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Morning report: Bitcoin prices stall despite weak US dollar as China risk lingers

Asia-Pacific markets look to end the week on a bright note; China remains a risk to markets as Shenzhen goes on alert over Covid and BTC/USD prices stall after narrowly clearing confluent resistance.

Friday’s Asia-Pacific outlook

The US dollar and Treasury yields fell, and stocks rose in New York trading. A weaker-than-expected report from the labor department showed an unexpected rise in jobless claims for the week ending July 16. That saw Fed rate hike bets ease. The tech-heavy Nasdaq-100 Index (NDX) was the biggest gainer, led by a nearly 10% surge in Tesla. Snap, Inc. reported weak results after the bell.

WTI crude and Brent crude oil prices fell as economic growth fears accelerated. WTI crude lost around 3.5% overnight. The Energy Information Administration’s weekly report showed a 3.498 million barrel build in gasoline stocks. Meanwhile, the 1:1 RBOB/WTI crack spread fell to its lowest level since early April, suggesting lower refinery demand.

China’s Covid cases remain high, posing a risk to markets. Shenzhen stepped up containment efforts after local cases increased by 22 for Wednesday. So far, the city hasn’t ordered a broad lockdown, but high-risk apartment complexes and other buildings have been quarantined. Iron ore prices fell in China this morning. The Chinese Yuan’s position against the USD may weaken as Covid fears compound on an already precarious situation that includes mortgage boycotts amid an ailing property sector.

Australia’s services and manufacturing activity fell in July, according to purchasing managers’ indexes from S&P Global. The flash PMI manufacturing index for July fell to 55.7 from 56.2, and the services index dropped to 50.4 from 52.6. Later today, Japan’s June inflation numbers are due out. The core inflation rate for June is seen rising to 2.2% from 2.1%. That would be just 0.1% below the BoJ’s updated forecast for this year.

Notable events for July 22

  • Japan – Jibun Bank Composite PMI Flash (July)
  • Singapore – URA Property Index QoQ Final (Q2)
  • Thailand – Balance of Trade (June)

BTC/USD technical outlook

Bitcoin is struggling after prices narrowly cleared the 50-day Simple Moving Average (SMA) and a descending trendline from March. The current resistance stems from mid-June, when prices moderated after a steep decline. Prices may need a period of consolidation to allow bulls to regroup. However, dropping below 23,000 may open prices up to further downside.

BTC/USD daily chart

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This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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