2,000 to 12,000 between 2001 and 2011 before falling back to 7,000 in 2015. Currently, it’s trading near 9,000 CNH (Figure 1). The similarity in performance reflects the stability of CNH versus the U.S. dollar, staying within about a 25 percent range during the past two decades. Is Gold a Hedge for Chinese Growth? China’s economic growth sent the prices of most commodities soaring from 2001 until 2011. Many commodities, including wheat, copper, aluminum, platinum, soybean oil and crude oil have had strong positive correlations with both the “Li Keqiang” index (a narrow but...

What Happens When The U.S. Dollar Declines?

The U.S. dollar is the most important currency in the world and when it falls, everyone feels the ripples. Over 80 percent of all currency transactions involve the greenback and investors of all asset classes have learned that its ups and downs can have significant ramifications for their investments. But the dollar’s influence is even more far reaching than that – any businesses with customers outside of their own borders need to be mindful of its swings because the moves in the greenback can have a big impact on earnings and equity valuations. Dollar Connection to Gold and Oil In fact, it is hard to find a market that is not impacted by the dollar’s fluctuations. If the greenback declines, the benefits can be widespread. Commodities like oil and gold are priced in dollars so when the dollar falls, oil and gold prices are pushed higher. This drives up prices...

What Happens When The U.S. Dollar Declines?

The U.S. dollar is the most important currency in the world and when it falls, everyone feels the ripples. Over 80 percent of all currency transactions involve the greenback and investors of all asset classes have learned that its ups and downs can have significant ramifications for their investments. But the dollar’s influence is even more far reaching than that – any businesses with customers outside of their own borders need to be mindful of its swings because the moves in the greenback can have a big impact on earnings and equity valuations. Dollar Connection to Gold and Oil In fact, it is hard to find a market that is not impacted by the dollar’s fluctuations. If the greenback declines, the benefits can be widespread. Commodities like oil and gold are priced in dollars so when the dollar falls, oil and gold prices are pushed higher. This drives up prices...

Will The Fed Cut Rates in July? Six Key Dates To Watch

CME Group’s FedWatch Tool expects a rate cut soon. The Federal Reserve (Fed) meets on July 30-31 to decide whether to cut rates and if so, by how much. While some more vocal members of the policy-setting Federal Open Market Committee (FOMC) are ready to accommodate the White House and/or the bond market by cutting rates, others may be more data-dependent, meaning they want to assess and analyze the latest data to see if there are any signs of economic weakness. Here is our take on what the data releases in July 2019 might bring. July 5: Jobs Report: Data from the May report surprised with a relatively weak job creation number of 75,000. Monthly jobs data zigs and zags. Low numbers are often followed by a rebound, and that is what seems most likely. By our calculations, job growth is decelerating, yet still on a path to see 140,000...

Will The Fed Cut Rates in July? Six Key Dates To Watch

CME Group’s FedWatch Tool expects a rate cut soon. The Federal Reserve (Fed) meets on July 30-31 to decide whether to cut rates and if so, by how much. While some more vocal members of the policy-setting Federal Open Market Committee (FOMC) are ready to accommodate the White House and/or the bond market by cutting rates, others may be more data-dependent, meaning they want to assess and analyze the latest data to see if there are any signs of economic weakness. Here is our take on what the data releases in July 2019 might bring. July 5: Jobs Report: Data from the May report surprised with a relatively weak job creation number of 75,000. Monthly jobs data zigs and zags. Low numbers are often followed by a rebound, and that is what seems most likely. By our calculations, job growth is decelerating, yet still on a path to see 140,000...

By NIBARead article