Week-over-week performance:
- BTCUSD: 68,659 / -3.21%
- ETHUSD: 2,425 / -7.12%
- US10Y: 4.29% / +2 bps
- DXY: 103.8 / -0.48%
- GOLD (USD/OZ): 2,740 / -0.51%
- SPX: 5,712 / -1.91%
- NDX: 19,963 / -1.91%
- DVOL: 63.19 / +10.59%
- VIX: 21.97 / +10.96%
Looking ahead – Economic calendar:
- Tuesday, 05 November 2024: US Presidential Elections, US ISM PMIs
- Wednesday, 06 November 2024: BoJ Meeting Minutes
- Thursday, 07 November 2024: BoE Interest Rate Decision, US Jobs, FOMC
On the macro side:
This week’s market focus is firmly on the US elections and FOMC meeting.
The recent market rally has reversed, aligning with fluctuations in polls and prediction markets, which offer valuable insights for election-related trading strategies.
October’s jobs report, which came in well below expectations, likely surprised some Fed officials.
While much of the reported weakness in payrolls is attributed to disruptions from hurricanes other factors played a role.
Strikes at Boeing, layoffs in the automotive sector and other manufacturing industries, as well as slowdowns in professional and business hiring, all contributed to the disappointing figures.
After accounting for these temporary factors and adjusting for data distortions, underlying job growth appears insufficient to stabilise the unemployment rate, which we anticipate will continue rising in the months ahead.
We expect a cut of 25 bps in November.
On the FX side:
Despite relatively higher yields, the DXY has rebounded toward 103, though without strong conviction.
My outlook remains tilted toward a weaker US dollar.
However, for those not yet positioned, I would suggest holding off until after the elections, as they are likely to have a significant global impact, particularly on markets like Japan.
Chart 1: DXY 1d
On the crypto side:
BTCUSD has closely mirrored poll updates and equity movements.
Options markets are pricing in a substantial premium, with a 7-day VRP reaching 30v (!).
Friday’s options expiry shows straddles expecting a 7% move, or +/- USD 4,600, essentially factoring in a potential 3-sigma move.
I anticipate BTC to oscillate between USD 60,000 and USD 76,000 this week, with a possible dip to USD 60,000 on a Kamala win and potential new all-time highs if Trump prevails.
Leveraged liquidations will amplify short-term movements in both directions – and the short-term trade set-up I like is to fade those moves, as current VRPs are challenging to sustain over longer horizons.
Trump-related trades could include BTC, SOL, DOGE, LTC, XRP, and if old DeFi makes a comeback, ETH upside is still cheap.
Chart 2: BTCUSD 1d
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