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Round Up – China, Gold, US Dollars and Bitcoin

James Boston
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Upbeat economic news today as China confirms 2013 GDP growth of 7.7%, here we have a positive story, not only because continued success in this major economy will no doubt impact globally, but also because of the mature restraint shown by the Chinese authorities. Proactive moves by the Communist party to tighten credit in the face of slowing growth are both politically courageous and economically responsible. This bodes well for confidence in China, and should be positively received by international markets as the world’s second largest economy allays overheating fears by proving it has the mettle to take the tough decisions when necessary.

We will however need to wait one more day to gauge the full market reaction to the Chinese news as Martin Luther King Jr. Day means no US equities or bonds are trading today. The US dollar is however active and coming off December lows of 1.38 v the Euro, a well-formed channel and no obvious obstacles opens a clear path towards 1.34, watch out for the Jobless figures on Thursday, anything significantly higher than 330k is likely to bring a premature end to this dollar rally.

Commodities are in play this week, lead by Gold, which continues to enjoy a short-term recovery, this metal’s fall from grace was once again halted in mid-December following a second test of the support line around $1,200/Oz. Momentum from this bounce looks set to persist and any clean break above $1,270/Oz in the next few days will put $1,300/Oz back on the radar as a near term target.

Everyone’s favorite virtual currency, Bitcoin, was dealt a blow as regulators in Finland have deemed it not to be either a currency or a form of electronic payment (although private transactions will continue). Finland now joins Norway and China in refusing to recognize the cyber currency for official transactions. So what next for Bitcoin? Well, markets have taken this latest setback in their stride, the notoriously volatile pseudo currency appears to have finally settled, there have been plenty of trades but little price movement over the past two weeks which begs the question are we beginning to see a maturing of this new asset class or just a temporary respite?

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