As reported yesterday, bitcoin’s break of $226 had little follow-through. In the past 24 hours not much has changed. The lack of continuation persists with prices moving aimlessly around the $226 level. The day’s low stands at $221 per coin and the high at $229.73. We are currently trading in the middle of today’s range at $226.87 on BTC-E. As usual, bitcoin prices are trading at a small premium on rival exchanges OKCoin ($230) and BitStamp ($234).
In our two previous updates we cautioned against reading too much into the $226 breakout. The $226 swing high is weak resistance. With the medium and longterm trends firmly to the downside, we would need to see a much stronger rally before we can classify the move upward as a change in trend. A clearing of the $266 level may lead to this. On the downside, to restart the bearish trend we would need to see a break of the $162 mark. For the time being both of the important levels are relatively far away but we may adjust them depending on the price action going forward.
The Winklevoss twins plan to launch a new US-based bitcoin exchange. The project is called Gemini (the zodiac sign for twins). The website emphasizes the fact that the exchange is based in the USA:
”Gemini operates fully in the United States. We work exclusively with American banks; your dollars never leave the country”
Gemini will follow all regulations and consumer protections laws:
”We are working with federal and state governments to launch in full compliance with all Bitcoin regulations and consumer protection laws”
The marketing focus is clearly being placed on the security aspect. They claim to have assembled the nation’s top security experts and financial engineers to make sure Gemini stays secure. Furthermore, the company says that because of its banking partnership, dollars kept on the exchange will be eligible for FDIC insurance. Gemini is not yet open to the public.
The dollar trimmed gains against the other major currencies on Friday, after downbeat U.S. housing and manufacturing reports, but the greenback still continued to trade at a 12-year peak as risk aversion continued to dominate.
In a report, the National Association of Realtors said that U.S. existing home sales rose by 2.4% in December to 5,040 million units from a revised total of 4,920 million units in November. Analysts had expected existing home sales to hit 5,060 million units last month.
Separately, research firm Markit said the U.S. flash manufacturing purchasing managers' index fell to 53.7 this month from 53.9 in December, disappointing expectations for a rise to 54.0.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.34% to 94.98, still close to the session's 12-year highs of 95.77.
EUR/USD eased off 11-year lows of 1.1118 to stabilize at 1.1268, down 0.83% for the day.
The euro remained under broad selling pressure after European Central Bank President Mario Draghi announced on Thursday that the bank will make monthly purchases of €60 billion per month, starting in March and continuing until late 2016.
Earlier Friday, data showed that the Markit preliminary composite PMI, which measures activity in the manufacturing and services sectors in the euro area, rose to 52.2 this month from 51.4 in December. Analysts had expected the index to rise to 51.8 in January.
In Germany, the preliminary manufacturing PMI ticked down to 51.0 this month from 51.2 in December, while the preliminary services PMI rose to 52.7 in January from 52.1 the previous month.
Markit also said that France's preliminary manufacturing PMI rose to 49.5 this month from 47.5 in December, while the services PMI fell to 49.5 in January from a reading of 50.6 in December.
The pound held steady against the dollar, with GBP/USD at 1.5017, just above an 18-month trough of 1.4951 hit earlier in the day.
Sterling showed little reaction to an earlier report by the Office for National Statistics showing that U.K. retail sales rose 0.4% in December, beating expectations for a 0.6% decline, after a 1.6% increase the previous month.
Year-on-year, retail sales increased by 4.3% last month, more than the expected 3.0% rise, after a 6.4% advance in November.
Elsewhere, USD/JPY declined 0.74% to 117.64, while USD/CHF climbed 0.71% to 0.8771.
The commodity-linked currencies were broadly weaker. AUD/USD plummeted 1.12% to fresh five-and-a-half year lows at 0.7933, while NZD/USD slid 0.39% to two-and-a-half year lows of 0.7473.
USD/CAD pulled away from a nearly six-year peak of 1.2456 and consolidated at 1.2409, up 0.23% for the day. The loonie found some support after Statistics Canada said that retail sales rose 0.4% in November, exceeding expectations for an uptick of 0.1%, after a flat reading the previous month.
Core retail sales, which exclude automobiles, increased by 0.7% in November, compared to expectations for a 0.5%. October's figure was revised to a 0.1% rise from a previously estimated 0.2% gain.
A separate report showed that Canada's consumer price inflation slipped 0.7% in December, confounding expectations for a 1.0% decline, after a 0.4% fall the previous month.
Core CPI, which excludes the eight most volatile items, fell 0.3% last month, in line with expectations, after a 0.2% downtick in November.
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