Summary:
- Bitcoin extends recent rally to post new all-time high above 11k
- US GDP rises to highest level since Q3 2014
- German inflation beats but Spanish misses; EUR little changed
- GBP continues to rise
- OPEC meeting tomorrow
The recent surge higher in Bitcoin has been incredible even by its own high standards. The price has rallied by over $2500 in the past five days to post a new all-time high above 11400. But with no fundamental developments to support this move higher, there are growing signs to suggest the market is in a bubble.
The US economy continues to perform admirably with the latest economic growth figures showing the fastest pace of expansion since 2014. Preliminary GDP for the 3rd quarter came in at 3.3% in annualised terms, inline with expectations and marking a decent rise on the 3.0% seen previously.The USDJPY briefly traded above the 112 handle following the GDP release but the market failed to hold above the level and has since pared its gains.
Inflation in the Eurozone’s most influential country has risen faster than expected according to the latest data. The German HICP for November rose by 1.8% Y/Y compared to an expected 1.7% gain and a prior reading of 1.5%. The rise will go some way to offset the earlier Spanish HICP reading which remained steady at 1.7% Y/Y with a rise to 1.9% expected. The market reaction to the release was fairly subdued and the Euro remains little changed on the day.
It was remarkably tumultuous Tuesday’s afternoon on the British pound as it soared, collapsed and then surged again on the newest revelations surrounding Brexit. Today’s trade has been more subdued but the pound is making steady gains across the board and is looking more likely to to retest its 2017 peak against the US dollar around the 1.36 handle in the coming weeks.
Once again there are quite high expectations ahead of OPEC meeting. The street sees a 9-month extension until the end of 2018. OPEC has admitted of late, that rebalancing was too slow and therefore another production cut is not unlikely. Taking this into account and given high compliance with the accord, the extension is almost a done deal. However, investors have some concerns. Is OPEC able to keep a recent rally in oil prices?