The German Index set an all-time high. Bitcoin rate reached 2-year high

Wednesday’s Q4 US GDP report was mixed for the dollar, with Q4 GDP revised downward (from 3.3% to 3.2% y-o-y) but still pointing to a robust economy.

The bitcoin exchange rate (BTC/USD) rose more than 6% on Wednesday, hitting a 2-year high following the successful launch of spot bitcoin ETFs in the US. The ETFs have raised more than $6 billion since they began trading on January 11, with some analysts warning of a looming supply shortage as new coins from bitcoin miners fail to keep up with demand. Additional demand has been sparked by the expected April 20 halving of bitcoin issuance. About 80% of the bitcoin supply has not changed hands in the past six months, which could exacerbate the situation and contribute to a further rise in bitcoin prices. Additionally, speculation is growing around the possible approval of spot ETFs, potentially driving higher Ethereum (ETH/USD) prices.

ECB Governing Council representative Kazaks said yesterday that the ECB should not be in a hurry to cut interest rates as there is a risk that tighter measures will be needed later. His colleague, ECB Governing Council representative Kazimir, added that the ECB has no reason to rush interest rate cuts and prefers June as the first rate cut. Swaps estimate the odds of a 25 bps ECB rate cut at 5% at the next meeting on March 7 and 32% at the next meeting on April 11.

The latest EIA report showed a larger-than-expected increase in US crude oil inventories of 4.199 million barrels last week, although much smaller than the 8.428 million reported by the API. The rise in inventories is mainly attributed to a slowdown in processing crude oil into finished products at refineries. Looking ahead, investors are eagerly anticipating the upcoming OPEC+ meeting in March to discuss extending production cuts. Producers will likely stick to voluntary production limits until at least the June ministerial meeting to help stabilize the market. In addition, uncertainty surrounding the ceasefire between Israel and Hamas, as well as ongoing Houthi attacks on ships in the Red Sea, have increased the risk premium in oil prices.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.08% yesterday, China’s FTSE China A50 (CHA50) was down 0.24% on Wednesday, Hong Kong’s Hang Seng (HK50) fell by 1.51% on the day, and Australia’s ASX 200 (AU200) was negative 0.03% on the day. The Hang Seng Index (HK50) opened higher on Thursday, reversing a decline after removing measures to curb housing demand as part of the 2024 budget, including the complete abolition of housing levies. Wednesday’s GDP report showed the city’s economy grew by 4.3% y/y in Q4 2023, the highest growth in 2 years, on the back of a rebound in inbound tourism and a recovery in private consumption.

Fresh data showed that Australian retail sales rose by 1.1% month-on-month in January 2024, reversing an upwardly revised 2.1% drop in the previous month but falling short of market consensus, which expected a 1.5% rise.