In its policy meeting earlier, the Bank of Japan ended its negative interest rate policy and scrapped yield curve control, weakening the Japanese Yen.

1. In a widely expected move, the Bank of Japan has raised its interest rate for the first time since 2007 to end its negative interest rate policy, although the Bank continues to describe its approach as “accommodative”. Japan’s interest rate now stands between 0.0% and 0.1%. The Bank also ended its yield curve control policy. The Yen has weakened as a result, although attention now will be turning to Ueda’s upcoming speech as European markets start to come online. The main Japanese stock market index the Nikkei 225 has risen to trade above 40,000 and is not far from its all-time high made just a couple of weeks ago.
2. As expected, the Reserve Bank of Australia left its Policy Rate unchanged at 4.35% and made what is widely seen as a dovish tilt by removing language from its statement which suggested that a further rate hike could not be ruled out. The Australian Dollar has been notably weaker following this announcement.
3. In the Forex market, the US Dollar has been the strongest major currency since the Tokyo open today. The Japanese Yen has been the weakest. This puts the USD/JPY currency pair in focus, although its implied volatility for the coming year has dropped following the Bank of Japan’s earlier rate hike.
4. Bitcoin is looking bearish after making a new all-time high last Thursday just below $74,000. Trend traders may be considering exiting any long trades.
5. In the commodities market, Cocoa futures rose again yesterday to reach a new multi-year high before closing lower. Trend traders will be keen to be involved in this very long-running trend on the long side.
6. There will be a release of Canadian CPI (inflation) data later today which is expected to show a 0.6% increase over the past month.

An improving housing market could fuel consumer confidence, spending, and demand-driven inflation. According to the CME FedWatch Tool, the chances of a 25-basis point June Fed rate cut decreased from 55.2% to 50.7%.

10-year US Treasury yields increased by 0.32%, ending the day at 4.324%. However, the US markets ignored rising yields and falling bets on an H1 2024 Fed rate cut. On Monday, the Dow ended the day up 0.20%. The Nasdaq Composite and S&P 500 saw gains of 0.82% and 0.63%, respectively.

The Monday Market Movers

Auto stocks were among the front runners. Porsche rallied 2.26%, with Volkswagen gaining 1.44%. Mercedes Benz Group and BMW ended the session up 0.36% and 0.28%, respectively.

Vonovia recovered some of the losses from Friday, gaining 3.13%. The German real estate firm reported its largest-ever loss in 2023, sending the share price down 10.07% on Friday.

Tech stocks also limited the downside. Infineon Technologies and SAP ended the day up 0.28% and 0.17%, respectively.

However, Adidas slid by 2.39%, with bank stocks ending the session in negative territory. Commerzbank and Deutsche Bank declined by 0.38% and 0.90%, respectively.

German and Eurozone Economic Sentiment in the Spotlight

On Tuesday, ZEW Economic Sentiment figures for Germany and the Eurozone need investor consideration. Improving sentiment toward the German and Eurozone economies could support demand for DAX-listed stocks.

Economists forecast the German ZEW Economic Sentiment Index to rise from 19.9 to 20.5 in March. Moreover, economists predict the Eurozone ZEW Economic Sentiment Index to increase from 25.0 to 28.0 in March.

Beyond the numbers, ECB commentary also warrants investor attention. ECB Executive Board member Luis de Guindos is on the calendar to speak. Views on inflation, the economic outlook, and the timeline for an ECB rate cut would move the dial. The markets are betting on a June ECB rate cut.

US Economic Calendar: US Housing Sector in the Spotlight

On Tuesday, US housing sector data will garner investor attention. Building permits and housing start numbers for February could influence sentiment toward the US economy. Economists consider the housing sector a leading indicator of the US economy.

Economists forecast building permits to decline by 0.2% and housing starts to increase by 7%. In January, building permits and housing starts fell by 0.3% and 14.8%, respectively.

Short-term Forecast

Near-term trends for the DAX will hinge on euro area economic indicators and the Fed interest rate decision.

Better-than-expected euro area data could drive buyer demand for DAX-listed stocks. However, a less dovish Fed rate path could pressure riskier assets.

In the futures, the DAX and Nasdaq mini were down 47 and 43 points, respectively.

DAX Technical Indicators

Daily Chart

The DAX hovered well above the 50-day and 200-day EMAs, sending bullish price signals.

A breakout from the March 14 all-time high of 18,039 could support a move toward the 18,200 level.

Economic data from the euro area, ECB chatter, and US housing sector data need investor consideration.

However, a fall through the 17,900 handle could give the bears a run at the 17,750 handle.

The 14-day RSI at 74.47 shows the DAX in overbought territory. Selling pressure could intensify at the March 14 high of 18,039.

Meme coins on rise

Meme coins have made crypto trading accessible to younger retail investors with their low prices. Investors can acquire thousands or even millions of these tokens with just a few dollars, offering the potential for significant gains. In 2024, these tokens are among the winners of the market bull run, with their total market cap reaching $48 billion in the beginning of March.

It all began with the phenomenon of “meme stocks” like GameStop and AMC Entertainment experiencing dramatic price increases, fueled by the Reddit community WallStreetBets in late 2020.

In January 2021, the Reddit group suggested boosting the price of Dogecoin to mirror the success of GameStop. This idea gained traction, amplified by endorsements from Musk, leading to a rapid surge by 2,000% in Dogecoin’s value.

Currently, over 1,300 cryptocurrencies are presented in the CoinMarketCap meme coin section. Dogecoin, the first ever meme coin, and Shiba Inu, the self-styled “Dogecoin killer,” are the top market performers in terms of market cap, leaving the rest of the tokens far behind.

A recent post by the Shiba Inu lead on the X platform suggests strong ambitions on SHIB’s side:

Dogecoin: First meme coin

Billy Marcus and Jackson Palmer launched Dogecoin (DOGE) in 2013 as a jest at Bitcoin. Dogecoin was created based on a meme based on the Japanese hunting dog Shiba Inu.

It was initially designed with a hard supply capitalization of 100 billion coins. However, the creators removed this limit to discourage hoarding and speculation. With an unlimited supply, Dogecoin lacks scarcity, which can impact its perceived value.

Unlike Bitcoin, which has a fixed supply of 21 million coins, Dogecoin’s unlimited nature may lead investors to view it differently, not as a store of value but rather as a medium of exchange or a means of tipping and donations.

Dogecoin remained relatively stagnant from December 2013 to December 2020. Its trading volume surpassed Bitcoin and other cryptocurrencies combined in January 2014. However, it hit its lowest price of $0.0000869 on May 6, 2015. In early 2018, Dogecoin experienced a brief price increase before the overall crypto market crash.

In January 2021, Elon Musk’s remarks led to a 339% surge in Dogecoin’s value to $0.032642. Its highest price of $0.682 was reached on May 8, 2021. Despite celebrity endorsements, Dogecoin’s adoption for business transactions remains limited.

In the last month, DOGE’s price has surged by 105.06%, gaining an impressive average of $0.18.

Shiba Inu: Killer coin

Shiba Inu, introduced in August 2020 as the “Dogecoin killer,” gained attention for its unique approach of donating 50% of its total supply to Vitalik Buterin, the Ethereum creator. The token surged by over 300% within a month, rivaling Dogecoin’s frenzy in early 2021. It even rivaled Ethereum’s trading volume in October 2021.

Vitalik Buterin’s donation of over 50 trillion SHIB to charity and subsequent burn of 90% of his remaining tokens removed a significant portion from circulation. Despite a decline post-peak in 2021 and a quiet 2023, recent trends show a resurgence for SHIB. Its price has soared by 220.5% on the 14-day charts and nearly 250% over the past month, with a 223.3% increase since March 2023.

The recent Bitcoin rally gave Shiba Inu a 250% surge in price. In addition, SHIB wielded a market cap of $24.4 billion as of March 5.

However, SHIB’s substantial supply remains a challenge. A potential solution could involve a burn similar to Buterin’s in 2021, sparking another rally akin to 2021’s frenzy. According to the Shibburn X account, the past two weeks have seen a total of 14,238,113,469 SHIB tokens burned, marking a 6,478.69% increase in the weekly burn rate.

Key metrics

Dogecoin surpasses Shiba Inu in several metrics, the most significant being market cap, $25 billion against $20 billion, respectively. Another one is the number of holders in profit. For Dogecoin this is 46.94%, while for SHIB it is 27.11%.

Shiba Inu bested DOGE in the price surge: 230% against 112%. In addition, Shiba Inu kicked off March with a bang, attracting over 8,400 addresses to peak at 21,000 daily new addresses, about 20 times the daily average in February. Shiba Inu’s total addresses have also hit a new record at 3.88 million.

In another metric, SHIB’s aggregated daily volume has neared the $600 million mark, a 200% surge compared to the figures observed on March 11. In comparison, Dogecoin (DOGE) has witnessed a more modest increase of approximately 92%.

Another important indicator to mention is the correlation with Bitcoin. Generally, meme tokens are closely tied to Bitcoin’s performance, with their value often mirroring that of the broader cryptocurrency market. Shiba Inu has a 0.93 correlation index, while Dogecoin has 0.83.

Volatility is the biggest problem for meme coins, and here we see SHIB overpassing DOGE as well.

Although these metrics change constantly, the market data indicates strong competition between the two major meme coins. Overall, the two meme coin giants will most likely go toe to toe in the future.

The sell the fact play is continuing as traders are still digesting the BOJ monetary policy decision earlier here. But quite frankly, we’ve had plenty of time to take it all in after the numerous leaks over the past week. And that sort of explains what we’re seeing today.

Yes, the BOJ has decided to end negative rates. However, it is merely moving short-term rates from -0.10% to between the 0.00% to 0.10% range. Yes, the BOJ has decided to scrap yield curve control. However, they are still maintaining JGB purchases and will step in where necessary if yields run too high, too fast.

Besides that, they also didn’t offer any forward guidance about future policy steps and the pace of normalisation. That’s a red flag to me and smells like they are going to approach it very, very slowly.

Meanwhile, with Treasury yields continuing to hang at the highs for the year, it is making it tough to find a compelling reason for USD/JPY to gather much downside momentum currently.

For now, buyers are in control as the pair runs into resistance and offers around the 150.00 mark. Thereafter, key resistance lies at the February highs around the 150.84-88 region before potentially revisiting the November high at 151.90. Those will be key upside levels to watch at the moment for USD/JPY.