EUR/USD rises further to three-week highs, eyes 1.1900

The EUR/USD is rising for the fifth consecutive day on Thursday, boosted by a decline of the US dollar across the board. It is trading at 1.1890, at the highest level since July 6, on its way to the best week in three months.

During the American session, the US dollar dropped, further supporting the upside in EUR/USD. Economic data from the US contributed to the decline. Growth during the second quarter came in at 6.5%, below the 8.5% expected; initial jobless claims fell to 400K, a reading worse than consensus; and pending home sales declined 1.9% in June against expectations of a modest increase.

Economic figures added fuel to the slide of the greenback that started on Wednesday following the FOMC meeting. The DXY is down by 0.41%, at 91.90, the lowest level in a month. At the same time, US yields are hovering around recent levels. Equity prices are up in Wall Street. The Dow Jones gains 0.55% and the Nasdaq 0.45%. The risk-on environment weighs on the dollar.

The EUR/USD is looking at the 1.1900 area. Currently is testing the 1.1890 resistance area and a break higher should lead to further gains above 1.1900. The next resistance stands at 1.1920/25. The positive tone is likely to remain intact while above 1.1840; the next support is the 20-day moving average at 1.1820.

RIPPLE’S XRP LOSING COMPETITIVE ADVANTAGE: BIS AND SWIFT GOING REAL-TIME

Nexus is a model for connecting multiple national payment systems into a cross-border platform that could enable international payments to happen as quickly as sending a text message.

The Bank for International Settlements (BIS) has partnered with the Monetary Authority of Singapore, the country’s financial supervisory authority, to publish a blueprint for the multilateral linking of domestic real-time payment systems across borders.

Building on the bilateral linkage between Singapore’s PayNow and Thailand’s PromptPay launched in April 2021, the blueprint also leverages the experience of the National Payments Corporation of India’s (NPCI) development and operation of the Unified Payments Interface (UPI) system.

The blueprint is titled Project Nexus (link to .pdf) and envisages the creation of ‘Nexus Gateways’ that serve to coordinate compliance, foreign exchange conversion, message translation, and the sequencing of payments among all participants.

An overarching Nexus Scheme sets out the governance framework and rulebook for participating retail payment systems, banks, and payment service providers to coordinate and effect cross-border payments through the network.

Benoît Cœuré, head of the BIS Innovation Hub, commented: “Project Nexus is trying to achieve the equivalent of internet protocols for payments systems. That means creating a model through which any country can join by adopting certain technical and governance requirements.”

Project Nexus requires participating countries to adopt the protocols once to gain access to the broader cross-border payments network. Countries won’t have to negotiate payment linkages with each jurisdiction on a bilateral basis.

Andrew McCormack, head of the BIS Innovation Hub Singapore Centre, said: “Country-to-country and regional payment connections already exist. But they require significant coordination efforts, which increase exponentially with more participants. Three countries require three bilateral links but 20 countries would require 190 bilateral links.”

Nexus is a model for connecting multiple national payment systems into a cross-border platform that could enable international payments to happen as quickly as sending a text message, the Bank for International Settlements announced.

BIS proposes to connect national systems internationally to improve speed, cost, and transparency of cross-border payments, which basically sums up the mission of blockchain firms such as XRP-powered Ripple, ex-Ripple founder Jed McCaleb’s Stellar (XLM), and newly launched Algorand-powered Six Clovers.

SWIFT has just announced cross-border payments in a matter of seconds with its new messaging product SWIFT Go, which is complementary to cross-border settlement services such as BIS’ Project Nexus and Ripple’s On-Demand Liquidity.

Yesterday, Ripple announced the go-live of its On-Demand Liquidity in Japan, thus setting the stage to drive more adoption of crypto-enabled services in the Asia Pacific.

The news further proves the utility of the XRP Ledger in a turbulent period for Ripple Labs due to the ongoing lawsuit with the SEC, which claims XRP to be a security for its “decentralized nature“.

SEC Commissioner Hester Peirce has recently come forth to clarify that the agency could file complaints against firms for unregistered security offerings even if said instrument is not a security in the eyes of the SEC.

The same Commissioner has released a public statement together with SEC Commissioner Elad Roisman – “a gift from the heavens” – admitting to the lack of clarity within the digital asset space, further contributing to Ripple’s claim that it had no fair notice that XRP could be deemed a security.

Ripple’s Fair Notice defense is believed to be a threat to the SEC’s future enforcement actions against the crypto ecosystem. The agency itself warned the Court that a Ripple win on Fair Notice would nullify the Howie Test.

In June, BIS opened an Innovation Hub in London to push for digital currencies. Later that month, the institution praised CBDCs against Bitcoin, while adding that stablecoins are no game-changer as they have the potential to fragment the liquidity of the monetary system. 

US Dollar Index tumbles to lows near 92.50

• DXY moves lower and retests the 92.50 region.
• Initial Claims rose by 419K from a week earlier.
• Existing Home Sales come up next in the calendar.

The dollar extends the bearish move and drops to session lows around 92.50 when tracked by the US Dollar Index (DXY).

US Dollar Index recedes from recent peaks

The index gives away further ground and recedes to the mid-92.00s on the back of the extra improvement in the risk complex.

Yields of the key US 10-year reference also edge lower after briefly testing the area above 1.30% and collaborate with the renewed downside momentum in DXY.

Further selling pressure hit the dollar after the ECB meeting left the key rates unchanged, as expected, and both the Governing Council and Chairwoman Lagarde at her press conference did not sound as dovish as expected.

The docket was not supportive of the buck either after weekly Claims rose by 419K (from 368K) and the Chicago Fed National Activity Index eased to 0.09 in June (from 0.26). Later in the session, Existing Home Sales and the CB’s Leading Index will close the daily calendar.

US Dollar Index relevant levels

Now, the index is losing 0.27% at 92.52 and faces the next support at 92.46 (23.6% Fibo of the November-January rally) followed by 92.00 (monthly low Jul.6) and then 91.51 (weekly low Jun.23). On the upside, a break above 93.19 (monthly high Jul.21) would open the door to 93.43 (2021 high Mar.21) and finally 94.00 (round level).

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RIPPLE’S XRP VENTURES INTO TOKENIZATION, SEC GENSLER WARNS OF SECURITY ISSUE: “MAKE NO MISTAKE”

“Make no mistake: It doesn’t matter whether it’s a stock token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities.”

Gary Gensler, Chair of the Securities and Exchange Commission, spoke about security-based swaps before the American Bar Association Derivatives and Futures Law Committee.

He started off by noting that “I’m not speaking on behalf of my fellow Commissioners or the SEC staff”. This short sentence is now vital as the agency prepares to face the deposition of ex-SEC Director William Hinman for a speech he gave about the nature of Ether – “not a security” – in 2018.

The SEC Chair spoke about security-based swaps in the aftermath of the Archegos meltdown and the SEC’s completion of the implementation of derivatives oversight in the United States, eleven years after Dodd-Frank.

At the end of the speech, Mr. Gensler mentioned the intersection of security-based swaps and financial technology, including with respect to crypto assets.

“There are initiatives by a number of platforms to offer crypto tokens or other products that are priced off of the value of securities and operate like derivatives”, said the SEC Chair.

“Make no mistake: It doesn’t matter whether it’s a stock token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities. These platforms — whether in the decentralized or centralized finance space — are implicated by the securities laws and must work within our securities regime.

“If these products are security-based swaps, the other rules I’ve mentioned earlier, such as the trade reporting rules, will apply to them. Then, any offer or sale to retail participants must be registered under the Securities Act of 1933 and effected on a national securities exchange”, he added.

The SEC has already filed complaints against retail offerings of security-based swaps and is likely to charge more blockchain firms in the near future.

FinanceFeeds has recently covered the phenomenon of tokenization of assets and named Binance as one of the leading firms already offering such products, having started with a tokenized version of the Tesla stock (TSLA) as the operator aims to allow non-U.S. based users to trade the instrument and many more after that.

Binance, among a growing number of firms, could be meaning to bypass the regulatory framework in the United States and other jurisdictions. The counterreaction is what we’re seeing today: a global crackdown on Binance.

Ripple is also venturing into asset tokenization utilizing its renowned XRP Ledger, RippleNet’s General Manager Asheesh Birla announced earlier this month.

“Tokenization is transforming how people buy, sell, track and manage assets – everything from art and real estate to intellectual property, equities, and supply chain goods. In fact, the World Economic Forum projects 10% of the world’s GDP will be tokenized by 2027”.

“We’re expanding from a cross-border payments network to a platform providing tokenized services that will bring crypto capabilities to the enterprise and prepare them for a future where crypto is front and center. RippleNet was initially built to solve the challenges with speed, cost, and transparency in cross-border payments for those that have been grossly underserved by the financial system at large.”

The Asia Pacific’s progressive crypto regulation is probably where Ripple will find momentum for its new product, but there is no lack of clarity in regard to blockchain-powered products that provide exposure to underlying securities: they are implicated by the US securities laws. SEC Chair Gary Gensler made that abundantly clear.

Lack of clarity has been a very serious issue within the crypto ecosystem in the United States. So much so that this week, SEC Commissioners Hester Peirce and Elad Roisman have made public statements that admit to that – “a gift from the heavens“, said attorney Jeremy Hogan.

The admission of lack of clarity from top SEC officials will be used by Ripple and the individual defendants to support its fourth affirmative defense and the motion to dismiss the case, respectively.

The bombshell comes in good timing for the Ripple counsel, who will have ex-SEC Director William Hinman depose on July 27 in order to further strengthen its fair notice defense.

The following day, July 28, is the deadline for the requested response from SEC Chair Gary Gensler to Senator Elizabeth Warren. She has requested information about the regulator’s “authority to properly regulate cryptocurrency exchanges and to determine if Congress needs to act to ensure that the SEC has the proper authority to close existing gaps in regulation”.

That letter also sent shock waves of speculation regarding what could be deemed as an orchestrated powerplay to outflank the CFTC.

Bitcoin Falls Below $30,000 for First Time in Weeks, and Suffers Weekly Loss of 10%

The current price offers little improvement on where Bitcoin started the year.

Bitcoin has fallen below $30,000 for the first time in almost a month.

Tuesday’s painful 24-hour losses of 5.4% have contributed to a seven-day decline of 10.5% — and as is normally the case, the sell-offs are even worse among altcoins. 

BTC’s decline may be linked to Grayscale Bitcoin Trust unlocking a large chunk of shares over the weekend, giving investors their first chance to sell in six months.

Its current performance is little improvement on the price of $29,032 that was seen on Jan. 1.

Other factors that haven’t been helping matters related to the fact that on-chain activity has remained “extremely muted” in the past week, according to Glassnode.

Its latest report suggests “Bitcoin block space and on-chain settlement is low, mined blocks are not full, and the utilization of the network is relatively low.” 

Whereas the BTC network was settling daily volumes of $15.5 billion when activity peaked in May 2021, this has fallen to just $5.3 billion a day at present.

To make matters worse, most of this transaction volume relates to coins that are being sold at a loss, with median losses currently working out at about $353 million per day.

Elon Musk to Attend Bitcoin Conference 

In other developments, it has been confirmed that Elon Musk is going to discuss Bitcoin with Jack Dorsey at a conference on Wednesday — something that could give the markets a little something to cheer about.

“The B Word” is an online panel that has been organized by the Crypto Council for Innovation, and other attendees will include Cathie Wood and Adam Back.