Bitcoin rallies to a three-month high amid a bullish outlook
Bitcoin rallied on Thursday to a three-month peak, resuming gains after a two-day hiatus amid a positive outlook as positive momentum dominates the crypto market.
The currency is targeting the coveted $100,000 once more with strong cash inflow into bitcoin exchange funds in the US, boosting liquidity.
The Price
Bitcoin rose 2.4% today at Bitstamp to $96,399, the highest since February, with a session-low at $94,141.
On Wednesday, bitcoin lost 0.2%, the second loss in a row under pressure from the stronger dollar.
Market Value
The market value of cryptocurrencies rose by over $50 billion today to $3.110 trillion, the best since February.
Bullish Outlook
The crypto market moved within a limited range last week, which opened the way for a strong higher breakout in upcoming sessions.
Periods of calm sideways trading in the crypto market are usually followed by aggressive one-sided breakouts, with bitcoin likely surpassing $100,000 soon.
Bitcoin Exchange Funds
US bitcoin funds had inflows of over $3 billion over the past 9 days, with the series of increasing inflows capped by a drop of $56 million on Wednesday.
US dollar expands gains to two-week high amid positive trade developments
The US dollar rose in European trade on Thursday against a basket of major rivals, expanding the gains for the third straight session and hitting a two-week high amid positive developments for the US trade negotiations with major partners.
The dollar is also boosted as the odds of a US interest rate cut in May receded, with investors now awaiting important US unemployment claims and industrial data later today.
The Index
The dollar index rose 0.45% today to 100.08, marking a two-week high, with a session-low at 99.61.
On Wednesday, the index rose 0.45%, marking the second straight profit amid a positive outlook for trade negotiations.
The index lost 4.4$ in April, marking the third monthly loss in a row, and the heftiest since November 2022 as investors lost confidence in US assets.
Trade Developments
Chinese reports said the US has communicated with China recently to discuss tariffs, with President Donald Trump saying there’s a high probability of reaching a deal with China.
He also pointed to potential trade deals with India, South Korea, and Japan soon, as he seeks to utilize his tariffs to force beneficial results.
US Rates
Several Fed officials don’t believe there’s an urgent need to review monetary policies soon.
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in May stood at just 8%.
The odds of such a cut in June stood at a healthier 65%.
Gold skids to two-week trough as the dollar rebounds
Gold prices fell in European trade on Thursday on track for the third loss in a row, plumbing two-week lows under pressure from the stronger US dollar.
The dollar’s rebound comes as global trade tensions receded, while the odds of a Fed rate cut in May dropped as well.
The Price
Gold prices fell 2.05% today to $3221 an ounce, the lowest since April 15, with a session-high at $3290.
On Wednesday, gold lost 0.9%, the second loss in a row as the dollar muscled up.
Gold surged 5.3% in April, the fourth monthly profit in a row on haven demand as the US-China trade war flared back then.
The Dollar
The dollar index rose 0.4% on Thursday, expanding the gains for the third straight session and scaling a two-week high at 100.03 against a basket of major rivals.
A stronger dollar makes the greenback-denominated gold futures less attractive to holders of other currencies.
Trade Developments
Chinese reports said the US has communicated with China recently to discuss tariffs, with President Donald Trump saying there’s a high probability of reaching a deal with China.
He also pointed to potential trade deals with India, South Korea, and Japan soon, as he seeks to utilize his tariffs to force beneficial results.
US Rates
Several Fed officials don’t believe there’s an urgent need to review monetary policies soon.
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in May stood at just 8%.
The odds of such a cut in June stood at a healthier 65%.
SPDR
Gold holdings at the SPDR Gold Trust fell 2.87 tons yesterday to a total of 944.26 tons, the lowest since April 9.
Euro extends losses on interest rate gap concerns
The euro fell in European trade on Thursday against a basket of major rivals, expanding the losses for the third straight session against the dollar and plumbing two-week lows amid concerns about a wide US-eurozone interest rate gap.
The European Central Bank is widely expected to cut interest rates in June, while the Federal Reserve is unlikely to change policies this month.
The Price
The EUR/USD price fell 0.35% today to $1.1287, the lowest since April 16, with a session-high at $1.1331.
The pair closed down 0.5% on Wednesday, the second loss in a row as the greenback rebounded strongly.
The euro rallied 4.75% last month against the dollar, marking the third monthly profit in a row, and the largest since late 2022 following huge German stimulus plans, while Trump paused his tariffs on the EU for 90 days.
Interest Rate Gap
The US-eurozone interest rate gap expanded to 210 basis points after the European Central Bank cut rates in April, with the gap potentially expanding in upcoming months.
European Rates
Sources reported that some ECB officials see a high chance of a rate cut in June.
President of the Deutsche Bundesbank Joachim Nagel said that German recession this year can’t be ruled out.
European Central Bank President Christine Lagarde said the impact of tariffs could be seen on the PMI and unemployment numbers.
Lagarde expects the tariffs to have more of a deflationary role on prices rather than inflationary.
Markets are currently pricing in a 60% chance of an ECB interest rate cut in June.