Fresh optimism sinks dollar, taxman tanks Bitcoin, PMIs, central bankers eyed

The market mood is upbeat as investors shrug off tapering concerns and as a ceasefire has come into force in the Middle East. US intentions to tax cryptocurrencies weigh on Bitcoin, while gold and oil are stable. Markit’s PMIs and speeches from central bankers are scheduled throughout the day.

Risk-on – it took the market around 24 hours to rid themselves of fears that the Federal Reserve would entertain reducing its bond-buying scheme. While the bank’s minutes consisted of a subtle hint of tightening, investors are now listening to dovish comments by Fed members, who say the economy has a long way to go.

Middle East: Israel and Hamas agreed on a ceasefire after 11 days of fighting. At the time of writing, the truce is holding, supporting the upbeat mood in markets. Oil prices are more tuned to nuclear talks with Iran in Vienna, which are reportedly advancing.

The dollar has resumed its decline, alongside the slide in US Treasury yields, with returns on 10-year bonds hovering around 1.63%.

After weekly jobless claims showed another decline, the focus on Friday is on Markit’s Purchasing Managers’ Indexes for May, which are set to remain elevated. Existing Home Sales a speech from the Fed’s Mary Daly are also set to move the greenback.

EUR/USD is trading above 1.22, benefiting from dollar weakness and from encouraging COVID-19 figures from the old continent. The EU is set to launch its green passport for travel in July. Preliminary PMIs for May are projected to continue their gradual advance, especially in the services sector. European Central Bank President Christine Lagarde is scheduled to speak later in the day.

GBP/USD has rebounded to 1.42, also buoyed by better-than-expected UK retail sales figures for April, which jumped by 9.2% in April. PMIs are set to remain elevated.

Bitcoin is trading below $40,000 after an attempt to recover from Wednesday’s sell-off ended in response to a report that the US will demand reports of cryptocurrency transfers of over $10,000. Ethereum is pressured under $2,800 and XRP is at around $1.12. Dogecoin has benefited from another tweet from Elon Musk, Tesla’s founder.

Gold: Global Times, a Chinese news outlet criticized Bitcoin and talked about rising gold prices. The yellow metal is stable above $1,870.

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