Bitcoin, BTC/USD, Bank of Japan, USD/JPY, Market Sentiment – Talking Points
- Bitcoin bears pressing attack as Wall Street sentiment pulls back
- Bank of Japan set to deliver rate decision; USD/JPY under watch
- BTC/USD primed for another attack on the key 20,000 level
Friday’s Asia-Pacific Outlook
The post-FOMC market enthusiasm evaporated overnight in New York as Wall Street traders hit the sell button on equities and bonds. The Dow Jones Industrial Average (DJIA) fell 2.42%, while the high-beta Nasdaq-100 Index (NDX) closed 4.02% lower. Despite the risk-off move, the US Dollar fell against most of its major peers, likely caused by a steepening in the yield curve.
Asia-Pacific currencies are benefiting from the movement in US Treasury yields. The widening yield spread between the 2-year Treasury and the yield on Australian and New Zealand 2-year bonds is pushing AUD/USD and NZD/USD higher. Yesterday, New Zealand missed estimates on its first-quarter GDP growth rate. Australia, however, saw a healthy jobs figure.
The Bank of Japan is set to announce its interest rate decision today, which will wrap up the event-heavy week of central bank announcements. The Bank of England sent the British Pound tumbling overnight after it announced a 25-basis-point rate hike. Unlike the BoE, the BoJ is unlikely to hike its benchmark lending rate. Japan’s 10-year yield saw a stunning run higher as short sellers failed to capitulate against the Bank of Japan’s aggressive defense of their 0.25% yield ceiling.
However, like the Swiss National Bank (SNB), Japanese policymakers may have a surprise up their sleeve regarding policy, whether it be forward guidance or a simple change in tone. That could see the Yen potentially strengthen against the US Dollar. NZD/USD’s run higher may continue after an upbeat PMI figure for May from BusinessNZ.
BTC/USD is approaching the psychologically important 20,000 level. Bears probed the 20,000 mark yesterday but failed to break through on the intraday move. The Relative Strength Index is tracking lower within oversold territory while MACD weakness accelerates. A breach below the key level may induce additional weakness.
BTC/USD Daily Chart
Chart created with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter