This Week’s Top Headlines

i) Bitcoin stays silent at $28,000, fluctuating within a tight range of $27,500 to $28,800, as the crypto market awaits for catalysts to shift its sentiment.

ii) The upcoming US inflation data, scheduled for April 12, is expected to reintroduce volatility back into the markets. The direction of the market will greatly depend on whether the reading meets expectations.

iii) OPEC+, an organization of 23 oil-exporting countries that produces over 40% of the world's oil, has announced surprise oil cuts. The decision led to a surge in oil prices, which analysts fear could cause inflation to remain sticky.

iv) Malaysia joins the global movement to ditch the US dollar. PM Anwar is currently in talks with China to establish an Asian Monetary Fund.

Scroll down to read the details.

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A relatively peaceful week for Bitcoin

Bitcoin's impressive rally of over 45% from $20,000 to a peak of $28,800 was sparked by the banking fiasco we witnessed in March. Following the surge, it seems that the volatility has died down quite a bit, making it a relief to see things settling down a little.

This week, Bitcoin's movement has remained muted, continuing the trend of the previous two weeks, with a clear boundary established between $27,000 to $29,000, which Bitcoin is currently "stuck" in.

The reason for this tight movement, I believe, is the absence of catalysts to shift the market sentiment, as the crypto market takes a breather from the rally back in March.

The peace will only last for so long, however, and the upcoming week should bring an end to this oscillation, as the latest US data is set to be released on April 12.

Upcoming US inflation data to test the markets and the Federal Reserve

The closely watched US inflation report will dictate the short-term fate of the markets and answer the most pressing question on whether the rate hikes from the Federal Reserve are coming to an end.

Scheduled for Wednesday, April 12, the current consensus are at 5.2% and 5.6% for the overall and core inflation, respectively. The previous figures came in at 6.0% and 5.5%.

Analysts are still concerned about the aftershocks of the banking crisis, but the Fed has sights on inflation.

Following the collapse of Silicon Valley Bank, Silvergate Bank, and Signature Bank earlier in March, investors have favored the Federal Reserve to begin cutting rates during the second half of the year to prevent a recession.

But the Fed has made it clear that, as long as inflation remains above their target goal of 2%, rates are expected to remain higher for longer. From the previous FOMC meeting, Fed Chairman J. Powell stated that that the path of getting inflation back down to 2% “has a long way to go and is likely to be bumpy,” and that reducing interest rates “are not in our base case” for the remainder of 2023.

The more restrictive rate outlook will be supported if the upcoming inflation reading falls short of expectations. We could see Bitcoin conceding ground to $25,000 and stocks in the red should inflation come out higher than anticipated.

The current probability of 71.2% on a 25 bps hike for the next FOMC meeting will also see a drastic shift upwards, confirming the more aggressive stance from the Fed.

Oil jumps to $86 per barrel as OPEC+ announces surprise oil cuts

On Sunday, Saudi Arabia and other OPEC+ nations announced cuts to oil output of around 1.16 million barrels per day - a move that has been criticized by the White House.

The reductions are expected to start in May and last through the entire year.

This is not the first time that OPEC+ has decided to slash oil production. The most recent decision is followed by a cut of 2 million barrels per day in October 2022.

The total OPEC+ oil reduction pledges now stand at 3.66 million barrels per day, or 3.7% of global demand.

The announcement had a significant impact on the markets, with oil prices jumping by over 8.50% on Monday, soaring from $79 per barrel to $86.

What is OPEC+ and why does it matter?

OPEC+ is an organization of 23 countries that export oil and gather regularly to determine the amount of crude oil to sell in the global market.

The group is primarily composed of 13 OPEC members, mainly from the Middle East and Africa, formed in 1960 as a cartel with the objective of controlling the worldwide supply and price of oil.

At present, OPEC+ countries account for approximately 40% of the world's crude oil production, with Saudi Arabia and Russia being the largest producer of oil, generating over 10 million barrels per day, respectively.

The purpose of the most recent oil cuts, according to Saudi Arabia, were a precautionary measure aimed at supporting market stability.

But the move raises new concerns of inflation, as higher oil price makes it tougher for central banks to tame rising prices, which in turn, forces them to lift interest rates further or keep them higher for longer.

Tensions with the US are also brewing, with the West repeatedly criticizing OPEC for manipulating the prices of oil and siding with Russia despite the war in Ukraine.

The US is now considering to pass a legislation known as NOPEC to allow the White House to seize OPEC assets within the US if the price manipulation can be proved.

Malaysia joins global movement to reduce dependency on the US dollar.

Following the global shift away from the US dollar, Prime Minister Anwar Ibrahim is in talks with China on forming an Asian Monetary Fund.

"There is no reason for Malaysia to continue depending on the dollar," he told Parliament on Tuesday.

During his state visit to China last week, Anwar focused on building stronger post-Covid ties between the two countries.

At the Boao forum in Hainan, he proposed the creation of the fund and was delighted to find that President Xi Jin Ping was open to discussing the idea.

Anwar also shared details about the RM170 billion investment pledged by China to Malaysia. This amount comprises a RM2 billion initial investment in Zhejiang Geely Holding Group and Proton for the current year, which will subsequently rise to RM32 billion.

That’s all for this week’s newsletter!

Disclaimer: I am not a financial advisor. This newsletter is based on my own analysis and research. Do not take any of it as financial advice.

*This newsletter was written at 11.30 AM on 9th April 2023 and completed at 3.30 PM the same day. To get early access to our newsletter, be our patron for as little as $1/month!