CFD Markets News and Forecasts — 16-03-2023

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16.03.2023
23:55
US Dollar Index: DXY slides towards 104.00 as Fed bets simmer, sentiment improve
  • US Dollar Index renews intraday low, braces for minor weekly loss.
  • Softer US inflation expectations, mixed US data join cautiously optimistic markets to probe DXY bulls.
  • Yields, hawkish Fed bets put a floor under the US Dollar Index price.
  • Michigan Consumer Sentiment Index, UoM 5-year Consumer Inflation Expectations eyed for fresh impulse.

US Dollar Index (DXY) holds lower ground near 104.35 after snapping a two-day winning streak the previous day. With this, the greenback’s gauge versus the six major currencies brace for minor weekly loss as traders brace for the last clues for the next week’s Federal Reserve (Fed) monetary policy meeting.

That said, the mixed US data joins downbeat inflation expectations and hopes of no financial crisis like 2008 seem to weigh on the US Dollar. However, expectations that the Fed will be able to keep its monetary policy tighter for longer join the upbeat Treasury bond yields to put a floor under the price.

Talking about the US data, Weekly Initial Jobless Claims dropped to 192K for the week ended on March 10 versus 205K expected and 212K prior whereas the four-week average figure dropped to 196.5K versus 197.25K prior (revised). Further, Housing Starts jumped to 1.45M in February from 1.321M previous reading and 1.31M analysts’ estimations while the Housing Starts jumped to 1.524M during the said month versus 1.34M expected and 1.339M prior. Additionally, the Philadelphia Fed Manufacturing Survey gauge came in as -23.2 compared to -14.5 consensus and -24.3 prior.

On the other hand, the US inflation expectations per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) remain pressured around the multi-day low and challenge the policy hawks, as well as the US Dollar bulls, of late. That said, the 10-year breakeven from the FRED data dropped to a fresh six-week low of 2.22% by the end of Thursday’s North American trading session during a two-day downtrend. However, the two-year counterpart revisits the week-start of 2.26%, previously poked in early February, while dropping for the second consecutive day.

It should be noted that the Fed fund futures recently bolster the case of the US central bank’s 0.25% rate hike in the next week’s monetary policy meeting.

Elsewhere, comments from Saudi National Bank's Chairman, Ammar Al Khudairy, conveying the “sound” conditions of Credit Suisse join the major US banks’ efforts to help California-based First Republic Bank to avoid a liquidity crunch to favor the risk-on mood. On the same line was the news that Credit Suisse eyes borrowing up to CHF50 billion from the Swiss National Bank (SNB) to strengthen liquidity, as well as Reuters quoting anonymous sources to confirm that the US banks are less vulnerable to the Credit Suisse debacle. Furthermore, US Treasury Secretary Janet Yellen’s assurance over the US banking industry’s health and European Central Bank’s (ECB) 50 bps rate hike, matching expectations, also favored the sentiment and allowed the latest run-up in the AUD/USD prices.

Against this backdrop, United States 10-year and two-year Treasury bond yields are down for the second consecutive week despite the previous day’s rebound from the multi-day low. Further, Wall Street closed in the green with more than 1.0% gains by each of the benchmark indices while S&P 500 Futures print mild gains of late.

Looking ahead, preliminary readings of the US Michigan Consumer Sentiment Index for March and the UoM 5-year Consumer Inflation Expectations for the said month will be important for clear directions.

Technical analysis

Failure to cross the 100-DMA, around 104.85 by the press time, directs US Dollar Index (DXY) towards the 50-DMA retest, close to 103.45 at the latest.

 

23:38
WTI Price Analysis: Stabilization above 20-EMA at 68.50 propels a short-term reversal
  • The oil price has shown a stellar recovery after printing a fresh 15-month low at $65.88 and is aiming to stretch it further.
  • US Biden’s denial of further sanctions on Russian oil and revised China’s GDP forecast have supported oil price.
  • A bullish reversal has been pinned as the oil price has crossed the critical resistance of $69.00.

West Texas Intermediate (WTI), futures on NYMEX, is making efforts in sustaining its auction above the critical resistance of 68.50 in the early Asian session. The oil price has shown a stellar recovery after printing a fresh 15-month low at $65.88 and is aiming to stretch it further on expectations of a smaller interest rate hike by the Federal Reserve (Fed).

Despite soaring fears of banking turmoil, the oil price has shown a recovery due to the least appetite of the United States for levying more sanctions on oil supply from Russia. US President Joe Biden believes that Russia won’t deliver oil below the current $60/barrel, which could disturb the demand-supply equilibrium.

Also, a surprise upside in China’s Gross Domestic Product (GDP) forecasts has fueled a sense of optimism in the oil price. Goldman Sachs revised 2023 China’s GDP projections higher to 6% from 5.5% anticipated earlier.

WTI has shown a confident recovery after testing a fresh 15-month low at $65.88 on Thursday. The oil price has formed a Double Bottom chart pattern on an hourly scale, which indicates a bullish reversal as the asset re-tested its prior crucial lows with less selling pressure. A bullish reversal has been pinned as the oil price has crossed the critical resistance of $69.00.

The black gold is aiming to shift its auction above the 20-period Exponential Moving Average (EMA) at $68.50, which will underpin a short-term upside trend.

Meanwhile, the Relative Strength Index (RSI) (14) has delivered a range shift move from the bearish territory of 20.00-40.00 to the neutral region of 40.00-60.00, which cements a bullish reversal.

For further upside, the oil price needs to break Thursday’s high at $69.53, which will drive the asset toward the horizontal resistance plotted around $71.00. A break above the latter will further push the oil price to near February 22 low at $73.85.

On the contrary, a downside move below the 15-month low at $65.88 would drag the asset toward 30 November 2021 low at $64.40 followed by 02 December 2021 low at 62.41.

WTI hourly chart

 

23:26
US inflation expectations remain weak as markets brace for Fed meeting

Having witnessed immense volatility in the last few days, the global markets portray the much-needed inaction while depicting the traders’ cautious mood ahead of the next week’s Federal Open Market Committee (FOMC) monetary policy meeting. Even so, the recently downbeat US inflation expectations and financial market turmoil seem to favor the risk-on mood while also probing the US Dollar.

It should, however, be noted that the Fed fund futures recently bolster the case of the US central bank’s 0.25% rate hike in the next week’s FOMC.

That said, the US inflation expectations per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) remain pressured around the multi-day low and challenge the policy hawks, as well as the US Dollar bulls, of late.

The 10-year breakeven from the FRED data dropped to a fresh six-week low of 2.22% by the end of Thursday’s North American trading session during a two-day downtrend. However, the two-year counterpart revisits the week-start of 2.26%, previously poked in early February, while dropping for the second consecutive day.

To confirm the latest weakness in the US inflation expectations, the traders might wait for Friday’s UoM 5-year Consumer Inflation Expectations for March, 2.9% prior, which in turn could confirm the Fed’s 0.25% rate hike and propel the US Dollar in case of upbeat readings.

Also read: Forex Today: Unexpected consolidation, DXY drops as risk sentiment improves

23:15
NZD/USD Price analysis: 100-HMA holds the key to Kiwi pair’s upside past 0.6200 NZDUSD
  • NZD/USD struggles to extend the previous day’s recovery moves but stays on the way to posting weekly gains.
  • 100-HMA probes buyers even as upbeat oscillators, one-week-old support line suggest further upside of the Kiwi pair.
  • Descending trend line from early March appears the key upside hurdle for the bulls to cross.

NZD/USD makes rounds to the key moving average as buyers struggle to keep the reins around 0.6200, bracing for the weekly gains, during early Friday.

In doing so, the Kiwi pair benefits from the upbeat RSI (14), not overbought, as well as bullish MACD signals. Not only the price-positive oscillators but the quote’s U-turn from a one-week-old ascending trend line also keeps the NZD/USD buyers hopeful of witnessing further upside.

Hence, the buyers are ready to overcome the immediate 100-Hour Moving Average (HMA), surrounding the 0.6200 threshold.

However, the 61.8% Fibonacci retracement level of the pair’s March 01-08 downside, near 0.6205, could act as a validation point for the rally targeting a downward-sloping resistance line since the month’s start, around 0.6245 at the latest.

Should the NZD/USD bulls stay in the driver’s seat beyond 0.6245, the odds of witnessing a fresh monthly high, currently around 0.6280, can’t be ruled out.

Alternatively, pullback moves may initially aim for the 50% Fibonacci retracement level of 0.6180 before directing the NZD/USD bears towards the aforementioned one-week-old support line, close to 0.6150 by the press time.

It should be noted, however, that the NZD/USD pair’s sustained trading below 0.6150 makes it vulnerable to testing the monthly low of 0.6084. During the fall, the 0.6100 round figure may act as an intermediate halt.

NZD/USD: Hourly chart

Trend: Limited upside expected

 

23:11
GBP/JPY surges to 162.00 level amid liquidity injection in the banking sectors
  • GBP/JPY recovers as UK government bond yields ease and risk appetite returns.
  • Central banks intervene to address the liquidity crisis in the banking sector.
  • Fed opens the discount window and major US banks support First Republic Bank, boosting market sentiment.

GBP/JPY marches higher on the back of easing UK Government bond 10-Year yield (Gilts) and a risk-on environment. It all started earlier this week with back-to-back liquidity issues involving Silicon Valley Bank (SVB), Signature Bank, Credit Suisse, and First Republic Bank.

The worsening financial conditions among banks injected turbulence and prompted a risk-averse environment earlier in the week. As a result, yield complexes began to fall in anticipation that central banks would scale down their aggressive tightening cycles amid receding liquidity.

Surging borrowing costs globally have prompted small to medium banks to struggle with their reserve requirement ratios to maintain normal banking operations. Consequently, investor confidence started to fade during this financial turbulence, and the market exerted pressure on yield complexes. This led to increased Japanese Yen safe-haven demand and a significant fall in GBP/JPY.

Amid this shift in the banking sectors, major central banks like the Federal Reserve (Fed), Bank of England (BoE), and Swiss National Bank (SNB) intervened to stem the liquidity crisis. 

On Wednesday, the BoE intervened in Credit Suisse's situation, while the SNB provided a covered loan facility. Several large-sized US banks announced a joint effort to provide up to $30 billion in deposits for First Republic Bank, including J.P. Morgan, Bank of America, Wells Fargo, and Citibank. On Thursday, the Fed also opened its discount window to provide liquidity in an exercise to tame any possible contagion in the banking sector. All these efforts have boosted risk sentiment, resulting in muted demand for the Japanese Yen across the board.

Levels to watch

 

23:05
EUR/JPY aims to extend rally above 142.00 as ECB to continue policy-tightening further EURJPY
  • EUR/JPY is looking to extend its rally above 142.00 on ECB’s hawkish interest rate guidance.
  • ECB Lagarde confirmed that wage pressures are keeping Eurozone CPI at elevated levels.
  • ECB policymakers agreed to go ahead with a 50 bps hike after the SNB "threw a lifeline" to Credit Suisse.

The EUR/JPY pair has sensed barricades while extending its rally above the immediate resistance of 142.00 in the early Asian session. The cross is expected to continue its upside momentum as the European Central Bank (ECB) would continue to hike its interest rates further as the Eurozone inflation looks persistent and would take plenty of time in declining to near the targeted level.

ECB President Christine Lagarde confirmed that wage pressures are keeping Eurozone Consumer Price Index (CPI) at elevated levels while responding to questions from the press after the monetary policy announcement.

The street was mixed for the ECB’s interest rate decision as the debacle of Credit Suisse, the second-largest Swiss banking firm, alarmed fears of banking turmoil. There is no denying the fact that the announcement of the interest rate decision by the central banks is executed by commercial banks and instability in the latter could create troubles in managing the monetary policy.

Reuters reported on Thursday that European Central Bank (ECB) policymakers agreed to go ahead with a 50 basis points increase in key rates after the Swiss National Bank (SNB) "threw a lifeline" to Credit Suisse. Also, ECB's policy debate was between a 50 basis points hike or leaving rates unchanged. There was no discussion of a 25 bps hike.

For further guidance, analysts at Rabobank see two more hikes of 25bp. Persistent unrest in financial markets is the main downside risk, but if this fades, inflation persistence could still require higher rates.”

On the Japanese Yen front, Bank of Japan (BoJ) policymakers and Japanese officials are pulling their socks to provide a cushion to inflation to remain steady above the 2% target. Japan’s PM Fumio Kishida said this week that they are aiming to raise minimum wages beyond JPY¥1,000 nationwide. Superlative wage gains are going to add effectively to the upside filters for the inflationary pressures as households will be equipped with more funds for disposal.

 

23:03
S&P 500 rallies on financial turmoil easing, spurred by authorities and US banks
  • The three major indices, the S&P 500, the Nasdaq, and the Dow Jones, finished the day with gains.
  • Finance authorities and US banks providing aid to First Republic Bank improved the market sentiment.
  • US Initial Jobless Claims rose less than expected, making the labor market tight.
  • Money market futures are expecting a 25 bps rate hike by the Fed.

Wall Street finished Thursday’s session with gains after the financial markets turmoil spurred by the collapse of two US regional banks and the Credit Suisse liquidity crisis. However, US banks stepped in and gave $30 billion to First Republic Bank, while Swiss authorities endorsed Credit Suisse.

On Thursday, the S&P 500 gained 1.76%, at 3960.28, and the heavy-tech Nasdaq 100 rose 2.48% at 11,717.28. The Dow Jones Industrial Average registered gains of 1.17%.

During the week, turbulence in the global financial markets reminded us of the Global Financial Crisis in the 2000s. That triggered volatility amongst the different asset classes, with safe-haven assets like Gold, Silver, and US Treasuries, amongst others, being the gainers.

Therefore, US Treasury bond yields collapsed, with them, the greenback. The US Dollar Index closed at 104.203, down 0.29%, undermined by the fall of the 10-year bond yield. The US 10-year benchmark note rate is 3.579%, down 0.11%.

Sector-wise, Technology, Communication Services, and Financials were the pack’s leaders, up 2.82%, 2.77%, and 1.95%, respectively. The laggards were Consumer Staples and Real Estate, each down 0.06% and 0.07%.

The Bureau of Labor Statistics (BLS) revealed that unemployment claims for the week ending on March 12 increased by 192K, beneath estimates of 205K, lower than the previous week’s 212K. At the same time, housing data like Building Permits and Housing Starts came above estimates, and the Philadelphia Fed revealed that manufacturing activity contracted at a slower rate in March.

In the meantime, expectations for a 25 bps rate hike by the Federal Reserve (Fed) shifted up. The CME FedWatch Tool odds for a 25 bps hike lie at 79.7% to the 4.75% - 5.00% range.

What to watch?

The US calendar will feature Industrial Production for February in monthly and annual readings. The MoM figures are estimated at 0.2%, above January’s 0%. In addition, the University of Michigan (UoM) Consumer Sentiment poll will update American sentiment regarding the economy and revise inflation expectations.

S&P 500 Daily chart

 

22:58
S&P: US 'Aa+/A-1+' sovereign ratings affirmed; outlook remains stable

Global rating agency S&P crossed wires via Reuters during late Thursday, amid concerns about the health of the US financial markets. The major rating agency initially confirmed the US 'Aa+/A-1+' sovereign ratings before unveiling the stable outlook.

Additional comments

US ratings constrained by a high general government debt burden, reflecting substantial annual increases in general government's net debt.

Outlook remains stable, indicating expectation of continued resilience in the US economy.

View that us congress will resolve debt ceiling impasse in a timely manner.

Stable outlook reflects US institutional checks & balances, strong rule of law, free flow of information.

US fed has reacted swiftly amid recent problems in some segments of the US  banking sector.

Expect the US Fed to navigate the challenges of lowering domestic inflation and addressing financial market vulnerabilities.

Expect that congress will not pass major fiscal legislation aimed at curtailing the fiscal deficit before the 2024 national elections.

Expect consumer price inflation to exceed 4% in 2023 and decline toward 2% over the next couple of years.

Extraordinary monetary flexibility is key to the sovereign rating

Expect GDP growth to decelerate below 1% in 2023 and average 1.6% in the next three years (or 1.3% on a per capita basis).

Expect the US economy to grow close to 2% in the next two to three years following a slowdown in 2023.

Market implications

The news adds to the list of recent catalysts that favored risk-on mood. However, the immediate reaction to the headlines appears muted.

Also read: Forex Today: Unexpected consolidation, DXY drops as risk sentiment improves

22:46
AUD/USD seesaws around mid-0.6600s amid fragile markets, mixed concerns about Fed AUDUSD
  • AUD/USD remains sidelined after Aussie data, risk-on mood favor bulls to eye the biggest weekly gains since late January.
  • Global policymakers, banks try their hands to placate fears of financial crisis but traders seem less-convinced, despite latest optimism.
  • Yields bounce off multi-day low, equities improve but weekly performance suggests market’s indecision.
  • Final clues for next week’s FOMC eyed to confirm 25 bps rate hike.

AUD/USD treads water around 0.6650, after the previous day’s upbeat performance, as bulls brace for the biggest weekly gain in seven heading into the next week’s Federal Open Market Committee (FOMC) monetary policy meeting. It should be noted that the upbeat Aussie data and improvement in the market sentiment favored the risk-barometer pair even as the latest moves seem to portray traders’ cautious mood amid a light calendar at home.

Global policymakers and banks rushed to tame the banking industry fallout and favored the market sentiment the previous day. However, the investors aren’t all in and remain cautious as some of the latest market performance resembles the 2008 financial crisis.

That said, comments from Saudi National Bank's Chairman, Ammar Al Khudairy, conveying the “sound” conditions of Credit Suisse join the major US banks’ efforts to help California-based First Republic Bank to avoid a liquidity crunch to favor the risk-on mood. On the same line was the news that Credit Suisse eyes borrowing up to CHF50 billion from the Swiss National Bank (SNB) to strengthen liquidity, as well as Reuters quoting anonymous sources to confirm that the US banks are less vulnerable to the Credit Suisse debacle. Furthermore, US Treasury Secretary Janet Yellen’s assurance over the US banking industry’s health and European Central Bank’s (ECB) 50 bps rate hike, matching expectations, also favored the sentiment and allowed the latest run-up in the AUD/USD prices.

Elsewhere, US Weekly Initial Jobless Claims dropped to 192K for the week ended on March 10 versus 205K expected and 212K prior whereas the four-week average figure dropped to 196.5K versus 197.25K prior (revised). Further, Housing Starts jumped to 1.45M in February from 1.321M previous reading and 1.31M analysts’ estimations while the Housing Starts jumped to 1.524M during the said month versus 1.34M expected and 1.339M prior. Additionally, the Philadelphia Fed Manufacturing Survey gauge came in as -23.2 compared to -14.5 consensus and -24.3 prior.

At home, Australia’s headline Employment Change jumps by 64.6K versus 48.5K expected and 11.5K prior while the Unemployment Rate also dropped to 3.5% from 3.7% previous readings and 3.6% expected. Furthermore, Australia’s Consumer Inflation Expectations eased to 5.0% for March versus 5.4% market forecasts and 5.1% prior.

Amid these plays, United States 10-year and two-year Treasury bond yields are down for the second consecutive week despite the previous day’s rebound from the multi-day low. Further, Wall Street closed in the green with more than 1.0% gains by each of the benchmark indices whereas US Dollar Index (DXY) marked a negative daily closing. It’s worth mentioning that the Fed fund futures recently bolster the case of the US central bank’s 0.25% rate hike in the next week’s monetary policy meeting.

Moving on, the Michigan Consumer Sentiment Index for March and the UoM 5-year Inflation Expectation for clear directions are the final clues for the next week’s Fed meeting.

Technical analysis

A two-week-old symmetrical triangle restricts immediate AUD/USD moves between 0.6700 and 0.6600 at the latest.

 

22:33
EUR/USD stabilizes above 1.0600, upside looks likely as Fed-ECB policy divergence trims EURUSD
  • EUR/USD is showing a sideways performance above 1.0600 as investors are shifting their focus toward Fed policy.
  • An interest rate hike of 50 bps by the ECB has trimmed the Fed-ECB policy divergence.
  • S&P500 futures showed a rampant recovery after battered banks received support.

The EUR/USD pair is defending its auction above the round-level resistance of 1.0600 in the early Tokyo session. The major currency pair is looking to hold a bullish bias as the interest rate decision of 50 basis points (bps) rate hike by the European Central Bank (ECB) has trimmed the Federal Reserve (Fed)-ECB policy divergence.

On Thursday, ECB President Christine Laragde pushed interest rates to 3.50% despite discouraging headlines about banking turmoil. ECB Lagarde preferred to maintain its entire focus on the Eurozone inflation, which is extremely stubborn, and hawkish monetary policy is not showing any meaningful improvement in the battle against the former.

Also, the announcement of a fresh infusion of 50bln Swiss Francs into Credit Suisse promised by the Swiss National Bank (SNB) supported the ECB to go for a bigger rate hike.

Support from various financial institutions for the First Republic Bank after an infusion of fresh life into Credit Suisse by the SNB indicated that the mass banking crisis could be avoided. This infused a sense of optimism in investors and risk-perceived assets was heavily bought. S&P500 futures showed a rampant recovery and settled Thursday’s session with bumper gains.

Meanwhile, demand for US government bonds trimmed as investors channelized funds into US equities. The alpha offered on the 10-year US Treasury yields scaled to 3.58%.

The US Dollar Index (DXY) is displaying a sideways performance as investors are shifting their focus toward the monetary policy decision by the Fed, which will be announced next week. As per the CME FedWatch tool, the odds for a 25 basis point (bps) interest rate hike by Fed chair Jerome Powell have scaled to near 80%.

 

22:20
Gold Price Forecast: XAU/USD retreats as final clues for Federal Reserve decision loom
  • Gold price eyes the biggest weekly gains in two months despite easing from 1.5-month high of late.
  • XAU/USD bulls cheer softer United States 10-year, two-year Treasury bond yields, improved market sentiment.
  • Mixed US data, market’s lack of confidence probe the Gold price buyers of late.
  • XAU/USD traders eye Michigan Consumer Sentiment Index, inflation precursor ahead of next week’s Federal Reserve monetary policy meeting.

Gold price (XAU/USD) dribbles around $1,920, after a zigzag session that initially refreshed the six-week high but ended the day without any major moves. That said, the Gold price earlier cheered the softer United States Treasury bond yields before the improvement in market sentiment and a rebound in the bond coupons probed the XAU/USD bulls. Also likely to have probed the Gold buyers could be the cautious mood ahead of next week’s  Federal Open Market Committee (FOMC) monetary policy meeting. It’s worth noting, however, that the US bond coupons are down for the second consecutive week and hence allow the bullion to remain firmer on a weekly basis.

Gold price contradicts United States Treasury bond yields

Gold price recently eased from the multi-day high as the United States Treasury bond yields bounced off the latest troughs as the market sentiment improves and traders gear up for the next week’s Federal Reserve (Fed) meeting. Even so, the second consecutive weekly loss for the benchmark bond coupons allows the XAU/USD to brace for a three-week uptrend, as well as the biggest weekly gain since early January.

That said, United States 10-year and two-year Treasury bond yields are down for the second consecutive week despite the previous day’s rebound from the multi-day low. It should be noted that the US 10-year Treasury bond yields bounced off a six-week low to end Thursday’s North American trading session around 3.58% while the two-year counterpart recovered from the lowest level since mid-September 2022 to 4.17% at the latest.

It’s worth noting that the recent shrinking in the US 10-year and two-year Treasury bond yields inversion seems to help the Gold buyers.

Jittery markets, mixed US data also please XAU/USD bulls

Gold price pullback could be linked to the latest actions from global policymakers and banks to tame the banking industry fallout. However, the investors aren’t all in and remain cautious as some of the latest market performance resembles the 2008 financial crisis. Apart from the sentiment, the mixed United States data also probe the Gold buyers but allow the XAU/USD to remain firmer amid receding hopes of higher Federal Reserve (Fed) rates.

On Wednesday, Saudi National Bank, the largest shareholder of Credit Suisse Group AG, ruled out another call for additional liquidity and triggered the financial market rout as Credit Suisse is a G-SIB – a global systemically important bank and the drama erupts after the latest fallouts of the US banks, namely Silicon Valley Bank (SVB) and Signature Bank.

However, comments from Saudi National Bank's Chairman, Ammar Al Khudairy, shared by Bloomberg, eased the market’s pain as the bank leader mentioned Credit Suisse Group AG isn’t likely to seek more capital and the bank is generally “sound”. On the same line is the news that major US banks are working with the government to support California-based First Republic Bank to avoid a liquidity crunch.

The news that Credit Suisse eyes borrowing up to CHF50 billion from the Swiss National Bank (SNB) to strengthen liquidity also gained attention while Reuteres’ news that anonymous sources conveyed that the US banks are less vulnerable to the Credit Suisse debacle helped sentiment too. Additionally convincing the markets were comments from US Treasury Secretary Janet Yellen saying, “I can reassure the members of the committee that our banking system remains sound, and that Americans can feel confident that their deposits will be there when they need them."

It should be noted that the European Central Bank’s (ECB) 50 bps rate hike, matching expectations, also favored the sentiment and allowed the latest rebound in the yields, which in turn probed the Gold buyers.

On a different page, US Weekly Initial Jobless Claims dropped to 192K for the week ended on March 10 versus 205K expected and 212K prior whereas the four-week average figure dropped to 196.5K versus 197.25K prior (revised). Further, Housing Starts jumped to 1.45M in February from 1.321M previous reading and 1.31M analysts’ estimations while the Housing Starts jumped to 1.524M during the said month versus 1.34M expected and 1.339M prior. Additionally, the Philadelphia Fed Manufacturing Survey gauge came in as -23.2 compared to -14.5 consensus and -24.3 prior.

It’s worth mentioning that the Fed fund futures recently bolster the case of the US central bank’s 0.25% rate hike in the next week’s monetary policy meeting.

Amid these plays, Wall Street closed in the green with more than 1.0% gains by each of the benchmark indices whereas US Dollar Index (DXY) marked the negative daily closing.

Looking ahead, Gold traders should pay attention to the Michigan Consumer Sentiment Index for March and the UoM 5-year Inflation Expectation for clear directions as these are the final clues for the next week’s Fed meeting.

Gold price technical analysis

Gold price portrays a rising wedge bearish chart formation on the four-hour play. Also challenging the XAU/USD bulls is the overbought conditions of the Relative Strength Index (RSI) line, placed at 14, as well as sluggish signals from the Moving Average Convergence and Divergence (MACD) indicator.

With this, the stated wedge’s upper line, currently around $1,945, appears the key hurdle for the Gold price to tackle to avoid chances of a pullback. Even so, the Year-To-Date (YTD) high surrounding $1,960 can act as an extra filter toward the north.

Meanwhile, a downside break of the stated wedge’s support line, close to $1,913 at the latest, could confirm the bearish chart pattern suggesting a theoretical target of $1,790. During the anticipated fall, the 50-bar and 200-bar Simple Moving Averages (SMAs), around $1,866 and $1,858 respectively, will precede the $1,800 threshold to test the Gold bears.

It’s worth noting, however, that the 50-SMA stays well beyond the 200-SMA and portrays a “golden cross” suggesting the metal’s further upside.

Hence, the XAU/USD is likely to grind higher inside the aforementioned bearish chart formation.

Gold price: Four-hour chart

Trend: Limited upside expected

 

22:02
USD/CAD declines towards 1.3700 as uncertainty for Fed monetary policy deepens USDCAD
  • USD/CAD is demonstrating a sideways auction, following the footprints of the USD Index.
  • After the fiasco of SVB, Signature Bank, and Credit Suisse, a US-based First Republic Bank came under scrutiny.
  • The demand for US government bonds dropped as investors are now considering an unchanged monetary policy by the Fed.

The USD/CAD pair is displaying a back-and-forth action around 1.3720 in the early Asian session. The Loonie asset has turned sideways after a downside move and is expected to continue further toward the round-level support of 1.3700. The downside bias for the major has built as investors are worried about global banking turmoil, which is stretching day after day.

After the fiasco of Silicon Valley Bank (SVB), Signature Bank, and Credit Suisse, a US-based First Republic Bank has come under scrutiny. As reported by Reuters, financial institutions including JP Morgan Chase & Co and Morgan Stanley, confirmed earlier reports they would deposit up to $30 billion into First Republic Bank's coffers to stabilize the lender.

Although the move would infuse fresh life into the foreign exchange bank, it won’t fade the fact that global banking turmoil is for real and central banks are going to face various problems in executing their monetary policies, which are operated through commercial banks.

S&P500 futures recovered early losses and settled Thursday’s session on a promising note. The demand for US government bonds dropped as investors are now considering an unchanged monetary policy by the Federal Reserve (Fed) as the banking crisis is deepening. Also, the declining trend of the United States Consumer Price Index (CPI) is also supportive. Therefore, the 10-year US Treasury yields have gained to 3.58%.

The US Dollar Index (DXY) remained sideways around 104.40 as the street is mixed about unchanged monetary policy or a 25 basis point (bps) interest rate hike by the Fed next week.

On the oil front, oil price has corrected marginally after a recovery move and an upside extension is expected as the G7 countries are restricting themselves from further sanctions on Russia after setting the price cap at $60/barrel. It is worth noting that Canada is a leading exporter of oil to the US and a recovery in the oil price would support the Canadian Dollar.

 

21:50
USD/CHF Price Analysis: Bulls and bears clashed around 0.9280/90 on sideways trading USDCHF
  • USD/CHF hovers slightly below the 0.9300 figure and remains around the 20-day EMA.
  • USD/CHF Price Analysis: Upward biased in the near term, but downside risks remain on a break below the 20-day EMA.

USD/CHF retreats from weekly highs of 0.9340 and meanders between two daily Exponential Moving Averages (EMAs), at around 0.9290s. An improvement in market sentiment, and a soft US Dollar (USD), triggered flows toward the Swiss Franc (CHF), which recovered some ground.

USD/CHF Price action

Following Wednesday’s price action that saw the USD/CHF pair gaining 2%, Thursday’s session turned red. Nevertheless, the USD/CHF stayed nearby the 20/50-day EMAs, each at 0.9288 and 0.9297, respectively. If the USD/CHF cracks the top of the range, that will poise the pair towards 0.9300 and beyond. Once the figure is conquered, the USD/CHF will test the 100-day EMA at 0.9366, followed by the 0.9400 mark. A rally above will lift the USD/CHF toward the 200-day EMA at 0.9435.

In an alternate scenario, the USD/CHF first support will be the 20-day EMA At 0.9288. a breach of the latter and the USD/CHF will dive towards March 16 low at 0.9229 before stumbling to 0.9200.

USD/CHF Daily chart

USD/CHF Technical levels

 

21:41
GBP/USD Price Analysis: Bears prowl and eye a break below of 1.2050 again GBPUSD
  • GBP/USD bears are in the market but bulls coming up for air.
  • A break below 1.2050 again will likely seal the deal for the bears. 

GBP/USD is meeting resistance near 1.2100 while traders assess the risks associated with the banking system crisis and weigh the prospects of a hawkish Federal Reserve and the Bank of England that both meet next week to decide on their interest rate paths. 

From a technical perspective, a multi-timeframe analysis arrives at a bearish bias while GBP/USD remains pressured on the front side of the dominant bear trend. 

GBP/USD monthly chart

The break of structure, BoS, on the monthly chart is bearish for the immediate future as the bulls struggle to maintain form, on the correction back into the micro bear trend. 

GBP/USD daily chart

The daily chart sees the price trapped between structure and resistance, leaning with a bearish bias again. 

GBP/USD H4 chart

The bulls are testing the 1.21s but are on the backside of the prior bullish trend. There was a break of structure below 1.2050 which leaves the prospects also bearish for now. 

21:01
Forex Today: Unexpected consolidation, DXY drops as risk sentiment improves

Here is what you need to know on Friday, March 17:

The stock market stole volatility on Thursday. Wall Street indexes opened in the red to finish in the green with a gain of more than 1%. The Nasdaq led with a rally of 2.48%. Systemic risk fears eased, helping the market’s mood. Contributing to the improvement, 11 of the largest US banks announced a $30 billion deposit into First Republic Bank. The First Republic stock reversed a 36% drop to close the day up 10%.   

Regarding US data, the Federal Reserve Bank of Philadelphia's Manufacturing Business Index for current general activity improved in March to -23.2 from -24.3 in February, a reading worse than the -14.5 of market consensus; Initial Jobless Claims pulled back after surging last week; Housing Starts rebounded unexpectedly to 1.45 million, significantly above the 1.31 million of market consensus.  

As expected, the European Central Bank raised interest rates by 50 basis points. The words of the monetary policy statement and Lagarde’s were chosen carefully. In the first sentence, the ECB recognized that inflation is projected to remain too high for too long. At the same time, they are “monitoring” recent developments. The reaction in the currency market was limited. The Euro fell modestly following the ECB meeting. 

On Friday, the final reading of Eurozone consumer inflation should bring no surprises. Also in the docket are US Industrial Production and the University of Michigan’s Consumers Sentiment report. 

It was a quiet American session in the currency market despite what happened in Wall Street. Most of currency majors moved in small ranges. EUR/USD consolidated around 1.0600 while GBP/USD held firm above 1.2100.

Higher government bond yields and risk pushed USD/JPY back above 133.00, with the Japanese Yen flipping across the board. 

NZD/USD bottomed at 0.6131 after New Zealand reported weaker-than-expected Q4 GDP numbers; it then rebounded toward 0.6200. On the contrary, Australian employment data boosted the Aussie, sending AUD/USD to 0.6650. 

Gold tested recent highs but it pulled back, as yields moved to the upside; XAU/USD remains firm around $1,920/oz.  The improvement in market sentiment helped modestly Crude Oil prices; WTI rose 1% to settle above $68.00.
 

20:47
NZD/USD firm around 0.6190s with buyers eyeing the 200-DMA, ahead of US Consumer Sentiment NZDUSD
  • NZD/USD is subdued, around the 0.6190s ahead of Friday’s US economic data.
  • A risk-on impulse spurred the NZD/USD’s bounce from daily lows despite printing bad NZ GDP data.
  • NZD/USD Analysis: Short-term is upwards, though a break above 0.6200 will poise the pair towards the 200-DMA.

NZD/USD is about to finish Thursday’s session flat after diving towards a daily low of 0.6139. The European Central Bank (ECB) lifted rates amidst turbulent times. However, news that Swiss authorities backed Credit Suisse and major US banks stepping in to help First Republic Bank eased investors’ fears. Therefore, the NZD/USD recovered and is trading at 0.6191, a gain of 0.06%.

Sentiment improvement, the excuse for NZD buyers to lift the exchange rate

Wall Street finished with gains between 1.12% and 2.48%. Employment data in the United States (US), delivered by the Bureau of Labor Statistics (BLS), showed that unemployment claims for the last week rose by 192K below estimates of  205K, less than the prior week’s 212K. In the meantime, housing data like Building Permits and Housing Starts came above estimates and the prior’s month data.

At the same time, the Philadelphia Fed revealed that manufacturing activity contracted at a slower rate in March.

In the meantime, the US Dollar Index, a measure of the buck’s value against a basket of six currencies, losses 0.30%, at 104.430, a tailwind for the NZD/USD.

Earlier in the Asian session, the New Zealand Dollar (NZD) weakened on the release of the New Zealand (NZ) Gross Domestic Product (GDP) for Q4, which contracted 0.6% QoQ, and below the Reserve Bank of New Zealand (RBNZ) MPS projection of 0.7% expansion.

Analysts at ANZ Bank said, “the record Q4 current account deficit, amid waning appetite for NZGBs, the Kiwi may face headwinds in coming weeks. A Fed hike and/or higher dot plots next week, alongside reduced financial instability, may also see markets become more positive on the USD.”

What to watch?

The NZ economic docket is empty toward the end of the week. In monthly and annual readings, the US calendar wil feature Indutstiral Production for February. The MoM figures are estimated at 0.2%, above January’s 0%. In addition, the University of Michigan (UoM) Consumer Sentiment poll will update American sentiment regarding the economy and revise inflation expectations.

NZD/USD Technical analysis

The NZD/USD 4-hour chart portrays the pair bottomed around the 0.6120 area. On Thursday’s session, the pair’s low was around the S1 daily pivot, used as a springboard, with prices rising towards the confluence of the 20 and 50-Exponential Moving Averages (EMAs) at 0.6183-87. A breach of the 100-EMA at 0.6200 and the NZD/USD might test the 200-EMA in the near term at 0.6239. Otherwise, an NZD/USD fall beneath 0.6139, and the 0.6100 would be up for grabs.

 

20:07
AUD/USD Price Analysis: Bulls are fending off the bears below 200 DMA AUDUSD
  • AUD/USD bulls are testing the bears as failures persist on the downside.
  • There are prospects of to test 200 DMA and 0.6780.

At the time of writing, AUD/USD is up 0.6% on the day and has traveled from a low of 0.6606 to a high of 0.6668 so far. While pressured below the 200-DMA, AUD/USD is now trading on the backside of the trendline but is yet to break the 0.6700 key resistance level. Bulls are fending off the bears while keeping them back above 0.6580. The following illustrates the market structure on the 4-hour chart:

AUD/USD H4 charts

There is a price imbalance to the downside, greyed area, but so long as the bulls commit to the 0.6580s then there will be prospects of a move to test 200 DMA and 0.6780 as the accumulation process kicks in. 

19:57
US: Eleven banks deposit $30 billion into First Republic Bank

In a short statement, the Federal Reserve (Fed), the Department of the Treasury, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) announced a massive deposit of 11 banks into the Frist Republic Bank. 

Full statement: 

“Today, 11 banks announced $30 billion in deposits into First Republic Bank. This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system.”

Market reaction

US markets are up on Thursday with the Dow Jones up by more than 1% and the Nasdaq gaining by 2.45%. The support from banks to the Frist Republic Bank was a key factor on today’s rally. Shares of the bank reversed a 36% decline, and near the end of the session, are up by 10%. 
 

19:02
Gold Price Forecast: XAU/USD bears in the market below trendline support
  • Gold price is making the case for the downside.
  • Banking sector jitters ease as authorities come to the rescue. 
  • The break of the Gold price trendline support is compelling and points to a downside continuation to test key structure of $1,912 to open risk to $1,900. 

Gold Price was two-way over the European Central bank interest rate decision but then gave in to the bears that took control and moved towards a key structure area on the hourly chart, $1,912.49 where the lows reached $1,913. The initial reaction to the 50 basis point Refinancing Rate hike was a drop to test $1,926 before returning to $1,930 from where the bears piled in again to take out the bullish trendline support as illustrated below. 

Meanwhile, the ECB hiked as follows:

ECB rate hike 

  • Main refi rate at 3.50% vs 3.00% prior.
  • Raises interest rate on marginal lending facility to 3.75% vs 3.25% prior.
  • Deposit facility to 3.00% vs 2.50% prior.

ECB statement key notes

  • Refrains from signalling future rate moves in statement.
  • Inflation projected to remain too high for too long.
  • Headline inflation expected to average 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025.
  • Forecasts done before market turmoil.
  • Elevated level of uncertainty reinforces importance of a data-dependent approach to ECB policy decision, which will be determined by its assessment of inflation outlook in light of incoming data and dynamics.
  • Banking sector sector is resilient, with strong capital and liquidity positions
  • Policy toolkit is fully equipped to provide liquidity support to eurozone financial system if needed.

As a result, markets have now priced the terminal rate at 3% and the Euro was put under pressure. 

Banking crisis fears dwindle

Meanwhile, Gold price came under pressure in the main on the back of a pause in safe-haven buying as concerns over the health of Credit Suisse diminished after the institution secured funding from the Swiss National Bank to firm up its liquidity.

Analysts at ANZ Bank explained that ´´mainstream reports in the US that major US banks, working with the government, are in discussions to support California based First Republic Bank, also buoyed sentiment. US regional bank stocks climbed 5.0% and December 2023 fed funds futures sold off more than 40bp.¨´

´´The announcement of a bank funding plan sparked a sell-off in gold prices overnight, with CTA trend followers readjusting their length in response, but we continue to expect prices to remain resilient,´´ ´the analysts at TD Securities explained. 

´´Meanwhile, risks that the tightening cycle is coming to an end should also realign discretionary flows with strong physical flows, which could translate into substantial upside,´´ the analysts argued.

Gold price technical analysis

The break of the trendline support is compelling and points to a downside continuation to test key structure of $1,912 to open risk to $1,900. 

18:38
USD/JPY Price Analysis: Subdued around 133.50s after struggling at 134.00 USDJPY
  • USD/JPY is almost flat during the North American session.
  • Oscillators remain in bearish territory, but price action signals consolidation.
  • USD/JPY Price Analysis: Sellers reclaiming 132.21 would exacerbate a fall toward 127.20s.

USD/JPY rises after dropping to a fresh four-week low at 131.71 but stages a comeback and has reclaimed the 133.00 figure. Nevertheless, a wall of resistance with all the daily Exponential Moving Averages (EMAs) above the exchange rate supports a bearish bias. Hence, the USD/JPY is trading at 133.56, above its opening price by a decent 0.14%.

USD/JPY Price action

The USD/JPY is neutral biased after the 20, 50, 100, and 200-day EMAs intersected at around the 134.05-92 area. However, oscillators like the Relative Strength Index (RSI) and the Rate of Change (RoC), suggest that sellers are in charge. But price action, as the leading indicator, needs sellers to reclaim the February 10 daily low at 129.79, which could open the door for further downside.

For a bearish continuation, the USD/JPY must fall below the March 15 low of 132.21. Once cleared, the 132.00 figure would be for grabs. Seller's next stop would be the February 2 daily low at 128.08, followed by the YTD low at 127.21.

In an alternate scenario, the USD/JPY first resistance would be the 200-day EMA at 134.05. A breach of the latter would expose the 50 and 20-day EMAs, each at 134.13 and 134.59, ahead of testing the 100-day EMA at 134.92. Once broken, the buyers would reclaim 135.00.

USD/JPY Daily chart

USD/JPY Technical levels

 

18:20
EUR/USD: systemic risk fears look set to dominate price action – Danske EURUSD

The EUR/USD pair remained steady following the decision of the European Central Bank to raise rates by 50 basis points on Thursday. Analysts at Danske Bank see the pair at lower than current levels on a three to six months horizon. 

Limited market reaction to the ECB

“Despite the large uncertainty with respect to the rate decision, the reaction in FX markets was remarkably limited. We entered the meeting with a fundamental predisposition of wanting to sell EUR/USD rallies on a 50bp hike but the cross hardly reacted with the FRA curve flattening upon announcement.”

“Looking ahead, systemic risk fears look set to dominate price action among majors. Our bias remains for systemic fears to subside over the coming weeks, but we humbly acknowledge the high sensitivity to negative news, which leaves us side-lined with no high-conviction calls near term. On a 3-6M horizon, we still pencil in a lower EUR/USD compared with current spot levels.”

“We expect the ECB deposit rate to peak at 4%, with a 50bp rate hike in May followed by a 25bp hike in both June and July.”
 

18:15
WTI climbs on sentiment improvement, and Saudi-Russia meeting eased fears
  • WTI is recovering from falling 5% on Wednesday due to a risk-off impulse.
  • OPEC: The week’s fall is blamed on sentiment shifting sour on turbulence in the financial market.
  • The market sentiment improved on Swiss authorities supporting Credit Suisse.

Western Texas Intermediate (WTI), the US crude oil benchmark, gains traction after dropping to a 15-month-low at around 65.72, sponsored by a risk-on impulse. The Wall Street Journal (WSJ) reported that major banks in the US are stepping in to help First Republic Bank, an action cheered by US equities and oil prices. WTI is trading at 68.25, above its opening price by 0.03%.

Saudi Arabia and Russia’s discussion capped WTI’s fall

Additionally to the abovementioned factors, WTI is underpinned by reports that Saudi Arabia and Russia met to discuss enhancing market stability. Saudi’s energy minister Prince Abdulaziz bin Salman and Russian deputy prime minister Alexander Novak met in the Saudi capital to discuss the OPEC+ group’s efforts to maintain market balance.

Delegates from the Organization of Petroleum Exporting Countries (OPEC) and its allies told Reuters that “this week’s slide in oil prices to be driven by financial fears, not any imbalance between demand and supply, and expects the market to stabilize.”

WTI fell due to the turbulence in the financial markets. Swiss authorities backing up Credit Suisse (CS) and US Treasury Secretary Janet Yellen assuring lawmakers that the US banking system remained sound were a tailwind for WTI.

This week, OPEC and the International Energy Agency (IEA) have both predicted an increase in oil demand, but the market is still being affected by concerns about excess supply.

The IEA commented that stockpiles in developed countries hit an 18-month high, while Russian output stayed around familiar levels in February.

WTI Technical levels

 

18:10
EUR/USD bulls and bears in a brawl between key support and resistance EURUSD
  • EUR/USD holds in familiar territories after the ECB.
  • Markets are calmer after Credit Suisse said it would borrow up to $54 billion from the Swiss National Bank.
  • The bias is for a break of the horizontal support of 1.0480 to open prospects of a move to 1.0450.

EUR/USD is higher on the day but hardly making headway after the European Central Bank raised interest rates as planned despite market turmoil and the banking crisis. At the time of writing, EUR/USD is trading at 1.0595 and higher by 0.18% on the day. The pair has traveled between a low of 1.0551 and 1.0635.

The ECB announced a half-percentage point rate hike as promised to curb inflation as follows:

  • Main refi rate at 3.50% vs 3.00% prior.
  • Raises interest rate on marginal lending facility to 3.75% vs 3.25% prior.
  • Deposit facility to 3.00% vs 2.50% prior.

All in all, the Governing Council remains highly concerned about inflation, analysts at TD Securities explained, noting the first sentence of the release as being: "Inflation is projected to remain too high for too long". 

No LTROs were announced, but the statement shows a willingness to provide liquidity if needed. Moreover, there was no indication in the statement of future policy hikes. Treasury yields rose at the short end, while notes and bonds with maturities of 10 years or more fell after an initial volatile reaction by markets to the ECB decision.

Meanwhile, markets were broadly calmer on Thursday after Credit Suisse said it would borrow up to $54 billion from the Swiss National Bank to shore up liquidity and investor confidence. The bank's shares sank like a stone by 30% on Wednesday.

EUR/USD technical analysis

EUR/USD´s daily chart is meeting the daily support and is capped by daily resistance. While on the backside of the prior bullish trend and resisted below 1.0700, the bias is for a break of the horizontal support of 1.0480 to open prospects of a move to 1.0450 ahead of the 200 DMA.

The hourly chart has seen the price resisted below a 50% mean reversion after piercing the horizontal support. If the bears commit, then a break of the support will put the -272% Fibo in focus near 1.0450. 

17:59
ECB: Looking at two more 25bps hikes – Rabobank

On Thursday, the European Central Bank raised its key interest rates by 50bps as expected. Analysts at Rabobank see two more rate hikes of 25 bps ahead. 

More ground to cover

“Despite the market turmoil, the ECB stuck to the 50bp hike it had flagged beforehand, as inflation is still seen as too high. This reinforces the ECB’s commitment to getting inflation back to target, although we believe that markets are nonetheless underestimating the terminal rate in the wake of the meeting. To the extent that this is driven by financial stability concerns, the ECB made clear that Eurozone banks are resilient. If intervention is nonetheless necessary, it will be done in such a way that it doesn’t conflict with the price stability mandate.”

“Significant uncertainty forced the ECB to fully abandon forward guidance.”

“We maintain our call for two more hikes of 25bp. Persistent unrest in financial markets is the main downside risk, but if this fades, inflation persistence could still require higher rates.”

“President Lagarde made it clear that the inflation fight is not over. Nonetheless, markets are currently only reluctantly pricing higher policy rates again. This muted response was perhaps the best the ECB could hope for at this time. When calm returns to the markets, the Council can gradually fine-tune policy expectations. We maintain our call for two more 25bp hikes.”
 

16:43
USD/MXN falls on risk-on impulse and a soft US Dollar ahead of next week’s FOMC
  • USD/MXN dropped from daily highs above $19.00 as market sentiment improved.
  • Data from the United States shows the economy’s resilience despite the ongoing Fed’s aggression.
  • Investors are eyeing US Industrial Production, Consumer Sentiment, and next week’s FOMC meeting.

USD/MXN hovers nearby the $19.00 figure on Thursday, with risk aversion taking center stage, amidst a turbulent week, in the global banking system. Investors’ flight to safety weighed on the Mexican Peso (MXN), which is set to finish the week with losses of 0.15% after testing multi-year lows of 17.8967. However, the MXN holds to gains. At the time of writing, the USD/MXN is trading at around 18.90s, below its opening price by 0.23%.

Sentiment improvement a headwind for USD/MXN

Traders’ mood improved on headlines that major banks in the United States (US) stepped in to help the First Republic Bank. The European Central Bank (ECB) lifted rates by 50 bps, stating that inflation remained elevated and did not offer any cues about future monetary policy meetings.

Aside from this, the economic data in the United States (US) revealed that the number of people filing for unemployment benefits, as reported by the US Bureau of Labor Statistics (BLS), decreased to less than 200,000. This indicates that the job market is still tight, warranting further action by the Fed. The number of initial jobless claims increased by 192,000, lower than the 205,000 expected by experts. The housing data, including Housing Starts and Building Permits, also surpassed expectations, indicating that the economy is strong despite the Federal Reserve’s aggressive tightening cycle.

Lately, the Mexican Peso recovered ground vs. the US Dollar (USD), which according to the US Dollar Index, is down 0.33%, at 104.397. As sentiment improved, the USD/MXN fell from 19.7986 to the day’s low of 18.8812.

US Treasury bond yields are edging, with the 10-year Treasury bond yielding up six basis points, at 3.522%. For the upcoming meeting, money market futures odds for a 25 bps lift by the Fed moved from 45.4% to 83.4%.

Also read: USD/MXN rallies sharply above $18.80 on SVB crisis, Fed rates repricing

What to watch?

The US economic calendar will feature Industrial Production, Capacity Utilization, and the University of Michigan (UoM) Consumer Sentiment. Traders are eyeing the following week’s Federal Open Market Committee (FOMC) monetary policy decision.

USD/MXN Technical levels

 

 
15:58
ECB agreed to go ahead with 50 bps hike after SNB threw lifeline to Credit Suisse – Reuters

Citing three sources familiar with the matter, Reuters reported on Thursday that European Central Bank (ECB) policymakers agreed to go ahead with a 50 basis points increase in key rates after the Swiss National Bank (SNB) "threw a lifeline" to Credit Suisse.

Reuters further noted that the ECB's policy debate was between a 50 basis points hike or leaving rates unchanged. There was no discussion of a 25 bps hike.

Market reaction

EUR/USD gained traction on this headline and was last seen rising 0.45% on the day at 1.0622.

15:57
Gold Price Forecast: XAU/USD depends on whether and how quickly market situation calms down – Commerzbank

The outlook for the Gold price is currently highly uncertain. he further development of the precious metal depends heavily on whether and how quickly the market turmoil subsides and the Fed is able to raise its interest rates further, economists at Commerzbank report.

Gold would likely give up its recent gains if market mood improves

“If further bankruptcies follow or if the market increasingly prices in the risk of contagion effects, interest rate expectations could fall further and the Gold price could, in turn, receive further tailwind as a result.”

“We had previously assumed a Gold price of $1,950 at the end of the year, as we had expected that the market would only increasingly bet on a turnaround of interest rates in the second half of the year. This has now occurred much earlier due to the turmoil in the banking sector. Thus, if these continue, XAU/USD should reach our year-end forecast already in the near future.”

“If fears can be allayed, this could allow the Fed to raise interest rates further in order to curb inflation, which remains too high. In this case, Gold would likely give up its recent gains.”

“For the second half of the year, we would continue to expect Gold to recover even in this scenario, as the aggressive interest rate hikes should then start to be felt in the real economy. The market's focus would subsequently turn to possible interest rate cuts, which should make Gold look more attractive again in relative terms.”

 

15:45
USD/CAD Price Analysis: Bulls are in the market, eye break of H1 resistance USDCAD
  • USD/CAD bulls are attempting to break H1 resistance. 
  • H4 charts are bullish while above support. 

USD/CAD is building a bullish case across the time frames and the following illustrates this on the 4-hour and 1-hour chartsÑ

USD/CAD H4 chart

We have the price climbing along a dynamic support line and breaking structure on the front side of the trend following a pullback. This could be the makings for a bullish extension. 

Support around the prior structure sees the price stabilizing in the W-formations retest as illustrated above.

USD/CAD H1 chart 

Bulls need to break the current resistance. On a restest of this area, which would be expected to act as a support. the thesis is that there will be prospects of further demand there to take the pair higher and test prior highs. 

15:24
Silver Price Analysis: XAG/USD tests $22.00 but dived below the 200-DMA after US data
  • Silver price dropped sharply recently, following solid US jobs and housing data.
  • The ECB surprised the markets with a 50 bps hike; the following meetings are live.
  • XAG/USD Price Analysis: To remain downward biased, below $21.80.

Silver price fluctuates between gains and losses after hitting a daily high of $22.08, erasing some of its earlier gains. The European Central Bank (ECB) surprised the markets with a 50 bps lift, amidst a turmoil period in the financial markets, with Credit Suisse (CS) at the brisk of defaulting. At the time of writing, the XAG/USD exchanges hands at $21.54.

Unemployment claims in the US dropped, warranting further action by the Fed

Sentiment remains fragile, with most global equities dropping except the Nasdaq 100. The European Central Bank (ECB) raised rates by 50 basis points (bps) and stated that inflation remains too high. However, the statement did not provide forward guidance regarding future monetary policy decisions.

The US economic docket revealed that unemployment claims, reported by the US Bureau of Labor Statistics (BLS), eased below the 200K mark, a sign of the labor market tightness. Initial Jobless Claims rose by 192K vs. 205K, estimated by market participants. At the same time, housing data, led by Housing Starts and Building Permits, exceeded estimates, showing the economy’s resilience despite Fed’s aggressive tightening cycle.

The greenback remains under pressure, as shown by the US Dollar Index (DXY), down 0.26% at 104.478. US Treasury bond yields are recovering some ground, with 2s up 13 bps at 4.019%. On the contrary, the 10-year benchmark note rate is 3.432%, down two bps, a tailwind for XAG/USD.

What to watch?

The US economic calendar will feature Industrial Production, Capacity Utilization, and the University of Michigan (UoM) Consumer sentiment.

XAG/USD Technical analysis

The XAG/USD reached for two straight days the $22.00 mark but failing to hold to gains showed sellers’ commitment to keeping the price below the figure. Why? Because after the two attempts, the XAG/USD dropped below the confluence of daily Exponential Moving Averages (EMAs), particularly the 200-day at $21.78. therefore the path of least resistance is downwards. The XAG/USD first support would be $21.50, followed by the 20-day EMA at $21.29, and then the figure at $21. Alternatively, a daily close above $22.00 could pave the way for further upside.

 

15:15
ECB will deliver several further rate hikes in the upcoming meetings – Nordea

The ECB hiked rates by 50 bps. Economists at Nordea think the ECB remains worried about the inflation picture and will continue hiking in the upcoming meetings.

Finally truly driven by incoming data

“The ECB hiked rates by 50 bps despite ongoing market turbulence. The uncertain market situation led to the ECB not giving any signals about the future – the central bank is finally truly in a data-dependent mode.”

“We think the ECB will continue hiking rates in upcoming meetings, likely favouring 25 bps steps going forward.”

 

15:15
GBP/USD bulls pipe up to test H4 resistance after ECB presser GBPUSD
  • GBP/USD holds firm in a correction following ECB.
  • Bears are lurking near a 61.8% Fibo on the 4-hour chart.

GBP/USD is taking on hourly resistance in the aftermath of the European Central Bank interest rate decision and press conference. The ECB went ahead with a half-point rate hike on Thursday. Prior to the decision, market participants wondered if the Governing Council might balk. Nevertheless, the Euro sank and the US Dollar stabilized which is a weight for GBP. At the time of writing, GBP/USD is trading 0.28% higher on the day and has traveled between a low of 1.2026 and 1.2112 so far.

In the face of recent banking sector turmoil, including and especially Credit Suisse's worst day yesterday after its shares on Wednesday plunged as much as 30%, the ECB went ahead and raised interest rates as follows;

  • Main refi rate at 3.50% vs 3.00% prior.
  • Raises interest rate on marginal lending facility to 3.75% vs 3.25% prior.
  • Deposit facility to 3.00% vs 2.50% prior.

The bottom line here is that the Governing Council remains highly concerned about inflation, analysts at TD Securities explained, noting the first sentence of the release as being: "Inflation is projected to remain too high for too long". 

No LTROs were announced, but the statement shows a willingness to provide liquidity if needed. Moreover, there was no indication in the statement of future policy hikes.

In the presser, the governor Christine Lagarde said the bank remains committed to the 2% inflation target and that they are not seeing a lot of improvement in underlying inflation.

ECB statement key notes

  • Refrains from signalling future rate moves in statement.
  • Inflation projected to remain too high for too long.
  • Headline inflation expected to average 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025.
  • Forecasts done before market turmoil.
  • Elevated level of uncertainty reinforces importance of a data-dependent approach to ECB policy decision, which will be determined by its assessment of inflation outlook in light of incoming data and dynamics.
  • Banking sector sector is resilient, with strong capital and liquidity positions
  • Policy toolkit is fully equipped to provide liquidity support to eurozone financial system if needed.

GBP/USD technical analysis

 The break below the 50-day moving average is bearish:

H4 chart

´´We see room for the USD to reverse this week’s losses and would look for a move back to GBP/USD1.19 on a 1-month view,´´ analysts at Rabobank said. 

15:10
JPMorgan, Morgan Stanley, and others big banks in talks to strengthen First Republic – WSJ

According to the Wall Street Journal, JPMorgan, Morgan Stanley and other banks are “discussing a potential deal with First Republic that could include a sizable capital infusion to shore up the beleaguered lender, people familiar with the matter said.”

Market reaction 

First Republic shares are falling 23% on Thursday at $24.00, after rebounding from $21.00 following the WSJ report.

After opening with losses, Wall Street indexes turned positive during the last hour. The Nasdaq is up 0.90% and the Dow Jones rises by 0.16%. 

15:09
USD/IDR: Still constructive on the Rupiah amid volatile markets – TDS

The Indonesian Rupiah is down 0.7% against the US Dollar this month, the biggest decliner among major Asia FX. Nevertheless, economists at TD Securities remain constructive on IDR.

Holding jets before going short USD/IDR

“BI is not sounding overly concerned on FX now, sticking to its stance that it stands ready to intervene to stabilise the currency.”

“We still remain constructive on IDR as real yields are positive across the curve and should support bond inflows, giving a boost to IDR.”

“Amid volatile markets, we will hold our jets before going short USD/IDR.”

 

14:37
USD Index keeps the bearish tone around 104.50 post-data
  • The index maintains the familiar range in the mid-104.00s.
  • No meaningful reaction after the ECB hiked rates as promised.
  • The Philly Fed index improved marginally to -23.2 in March.

The greenback hovers around the 104.50 region when measured by the USD Index (DXY) amidst the mild rebound in the appetite for the risk complex on Thursday.

USD Index unchanged on data, ECB

The index keeps the trade well below the 105.00 mark against the backdrop of shrinking fears over a potential crisis in the banking system on both sides of the ocean, while the mixed tone in US yields also adds to the lack of traction in the dollar.

In the US calendar, Initial Jobless Claims rose by 192K in the week to March 11, while the Philly Fed Manufacturing Index ticked marginally higher to -23.2 for the current month. From the housing sector, Building Permits rose 13.8% MoM in February (or 1.524M units) and Housing Starts expanded 9.8% MoM, or 1.45M units.

In the meantime, investors’ concerns around the banking system look somewhat alleviated after the Swiss National Bank (SNB) will lend around $54B to Credit Suisse.

What to look for around USD

The index comes under pressure after hitting fresh tops past the 105.00 mark on Wednesday.

The risk aversion derived from banking jitters appears somewhat diminished and supports some selling pressure in the dollar amidst firmer conviction among investors of a 25 bps rate hike by the Federal Reserve at the March 22 meeting.

So far, the index remains under pressure against the backdrop of reinvigorated bets of a Fed’s pivot in the short-term horizon. However, the still elevated inflation and the resilience of the US economy continue to play against that view.

Key events in the US this week: Initial Jobless Claims, Housing Starts, Building Permits, Philly Fed Manufacturing Index (Thursday) – Industrial Production, Flash Michigan Consumer Sentiment, CB Leading Index (Friday).

Eminent issues on the back boiler: Rising conviction of a soft landing of the US economy. Persistent narrative for a Fed’s tighter-for-longer stance. Terminal rates near 5.5%? Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is retreating 0.17% at 104.56 and the breakdown of 103.48 (monthly low March 13) would open the door to 102.58 (weekly low February 14) and finally 100.82 (2023 low February 2). On the other hand, the next hurdle emerges at 105.88 (2023 high March 8) seconded by 106.64 (200-day SMA) and then 107.19 (weekly high November 30 2022).

14:36
USD/JPY to sink as the end of the Fed tightening cycle is approaching – MUFG USDJPY

Economists at MUFG Bank held a neutral bias for USD/JPY in February. But now, they expect the pair to move downward.

Higher volatility means risk skewed more to the downside

“We must stress that we could quickly see justification for the Fed to do nothing next week. Risks are extremely high at present and the continued to decline of share prices for European banks underlines the risks of this risk event morphing into something greater which would have implications for risk sentiment and likely mean a larger downside move for USD/JPY over the short-term.”

“While the FOMC may well hike this month if conditions stabilise, we believe the collapse of SVB in the US does certainly take out the prospect of the FOMC hiking by 100 bps in total from here. We believe this change in market conditions – that effectively brings the end to Fed tightening sooner – will weigh on USD/JPY going forward.”

“We have a clear bearish bias for the outlook going forward with extraordinarily high levels of volatility very possible.”

 

14:30
Lagarde speech: Not seeing a lot of improvement in underlying inflation

Christine Lagarde, President of the European Central Bank (ECB), is delivering her remarks on the policy outlook and responding to questions from the press following the Governing Council's decision to hike key rates by 50 basis points in March.

Key takeaways

"Not seeing a lot of improvement in underlying inflation."

"Beginning to see transmission of policy through the credit channel."

"Not yet had to decide whether Transmission Protection Instrument (TPI) is needed, but could be the case at some point."

Meanwhile, ECB Vice President  Luis de Guindos said that banks in the Eurozone were resilient with a robust liquidity position. De Guindos further argued that higher rates were positive for the margins of the banks and added that the exposure to Credit Suisse was "quite limited."

About ECB's press conference

Following the ECB´s monetary policy decisions, the ECB President delivers a prepared statement and responds to questions from the press on the policy outlook. Her comments may influence the volatility of EUR and determine a short-term positive or negative trend. Her hawkish view is considered as positive, or bullish for the EUR, whereas her dovish view is considered as negative, or bearish.

14:30
United States EIA Natural Gas Storage Change came in at -58B, above forecasts (-62B) in March 10
14:15
EUR/JPY is under pressure over ECB EURJPY
  • EUR/JPY pressured over the ECB event.
  • ECB´s Laggard is speaking to the press following the 50 bp rate hike. 

EUR/JPY is under pressure, down by some 0.7% as the Euro sells off due to the rate hike by 50bps today by the European Central Bank, taking the deposit rate to 3.00%.

The ECB also highlighted that it will regularly assess how TLTROs are affecting its monetary policy stance. ´´The bottom line here is that the Governing Council remains highly concerned about inflation: the first sentence of the release is "Inflation is projected to remain too high for too long". This does not sound like an ECB that wants to stop hiking rates yet, but the statement does fairly reflect the heightened uncertainty going forward,´´ analysts at TD Securities said. 

ECB rate hike 

  • Main refi rate at 3.50% vs 3.00% prior.
  • Raises interest rate on marginal lending facility to 3.75% vs 3.25% prior.
  • Deposit facility to 3.00% vs 2.50% prior.

ECB statement key notes

  • Refrains from signalling future rate moves in statement.
  • Inflation projected to remain too high for too long.
  • Headline inflation expected to average 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025.
  • Forecasts done before market turmoil.
  • Elevated level of uncertainty reinforces importance of a data-dependent approach to ECB policy decision, which will be determined by its assessment of inflation outlook in light of incoming data and dynamics.
  • Banking sector sector is resilient, with strong capital and liquidity positions
  • Policy toolkit is fully equipped to provide liquidity support to eurozone financial system if needed.

Meanwhile, markets are now pricing the terminal rate at 3% and the Euro is under pressure.

Markets are now tuned in to the ECB Governing Council Press Conference:

Watch Live: ECB Governing Council Press Conference 

ECB President Christine Lagarde explains the Governing Council's monetary policy decisions and is taking questions from journalists at the Governing Council press conference.

The key here is how the governor is guiding the markets in terms of the path of rate hikes given the lack of substance in the statement. 

Lagarde speech: Can exercise creativity in short order if there is a liquidity crisis

Lagarde speech: Wage pressures have strengthened

Lagarde speech: Monitoring market tension closely

 

14:14
Lagarde speech: No tradeoff between price and financial stability

Christine Lagarde, President of the European Central Bank (ECB), is delivering her remarks on the policy outlook and responding to questions from the press following the Governing Council's decision to hike key rates by 50 basis points in March.

Key takeaways

"Given uncertainty, better to make a decision that we believe is robust."

"The board proposed no other option, the decision was adopted by a very large majority."

"3-4 didn't support the decision, dissenters wanted more time."

"No tradeoff between price and financial stability."

"We stand ready to provide new facilities if needed."

"Euro liquidity is perfectly addressed."

About ECB's press conference

Following the ECB´s monetary policy decisions, the ECB President delivers a prepared statement and responds to questions from the press on the policy outlook. Her comments may influence the volatility of EUR and determine a short-term positive or negative trend. Her hawkish view is considered as positive, or bullish for the EUR, whereas her dovish view is considered as negative, or bearish.

14:11
USD/CHF recovers a part of heavy intraday losses, keeps the red below 0.9300 USDCHF
  • USD/CHF attracts some dip-buying near the 0.9230 area and trims a part of its intraday losses.
  • Fears of turmoil in the banking sector lend support to the pair amid a modest USD rebound.
  • The risk-off mood could underpin the safe-haven CHF and keep a lid on any meaningful upside.

The USD/CHF pair recovers over 50 pips from the daily low and now trades just below the 0.9300 mark during the early North American session, still down around 0.45% for the day.

The Swiss Franc initially reacted positively and forced the USD/CHF pair to reverse a part of the previous day's huge rally after Credit Suisse announced that it will exercise an option to borrow up to $54 billion from the Swiss National Bank (SNB) to shore up liquidity. The early optimism, however, fades rather quickly as the markets are still trying to determine whether fears of a systemic crisis have been tamed.

Apart from this, a modest US Dollar recovery from the daily low, supported by the mostly upbeat US macro data, assists the USD/CHF pair to attract some buying near the 0.9230-0.9225 region. The US Department of Labor reported that Initial Jobless Claims fell to 192K during the week ended March 10 from 212K previous. Adding to this, the US housing market data also surpassed market estimates.

This, to a larger extent, helps offset the disappointing release of the Philly Fed Manufacturing Index, which came in at -23.2 for the current month against expectations for an improvement to -14.5 from the -24.3 previous. This, along with expectations that the Federal Reserve will deliver at least a 25 bps rate hike next week, acts as a tailwind for the Greenback and lends some support to the USD/CHF pair.

That said, the prevalent risk-off environment - as depicted by an extended downfall in the equity markets - could underpin the safe-haven CHF and keep a lid on any meaningful upside for the USD/CHF pair, at least for the time being. Hence, it will be prudent to wait for strong follow-through buying before positioning for an extension of this week's solid rebound from the lowest level since early January.

Technical levels to watch

 

14:08
Lagarde speech: Can exercise creativity in short order if there is a liquidity crisis

Christine Lagarde, President of the European Central Bank (ECB), is delivering her remarks on the policy outlook and responding to questions from the press following the Governing Council's decision to hike key rates by 50 basis points in March.

Key takeaways

"We have seen further slowdown in loan growth to households."

"Impossible to determine what the rate path will be."

"Banking sector is currently in a much stronger position than 2008."

"We can exercise creativity in short order if there is a liquidity crisis but this is not what we are seeing."

About ECB's press conference

Following the ECB´s monetary policy decisions, the ECB President delivers a prepared statement and responds to questions from the press on the policy outlook. Her comments may influence the volatility of EUR and determine a short-term positive or negative trend. Her hawkish view is considered as positive, or bullish for the EUR, whereas her dovish view is considered as negative, or bearish.

14:05
Fed easing cycles tend to be accompanied by a weaker Dollar – SocGen

As the end of the Fed's hiking cycle gets closer, the Dollar becomes more vulnerable, Kit Juckes, Head of FX Strategy at Société Générale report.

Getting close to Fed easing cycle

“I might need another holiday sooner than planned, but f I'm patient, I should be able to go to the US and enjoy a cheaper Dollar.”

“Fed tightening has seen two-year yields rise above both the last cyclical peak and the one before that. That's the root cause of volatility, which brings peak rates a lot closer. And while the Dollar sometimes peaks before rates, sometimes after the downtrend has started, the downcycle in rates usually sends the Dollar lower too.”

 

13:58
Lagarde speech: Wage pressures have strengthened

Christine Lagarde, President of the European Central Bank (ECB), is delivering her remarks on the policy outlook and responding to questions from the press following the Governing Council's decision to hike key rates by 50 basis points in March.

Key takeaways

"Underlying price pressures remain strong."

"Services inflation is driven by past energy increases."

"Wage pressures have strengthened."

"Most meansures of long term inflation expectations stand around 2%."

"These warrant continued monitoring in light of recent volatility."

"Risks to growth outlook tilted to downside."

About ECB's press conference

Following the ECB´s monetary policy decisions, the ECB President delivers a prepared statement and responds to questions from the press on the policy outlook. Her comments may influence the volatility of EUR and determine a short-term positive or negative trend. Her hawkish view is considered as positive, or bullish for the EUR, whereas her dovish view is considered as negative, or bearish.

13:54
Lagarde speech: Monitoring market tension closely

Christine Lagarde, President of the European Central Bank (ECB), is delivering her remarks on the policy outlook and responding to questions from the press following the Governing Council's decision to hike key rates by 50 basis points in March.

Key takeaways

"We are monitoring market tension closely."

"Our policy toolkit is fully equipped to provide liquidity support."

"ECB forecasts were finalized in early March."

"Economy looks set to recover over coming quarters."

"Industrial production should pick up as supply conditions improve further."

"Labour market remains strong."

About ECB's press conference

Following the ECB´s monetary policy decisions, the ECB President delivers a prepared statement and responds to questions from the press on the policy outlook. Her comments may influence the volatility of EUR and determine a short-term positive or negative trend. Her hawkish view is considered as positive, or bullish for the EUR, whereas her dovish view is considered as negative, or bearish.

13:47
EUR/USD: The risk of a 1.05 break is still non-trivial – TDS EURUSD

The ECB hiked its key rates by 50 basis points today. EUR/USD is back below 1.0600 and could decline under 1.0500, economists at TD Securities report.

ECB hiked rates by 50 bps

“ECB delivers the 50 as they leaked to the press the other day. No LTROs announced, but the statement mentioned a willingness to provide liquidity if needed. Moreover, there was no indication in the statement of future policy hikes.” 

“For now, the key ranges are intact, but the risk of a 1.05 break in EUR/USD is still non-trivial, especially given USD/JPY's breach of 132.00/40 (key support). That leaves EUR/JPY vulnerable to 138, especially with next the major support in USD/JPY coming around 130.”

 

13:44
EUR/USD back below 1.0600 post-ECB, looks to Lagarde EURUSD
  • EUR/USD returns to the sub-1.0600 area on Thursday.
  • The ECB raised rates by 50 bps at its event.
  • Attention now shifts to Lagarde’s press conference.

EUR/USD fades the initial uptick to the 1.0630/35 band and returns to the sub-1.0600 region in the wake of the ECB decision on rates.

EUR/USD now focuses on Lagarde

EUR/USD leaves behind the initial optimistic trade and refocuses on the area below the 1.0600 mark after the ECB delivered a 50 bps rate raise at its event on Thursday.

Indeed, the central bank raised the interest rate on the main refinancing operations, the interest rate on the marginal lending facility and the deposit facility to 3.50%, 3.75% and 3.00%, respectively.

Following the updated macroeconomic projections, the ECB expects the economy to expand 1.6% in 2024 and 2025, while inflation is seen averaging 5.3% this year and 2.9% in 2024.

The ECB refrained from signaling futures interest rate moves, while it sees inflation at still high levels.

Investors will now closely follow the usual press conference by Chair Lagarde.

EUR/USD levels to watch

So far, the pair is advancing 0.12% at 1.0589 and the breakout of 1.0759 (monthly high March 15) would target 1.0804 (weekly high February 14) en route to 1.1032 (2023 high February 2). On the other hand, the next support emerges at 1.0516 (monthly low March 15) seconded by 1.0481 (2023 low January 6) and finally 1.0323 (200-day SMA).

13:40
Gold Price Forecast: XAU/USD bounded between H1 support and resistance over ECB rate hike
  • The Gold price is offering two-way price action over the ECB.
  • The Gold price broke the structure to the upside on Wednesday and we are seeing some consolidation of that.
  • An extension to the bullish trend could unfold in the coming hours/sessions with $1,940 eyed.

Gold Price is two-way over the European Central bank interest rate decision. The initial reaction to the 50 basis point Refinancing Rate hike was a drop to test $1,926 before returning to $1,930. 

ECB rate hike 

  • Main refi rate at 3.50% vs 3.00% prior.
  • Raises interest rate on marginal lending facility to 3.75% vs 3.25% prior.
  • Deposit facility to 3.00% vs 2.50% prior.

ECB statement key notes

  • Refrains from signalling future rate moves in statement.
  • Inflation projected to remain too high for too long.
  • Headline inflation expected to average 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025.
  • Forecasts done before market turmoil.
  • Elevated level of uncertainty reinforces importance of a data-dependent approach to ECB policy decision, which will be determined by its assessment of inflation outlook in light of incoming data and dynamics.
  • Banking sector sector is resilient, with strong capital and liquidity positions
  • Policy toolkit is fully equipped to provide liquidity support to eurozone financial system if needed.

Meanwhile, markets are now pricing the terminal rate at 3% and the Euro is under pressure.

Markets will now turn to the ECB Governing Council Press Conference:

Watch Live: ECB Governing Council Press Conference 

ECB President Christine Lagarde explains the Governing Council's monetary policy decisions and will answer questions from journalists at the Governing Council press conference to be held on 16 March 2023 at 14:45 CET in Frankfurt am Main. Key will be how the govenor guides the markets in terms of the path of rate hikes given lack of substance in the statement. 

Elsewhere, the attention is on the banking sector crisis which is supportive of the Gold price as global yields take a knock in anticipation of less hawkish sentiment surrounding the Federal Reserve. 

Credit Suisse said on Thursday it would borrow up to $54 billion from the Swiss National Bank to shore up liquidity and investor confidence, after its shares on Wednesday plunged as much as 30%. However, while the news helped to stem some heavy selling in Asia trade, market sentiment remained fragile.

Two supervisory sources told Reuters that the ECB has contacted banks on its watch to quiz them on their exposure to Credit Suisse.

Gold technical analysis

The Gold price broke the structure to the upside on Wednesday and we are seeing some consolidation of that. However, should the support near a 61.8% Fibonacci retracement hold, then with bullish commitments, we could see an extension of the bullish trend unfold in the coming hours/sessions with $1,940 eyed.

13:38
EUR/GBP pares modest intraday gains, up a little around 0.8780 region post-ECB EURGBP
  • EUR/GBP surrenders a major part of its intraday gains to levels just above the 0.8800 mark.
  • The ECB lifts its benchmark rates by 50 bps, though fails to provide any meaningful impetus.
  • Traders now look to the post-meeting press conference before placing fresh directional bets.

The EUR/GBP cross struggles to capitalize on its strong intraday gains beyond the 0.8800 mark and retreats a few pips from the daily top touched during the mid-European session. The cross moves little after the European Central Bank (ECB) announced its policy decision and currently trades around the 0.8780 region, up less than 0.10% for the day.

The ECB  raised its key rates by 50 bps at the end of the March policy meeting, lifting the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility to 3.5%, 3.75% and 3%, respectively. In the accompanying policy statement, the central bank noted: "elevated level of uncertainty reinforces importance of a data-dependent approach to ECB’s policy rate decisions, which will be determined by its assessment of inflation outlook in light of incoming economic and financial data, dynamics of underlying inflation, and strength of monetary policy transmission."

In the absence of any major surprises, either dovish or hawkish, the decision fails to provide any meaningful impetus to the shared currency or the EUR/GBP cross. Traders also seem reluctant and prefer to wait for ECB President Christine Lagarde's post-meeting press conference, for cues about the future rate-hike path, before placing fresh directional bets. In the meantime, growing acceptance that the Bank of England (BoE) will pause its rate-hiking cycle next week continue to undermine the British Pound and assist the cross to hold above the 100-day Simple Moving Average (SMA) support.

Technical levels to watch

 

13:15
Breaking: ECB hikes key rates by 50 basis points in March as expected

The European Central Bank (ECB) announced on Thursday that it raised its key rates by 50 basis points (bps) following the March policy meeting, as expected. 

With this decision, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 3.5%, 3.75% and 3%, respectively.

In its policy statement, "elevated level of uncertainty reinforces importance of a data-dependent approach to ECB’s policy rate decisions, which will be determined by its assessment of inflation outlook in light of incoming economic and financial data, dynamics of underlying inflation, and strength of monetary policy transmission," the ECB noted.

Follow our live coverage of the market reaction to the ECB's policy announcements.

Watch ECB President Christine Lagarde's press conference live. 

Market reaction

EUR/USD edged slightly higher with the initial reaction and was last seen rising 0.3% on the day at 1.0610.

Key takeaways from the policy statement

"ECB staff macroeconomic projections were finalised in early March before recent emergence of financial market tensions."

"ECB staff now see inflation averaging 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025."

"Inflation excluding energy and food continued to increase in February and ECB staff expect it to average 4.6% in 2023, which is higher than foreseen in December projections."

"ECB staff then expect growth to pick up further, to 1.6%, in both 2024 and 2025, underpinned by a robust labour market, improving confidence and a recovery in real incomes."

"APP portfolio decline will amount to €15 billion per month on average until end of June 2023 and its subsequent pace will be determined over time."

"As concerns PEPP, ECB intends to reinvest principal payments from maturing securities purchased under programme until at least end of 2024."

13:15
European Monetary Union ECB Rate On Deposit Facility meets expectations (3%)
13:15
European Monetary Union ECB Rate On Main Refinancing Operations meets forecasts (3.5%)
13:12
USD/JPY Price Analysis: Hits fresh one-month low, seems vulnerable below 61.8% Fibo. level USDJPY
  • USD/JPY drifts lower for the second straight day and touches a fresh one-month low on Thursday.
  • The prevalent risk-off mood benefits the safe-haven JPY and weighs on the pair amid a weaker USD.
  • Break below the 61.8% Fibo. level might have already set the stage for a further depreciating move.

The USD/JPY pair drifts lower for the second straight day on Thursday - also marking the fifth day of a negative move in the previous six - and remains depressed through the early North American session. The pair drops a fresh one-month low, around the 132.15 region in the last hour and is pressured by a combination of factors.

Despite the fact that Credit Suisse announced that it will exercise an option to borrow up to $54 billion from the Swiss National Bank (SNB) to restore investors' confidence, fears of a systemic crisis continue to weigh on the risk sentiment. This is evident from a fresh leg down in the US equity futures, which is seen benefitting the safe-haven Japanese Yen and exerting pressure on the USD/JPY pair.

The global flight to safety leads to a further decline in the US Treasury bond yields, which keeps the US Dollar bulls on the defensive and contributes to the offered tone surrounding the USD/JPY pair. Meanwhile, the disappointing release of the Philly Fed Manufacturing Index offsets the better-than-expected US Jobless Claims and housing market data and does little to provide any impetus.

From a technical perspective, the intraday downfall drags the USD/JPY pair back below the 50% Fibonacci retracement level of the recent rally from the January monthly swing low. Moreover, oscillators on the daily chart have just started gaining negative traction. Hence, some follow-through selling below the 132.00 mark will be seen as a fresh trigger for bearish traders and pave the way for deeper losses.

The USD/JPY pair might then accelerate the fall towards the next relevant support marked by the 61.8% Fibo. level, around the 131.25 region. This is closely followed by the 131.00 mark, below which the downward trajectory could get extended further towards the 130.60 intermediate support before spot prices eventually drop to the 130.00 psychological mark.

On the flip side, attempted recovery might now confront stiff resistance near the 133.00 round figure ahead of the daily swing high, around the 133.50 region. Any subsequent move up is more likely to attract fresh sellers and remain capped near the 133.80 zone, or the 38.2% Fibo. level, which should now act as a pivotal point for the USD/JPY pair.

USD/JPY daily chart

fxsoriginal

Key levels to watch

 

13:05
EUR/USD: Break above 1.0800 essential to affirm an extended up move – SocGen EURUSD

EUR/USD rebounds. A move above 1.08 is needed to trigger another leg higher, economists at Société Générale report.

Support 1.0520, resistance 1.0800

“A move beyond recent lower high at 1.0800 would be essential to affirm an extended up move.” 

“Interestingly, the pair is evolving within a possible Head &Shoulders and failure to reclaim 1.0800 could potentially mean completion of the pattern.”

“A deeper decline is likely should a break below support zone at 1.0520/1.0480 materialize. Next potential objectives are expected to be at 1.0330 and 1.0220/1.0200, the peak of last September.”

 

13:00
Russia Central Bank Reserves $: $573.3B vs previous $578.4B
12:48
More sustained USD losses may develop Fed expectations to go soft on rates next week – Scotiabank

The US Dollar is mixed. Economists at Scotiabank note that the greenback could sustain losses if markets expect the Fed to go soft next week.

Choppy ranges are likely for now

“Markets are still working through the developments of the past few days, it seems and pondering the implications for monetary policy. The disinflationary impact of financial market stress may well leave central banks more cautious about raising interest rates but it is perhaps too soon to say exactly what the consequences of bank share volatility will be at this point.”

“Proceeding – cautiously – might be the best option for policymakers. Jittery and unsettled trends in FX may continue in the meantime.” 

“More sustained USD losses may develop if it looks as if the Fed is going soft on rates next week but choppy ranges are likely ahead of that.”

 

12:40
US: Housing Starts rise by 9.8% in February vs. -0.6% expected
  • Housing Starts and Building Permits in US rose sharply in February.
  • US Dollar Index stays under modest bearish pressure despite upbeat data.

The monthly data published by the US Census Bureau revealed on Thursday that Housing Starts increased by 9.8% on a monthly basis in February following January's 2% decline. This reading came in much better than the market expectation for a drop of 0.6%.

In the same period, Building Permits surged by 13.8%, compared to the market expectation for a contraction of 0.5%.

Market reaction

The US Dollar Index stays on the back foot despite the upbeat data and was last seen losing 0.37% on the day at 104.34.

12:35
US: Weekly Initial Jobless Claims decline to 192K vs. 205K expected
  • Initial Jobless Claims in the US decreased by 20,000 in the week ending March 11
  • US Dollar Index stays in negative territory below 104.50.

There were 192,000 initial jobless claims in the week ending March 11, the weekly data published by the US Department of Labor (DOL) showed on Thursday. This print followed the previous week's print of 212,000 and came in better than the market expectation of 205,000.

Further details of the publication revealed that the advance seasonally adjusted insured unemployment rate was 1.2% and the 4-week moving average was 196,500, a decrease of 750 from the previous week's revised average.

"The advance number for seasonally adjusted insured unemployment during the week ending March 4 was 1,684,000, a decrease of 29,000 from the previous week's revised level," the DOL noted.

Market reaction

The US Dollar Index showed no immediate reaction to these figures and was last seen losing 0.35% on the day at 104.35.

12:34
US: Philadelphia Fed Manufacturing Index improves marginally to -23.2 in March vs. -14.5 expected
  • Philly Fed Manufacturing Index rises marginally to -23.3 against expectations of -14.5. 
  • US Dollar remains steady after US economic numbers, ahead of ECB. 

The Federal Reserve Bank of Philadelphia's Manufacturing Business Outlook Survey's diffusion index for current general activity improved in March to -23.2 from -24.3 in February, a reading worse than -14.5 of market consensus. 

"Responses to the March Manufacturing Business Outlook Survey suggest continued declines for the region’s manufacturing sector. The survey’s indicators for general activity, new orders, and shipments were all negative, and the firms reported a decline in employment, on balance. The survey’s broad indicators for future activity continued to suggest subdued expectations for growth over the next six months." 

The indicators for new orders and shipments both declined to their lowest readings since May 2020, -25.4 and -28.2, respectively. According to the report, "on balance, the firms reported a decline in employment. The employment index decreased from 5.1 to -10.3, the index’s second negative reading since June 2020 and its lowest reading since May 2020."

"The firms continued to report overall increases in prices, but the indexes for prices paid and prices received both declined. The current prices paid index ticked down 3 points to 23.5, its lowest reading since August 2020 and near its long-run average." The current prices received index decreased to 7.9, its lowest reading since June 2020. 

Market reaction

The US Dollar remained steady after the Philly Fed and the Jobless Claims reports. The DXY is falling by 0.30%, hovering around 104.40, as traders await the European Central Bank decision. 

 


 

12:32
Canada Wholesale Sales (MoM) came in at 2.4% below forecasts (3%) in January
12:32
United States Philadelphia Fed Manufacturing Survey below forecasts (-14.5) in March: Actual (-23.2)
12:31
United States Export Price Index (YoY) above expectations (-1.2%) in February: Actual (-0.8%)
12:31
United States Import Price Index (MoM) came in at -0.1%, above forecasts (-0.2%) in February
12:31
United States Import Price Index (YoY) registered at -1.1%, below expectations (1.1%) in February
12:31
United States Export Price Index (MoM) registered at 0.2% above expectations (-0.1%) in February
12:30
United States Continuing Jobless Claims below expectations (1.715M) in March 3: Actual (1.684M)
12:30
United States Initial Jobless Claims registered at 192K, below expectations (205K) in March 10
12:30
United States Housing Starts (MoM) came in at 1.45M, above expectations (1.31M) in February
12:30
United States Initial Jobless Claims 4-week average: 196.5K (March 10) vs previous 197K
12:30
United States Building Permits Change came in at 13.8%, above expectations (-0.5%) in February
12:30
United States Building Permits (MoM) above expectations (1.34M) in February: Actual (1.524M)
12:30
United States Housing Starts Change came in at 9.8%, above expectations (-0.6%) in February
12:22
EUR/USD Price Analysis: Further losses likely below 1.0804 EURUSD
  • EUR/USD picks up some buying interest and retakes 1.0600.
  • The weekly low just above 1.0800 caps the upside so far.

EUR/USD manages to generate some upside traction and reclaims the area above the 1.0600 hurdle ahead of the ECB on Thursday.

Occasional bullish attempts, in the meantime, should clear the weekly high at 1.0804 (February 14) to allow for the continuation of the uptrend in the short term

Looking at the longer run, the constructive view remains unchanged while above the 200-day SMA, today at 1.0323.

EUR/USD daily chart

 

12:21
USD/JPY: Support at 132.50/60 levels fails – OCBC USDJPY

USD/JPY stays on the back foot and fluctuates in negative territory. The 50-Day Moving Average (DMA) at around the 132.50/60 area is at risk, economists at OCBC Bank report.

50-DMA in focus

“Mild bearish momentum on daily chart intact while RSI fell. Risks to the downside.”

“Support at 132.50/60 levels (50-DMA, 50% fibo) and 131.30 (61.8% fibo).”

“Resistance at 133.80 (38.2% fibo retracement of 2023 low to high), 135.40 (23.6% fibo, 21, 100-DMAs).”

See: USD/JPY could easily trade under 130 should banking sector conditions deteriorate again – ING

 

12:20
EUR/USD: At risk of further dips below 1.06 in the very near-term – Rabobank EURUSD

EUR/USD has recovered to above the 1.06 level. The actions of the ECB today and how Lagarde responds to the crisis will be instrumental in guiding the outlook for the Euro, economists at Rabobank report.

Expect a volatile ride for the EUR this afternoon

“It cannot be assumed that the EUR will find support on a 50 bps rate hike. If such as move is judged to be potentially damaging to confidence in the financial sector and in the broader economy, such a move could weigh on the performance of the single currency.”

“We would expect a volatile ride for the EUR this afternoon, but in the absence of a strong commitment by the ECB to stand behind banks (which would trigger issues connected with moral hazard), we see risk of further dips below EUR/USD 1.06 in the very near-term in reflection of ongoing jitters in the financial sector.”

 

12:16
US: Sticky inflation and further hikes by the Fed – UOB

Senior Economist at UOB Group Alvin Liew assesses the recent US inflation figures and the prospects for further hikes by the fed.

Key Takeaways

“US headline consumer price index (CPI) inflation increased by 0.4% m/m, 6.0% y/y in Feb (from 0.5% m/m, 6.4% y/y in Jan), exactly in line with Bloomberg’s survey and more importantly, the lowest headline reading since Sep 2021. However, core CPI (which excludes food and energy) proved to be stickier, as it rose sequentially in Feb, but at a faster m/m pace of 0.5%, (from Jan’s 0.4%). Despite the m/m increase, core CPI decelerated on a y/y basis slightly to 5.5% (from 5.6% in Jan). This is the smallest y/y rise since Dec 2021.”

“The shelter cost index remained the main inflation driver, accounting for more than 70% of the 0.4% m/m overall CPI rise. The indices for gasoline prices, and food also contributed materially. And within the core CPI, while the shelter cost was the main contributor, the pressures were more broad-based with contributions from the indices of household furnishings and operations, motor vehicle insurance, recreation, and apparel. From the y/y overall CPI perspective, housing component (which includes shelter and household furnishings and operations) remained the main contributor, accounting for more than half of the y/y increase, followed by food and transport.”

US Inflation Outlook – For the full year, we still expect both headline and core inflation to average 3.0% in 2023, above the Fed’s 2% objective. But the Jan and Feb CPI data showed that the balance of risk for US inflation remains on the upside as reflected by the persistent rise of food and shelter costs, and that core and services inflation remain elevated amidst ample demand.”

FOMC Outlook – The latest inflation and employment reports from BLS reaffirm our view that the Fed is not done with tightening yet, given continued wage growth and the price developments seen in housing, food and services costs. Admittedly, the recent US banking sector developments have raised concerns as there may be contagion risks surfacing elsewhere, complicating Fed’s inflation fight as price concerns are now swirling in a pot of financial market uncertainty. As the recent US regional bank’s collapse is viewed more likely an idiosyncratic development and unlikely to have a systemic impact on the US financial sector, it is reasonable to expect the US Fed to continue to stay focused on fighting inflation and push forward with its rate hike cycle. Thus, we still expect another 25bps hike at the upcoming Mar FOMC.”

12:09
USD Index Price Analysis: Decent contention emerges at 103.50
  • DXY surrenders part of Wednesday’s sharp uptick north of 105.00.
  • The March low near 103.50 should hold the downside so far.

DXY gives away some of Wednesday’s sharp gains and retreats to the 104.50 region on Thursday.

If bulls regain the upper hand, then the index could dispute the so far 2023 high at 105.88 (March 8) in the short-term horizon ahead of the key 200-day SMA, today at 106.64.

Looking at the broader picture, while below the 200-day SMA, the outlook for the greenback is expected to remain negative.

DXY daily chart

 

12:04
When is the European Central Bank (ECB) rate decision and how could it affect EUR/USD? EURUSD

ECB monetary policy decision – Overview

The European Central Bank (ECB) is scheduled to announce its monetary policy decision this Thursday, March 16, at 13:15 GMT, which will be followed by the post-meeting press conference at 13:45 GMT. Investors had begun to doubt if the ECB will stick to its commitment and deliver another big rate hike following last week's collapse of two mid-size US banks - Silicon Valley Bank and Signature Bank. That said, reports on Wednesday indicated that ECB policymakers are still leaning towards a jumbo 50 bps lift-off. This, along with a positive development surrounding the Credit Suisse saga, supports prospects for an aggressive hike due to high inflation. Apart from this, investors will scrutinize the accompanying monetary policy statement and ECB President Christine Lagarde's comments for fresh cues about the future rate-hike path.

According to Matías Salord, News Reporter at FXStreet: “The ongoing turmoil in the banking system has become a factor of uncertainty. One more. Its impact is not yet defined. Contagion fears appear partially contained at times, but it could all change in the near future. The ECB has to decide on Thursday what to do with the mentioned context. The damage so far from the SVB drama is unknown. Such circumstances look unlikely to change the course of the 50 bps rate hike expected.”

How could it affect EUR/USD?

Heading into the key central bank event risk, the EUR/USD pair trades with a positive bias above the 1.0600 mark amid easing fears of a full-blown banking crisis in Europe and a modest US Dollar weakness. A hawkish 50 bps rate hike, though theoretically should be positive for the shared currency, might raise contagion fears and fuel speculations for much stronger or earlier ECB rate cuts, which, in turn, should attract fresh sellers around the major.

Furthermore, a 25 bps lift-off, with no forward guidance or a shift to smaller hikes going forward, should be enough to weigh heavily on the Euro. This, in turn, suggests that the path of least resistance for the EUR/USD pair is to the downside. Hence, any positive market reaction is more likely to get sold into and runs the risk of fizzling out rather quickly.

Eren Sengezer, European Session Lead Analyst at FXStreet, outlines important technical levels to trade the major and writes: “EUR/USD was last seen trading in 1.0620/30 area, where the 50-period and the 10-period Simple Moving Averages (SMA) align. In case the pair stabilizes above that region, it could face interim resistance at 1.0660 (static level) before targeting 1.0690/1.0700 area (200-period SMA, psychological level, static level).”

“On the downside, first support is located at 1.0600 (psychological level, static level) ahead of 1.0530 (static level= and 1.0500 (psychological level),” Eren adds further.

Key Notes

   •  ECB Preview: Banking jitters give arguments for doves

   •  ECB Preview: Set for 50 bps rate hike, Lagarde holds the key

   •  EUR/USD Forecast: Euro could extend rebound if ECB downplays market jitters

About the ECB interest rate decision

ECB Interest Rate Decision is announced by the European Central Bank. Usually, if the ECB is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the EUR. Likewise, if the ECB has a dovish view on the European economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.

12:03
USD/CAD: Risk appetite remains a headwind for the Loonie – Scotiabank USDCAD

The CAD is trading little changed against the USD once again. Volatile risk appetite remains a headwind for the Loonie, economists at Scotiabank report.

Valuation and a somewhat overbought USD may limit CAD losses 

“Volatile risk appetite remains a headwind for the CAD but valuation and a somewhat overbought USD may limit losses for now.”

“Markets have little incentive to move an overbought USD significantly higher at this point but there is not much reason to fight the short-term uptrend in funds either.”

“Support is 1.3675/80.”

“Resistance is 1.3815 and (firmer) 1.3865.” 

 

12:01
China: Recovery remains well in place – UOB

Economist Ho Woei Chen at UOB Group reviews the latest set of data releases in the Chinese economy.

Key Takeaways

“The Jan-Feb data released today were largely in line with consensus forecasts and expectation of an economic rebound but the surprise rise in the national surveyed jobless rate cast a pall on the outlook.”

“The improvement was most apparent in retail sales which reversed from declines in the three preceding months to register a growth of 3.5% YTD y/y in Feb.”

“We are maintaining our 2023 growth forecast for China at 5.2% with 1Q23 expansion likely at around 3.4% y/y (4Q22: 2.9% y/y). Challenges from its real estate market and the downturn in global demand continue to be the main economic headwinds.”

“The People’s Bank of China (PBoC) kept its 1Y medium-term lending facility (MLF) rate at 2.75% in Mar and net injected CNY281 bn. This likely implies no change to the 1Y loan prime rates (LPR) at the rate setting next Mon (20 Mar). More important to watch will be the 5Y LPR as a reduction to the rate will signal strong government support to the real estate sector. Having said that, there could still be targeted support to certain sectors while a further cut to banks’ reserve requirement ratio (RRR) remains a possibility.”

11:58
EUR/JPY Price Analysis: Near-term outlook shifted to negative EURJPY
  • EUR/JPY adds to Wednesday’s acute drop below the 141.00 mark.
  • Next on the downside comes the YTD low near 137.40.

EUR/JPY remains on the defensive and returns to the sub-141.00 region after the earlier bull run to the 141.55/60 band on Thursday.

The sharp retracement could now motivate the cross to revisit the March low at 139.48 (March 15), while the breach of the latter could prompt a probable visit to the 2023 low at 137.38 (January 3) to emerge on the horizon.

In the meantime, extra losses remain on the cards while the cross trades below the 200-day SMA.

EUR/JPY daily chart

 

11:38
China: PBoC could ease further its monetary conditions – UOB

Lee Sue Ann, Economist at UOB Group, suggests the PBoC could reduce the Loan Prime Rate (LPR) at its next meeting on March 20.

Key Quotes

“With the need for further support measures toward the real economy and for 5Y loan prime rate (LPR) to fall further to boost demand for homes, we see the possibility for the 1Y LPR to fall to 3.55% and 5Y LPR to 4.20% in Mar, following the National People’s Congress (NPC).”

“The loosening bias for the monetary policy may start to reverse in 2H23, though, should the economy show stronger rebound and inflation quickens.”

11:37
EUR/USD: At risk of breaking below 1.05 if concerns over Credit Suisse are not resolved quickly – MUFG EURUSD

For most of the past month, the EUR had been grinding lower against the USD resulting in the pair moving toward the bottom of the year-to-date range between 1.0500 and 1.1000. A move under 1.0500 could be witnessed on renewed fears over Credit Suisse collapsing, economists at MUFG Bank report.

Price action in EUR/USD to prove more volatile in the month ahead

“The pair is at risk of breaking below 1.0500 in the near-term if concerns over the health of Credit Suisse are not resolved quickly.”

“We had been assuming that the ECB would follow through on their guidance from their last policy meeting to deliver another larger 50 bps hike but that is no longer a done deal. The heightened concerns over the health of the banking sector could make the ECB more cautious over continuing to deliver large hikes. The fundamental case for further hikes is still in place though with core inflation surprising to the upside at the start of this year, the Eurozone economy avoiding recession, and the ECB lagging behind in the current tightening cycle leaving more room for rates to rise further.” 

“We expect price action in EUR/USD to prove more volatile in the month ahead.”

 

11:29
GBP/USD: Cap around 1.22 suggests downside risk – Scotiabank GBPUSD

GBP/USD is slightly softer. Economists at Scotiabank expect the pair to challenge the 1.2000/05 zone.

Cable tracking a slightly softer course on the charts

“Net losses yesterday and firm resistance around the 1.22 zone leave the GBP tracking a slightly softer course on the charts today.”  

“Intraday gains have been capped around 1.21 (minor resistance now) and a retest of the 1.2000/05 zone (50% retracement of the March rally) may develop from here.”

See: EUR/GBP can push back above 0.8800 if the ECB hikes 50 bps without unnerving banking stocks – ING

 

11:23
EUR/GBP recovers further from two-month low set on Wednesday, retakes 0.8800 ahead of ECB EURGBP
  • EUR/GBP gains strong positive traction and draws support from a combination of factors.
  • Easing fears of fresh turmoil in the European banking sector boosts the shared currency.
  • The ECB-BoE policy divergence lends additional support ahead of the key ECB decision.

The EUR/GBP cross builds on the previous day's late recovery move from the 0.8720 area, or a nearly two-month low and gains strong follow-through positive traction on Thursday. The momentum remains unabated through the mid-European session and pushes spot prices back above the 0.8800 round-figure mark in the last hour.

A positive development surrounding the Credit Suisse saga, along with the prospects for a jumbo rate hike by the European Central Bank (ECB), benefits the shared currency and acts as a tailwind for the EUR/GBP cross. In fact, the troubled Swiss bank announced that it will exercise an option to borrow up to $54 billion from the Swiss National Bank (SNB) to shore up the liquidity. This helps ease fears about fresh turmoil in the European banking sector. Adding to this, reports on Wednesday indicated that ECB policymakers are still leaning towards a 50 bps lift-off later today.

It is worth mentioning that investors had begun to doubt if the ECB will stick to its commitment for another big interest rate hike, especially after last week's collapse of two mid-size US banks - Silicon Valley Bank and Signature Bank. However, a source close to the ECB's rate-setting Governing Council said there was no fundamental change in the outlook, while the Eurozone economy is picking up strength and inflation is expected to remain high for years. In contrast, the markets are now pricing in a 50% chance that the Bank of England (BoE) will pause its rate-hiking cycle next week.

In fact, interest rate futures suggest a 50% chance that the BoE will leave rates unchanged and an equal possibility of a smaller 25 bps rate hike. This further contributes to the British Pound's relative underperformance and provides an additional lift to the EUR/GBP cross. Thursday's strong move up, meanwhile, follows the overnight failure to find bearish acceptance below the 100-day Simple Moving Average (SMA) and supports prospects for additional gains. Traders, however, might prefer to wait on the sidelines ahead of the key central bank event risk - the ECB policy decision.

Technical levels to watch

 

11:17
US Treasury Sec. Yellen: US banking system remains sound

"I can reassure the members of the committee that our banking system remains sound, and that Americans can feel confident that their deposits will be there when they need them," US Treasury Secretary Janet Yellen will tell the Senate Finance Committee on Thursday, per Reuters.

"This week's actions demonstrate our resolute commitment to ensure that depositors' savings remain safe," Yellen's prepared remarks read. "Shareholders and debtholders are not being protected by the government. Importantly, no taxpayer money is being used or put at risk with this action."

Market reaction

These comments don't seem to be having a significant impact on the US Dollar's performance against its major rivals. As of writing, the US Dollar Index was down 0.27% on the day at 104.45.

11:05
WTI: $90+ is still possible at the end of 2023 – TDS

WTI plunged nearly seven percent on Wednesday as it fell to just above $66/bbl for the first time since December 2021. Notwithstanding the outsized large correction and the potential of another sharp drop, strategists at TD Securities have not given up on oil for the longer term just yet.

A move to the low-$60 or slightly below is well within the realm of possibilities

“Crude could well move much lower than the fundamentals suggest, while systemic worries continue. A move to the low-$60 or slightly below is well within the realm of possibilities. Of course, an outright financial crisis could send oil much lower.”

“While it's hard to say what happens on the monetary policy and financial risk front in the short run and how worried investors will be over demand, we judge that the long term looks positive for crude. As such, $90+ WTI is still possible at the end of 2023.”

 

11:01
Ireland HICP (YoY) increased to 8.1% in February from previous 7.5%
11:01
Ireland HICP (MoM) increased to 1.5% in February from previous -1%
11:01
Ireland Consumer Price Index (MoM) increased to 1.6% in February from previous -0.8%
11:00
Ireland Consumer Price Index (YoY) rose from previous 7.8% to 8.5% in February
10:42
EUR/USD: Risk sentiment could hold Euro back even if ECB hikes 50 bps – ING EURUSD

The ECB faces a very difficult decision today, where market conditions are interfering with plans to hike 50 bps. What about the EUR impact? Economists at ING analyze how the shared currency could react to the interest rate decision.

ECB will struggle to thread the needle

“While our call is for a 50 bps hike, we wouldn’t be shocked to see an ECB hold today. A 25 bps move seems the least likely scenario.”

“If the ECB 50 bps hike comes in an environment where markets are scaling back concerns on the banking sector thanks to the support from the SNB, then this may actually be read as a signal of confidence by Frankfurt on the health of the Eurozone banking system, and can ultimately lift the Euro.”

“Should the ECB force a hike in a still fragile environment for the European banking sector, the impact on EUR/USD may actually be negative, as investors see this as another major risk for the financial stability in the area, while the simple repricing higher in ECB rate expectations is statistically not enough to boost the Euro.”

 

10:41
AUD/USD sticks to modest intraday gains just below mid-0.6600s, lacks bullish conviction AUDUSD
  • AUD/USD attracts fresh buying on Thursday, albeit seems to struggle to capitalize on the move.
  • The upbeat Australian jobs data benefits the domestic currency amid a modest USD weakness.
  • Banking crisis fears, hawkish Fed expectations limit the USD losses and seem to cap the major.

The AUD/USD pair regains positive traction on Thursday and reverses a major part of the previous day's slide to sub-0.6600 levels, or the weekly low. The pair, however, retreats a few pips from the daily peak touched during the first half of the European session and is currently placed around the 0.6640-0.6645 region, still up nearly 0.40% for the day.

A positive development surrounding the Credit Suisse saga, along with the upbeat Australian employment figures, turns out to be a key factor lending support to the AUD/USD pair amid a modest US Dollar weakness. In fact, the troubled Swiss bank announced this Thursday that it will exercise an option to borrow up to $54 billion from the Swiss National Bank (SNB) to shore up the liquidity. The Aussie gets an additional lift after the Australian Bureau of Statistics (ABS) reported that the unemployment rate in February fell back to match the lowest level since the 1970s set in December.  

That said, concerns about a broader systemic risk, especially after last week's collapse of two mid-size US banks - Silicon Valley Bank and Signature Bank - keep a lid on any optimism. This is evident from the prevalent cautious mood around the equity markets, which acts as a headwind for the risk-sensitive Aussie. Apart from this, expectations that the Fed will hike interest rates by at least 25 bps at its upcoming meeting on March 21-22 help limits deeper losses for the safe-haven Greenback and further contribute to capping the upside for the AUD/USD pair, at least for the time being.

The aforementioned fundamental backdrop, along with the Reserve Bank of Australia's (RBA) dovish shift recently, signalling that it might be nearing the end of its rate-hiking cycle, favours the AUD/USD bears. Even from a technical perspective, this week's repeated failures to find acceptance above the 0.6700 round-figure mark suggest that the path of least resistance for spot prices is to the downside. Market participants now look to the US economic docket, featuring Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, Building Permits and Housing Starts, for a fresh impetus.

Technical levels to watch

 

10:15
USD/JPY could easily trade under 130 should banking sector conditions deteriorate again – ING USDJPY

The return of financial crisis conditions has seen the Japanese Yen return as the clear outperformer. Economists at ING expect the USD/JPY pair to dip below 130.

The Yen will be winning from the macro side

“The Yen has normally played the role of safe haven currency during times like these because of Japan's large current account and net foreign asset position (years of surpluses).”

“The US banking crisis stands to tighten US credit conditions, hit US growth, and accelerate the timing of the Fed easing cycle. The same is true for other major central banks and, in effect, will drag global interest rates closer to the rock bottom rates in Japan.”

“USD/JPY could easily trade under 130 should banking sector conditions deteriorate again and recent events on both sides of the Atlantic only give us greater confidence in our year-end USD/JPY forecast of 120.”

 

10:02
Greece Unemployment Rate (QoQ) climbed from previous 11.6% to 11.9% in 4Q
09:59
Gold Price Forecast: XAU/USD holds steady above $1,920 level amid banking crisis fears
  • Gold price reverses an intraday dip and draws support from a combination of factors.
  • Fears of a full-blown global banking crisis continue to benefit the safe-haven XAU/USD.
  • A weaker US Dollar further lends support to the metal amid the cautious market mood.
  • Bets for additional rate hikes by major central banks act as a headwind for Gold price.

Gold price attracts some dip-buying near the $1,908-$1,907 region on Thursday and stalls the previous day's modest retracement slide from its highest level since early February. The XAU/USD sticks to its modest gains above the $1,920 level through the first half of the European session, albeit lacks follow-through or a bullish conviction.

Banking crisis fears lend support to the safe-haven XAU/USD

Despite a positive development surrounding the Credit Suisse saga, worries about a full-blown global banking crisis continue to lend some support to the safe-haven Gold price. It is worth recalling that the troubled Swiss bank announced this Thursday that it will exercise an option to borrow up to $54 billion from the Swiss National Bank (SNB) to shore up the liquidity. Investors, however, remain concerned about a broader systemic risk in the wake of last week's collapse of two mid-size banks in the United States (US) - Silicon Valley Bank and Signature Bank.

Weaker US Dollar further benefits Gold price

Nevertheless, Credit Suisse’s move to bolster its financial position forces the US Dollar (USD) to reverse a part of the overnight strong gains of over 1%. This, along with the prevalent cautious mood around the equity markets, turns out to be another factor acting as a tailwind for the US Dollar-denominated Gold price. That said, the prospects for additional interest rate hikes by major central banks keep a lid on any meaningful upside for the non-yielding yellow metal. This, in turn, warrants some caution before placing aggressive bullish bets around the XAU/USD.

Bets for more rate hikes by major central banks cap gains

Market participants seem convinced that the Federal Reserve (Fed) will still deliver at least a 25 basis points (bps) rate hike at its upcoming policy meeting on March 21-22. The bets were lifted by the US Consumer Price Index (CPI) report released earlier this week, which showed that inflation isn't coming down quite as fast as hoped. Furthermore, reports indicate that European Central Bank (ECB) policymakers are still leaning towards a 50 bps rate hike later this Thursday as the Eurozone economy is picking up strength and inflation is expected to remain high for years.

Macro data from United States eyed for some impetus

The markets, meanwhile, are pricing in a 50-50 chance that the Bank of England will hike interest rates by 25 bps next week. This makes it prudent to wait for strong follow-through buying before positioning for an extension of the recent strong rally in Gold price, witnessed over the past one-and-half week or so. Traders now look to the US economic docket, featuring the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, Building Permits and Housing Starts for a fresh impetus later during the early North American session.

Gold price technical outlook

From a technical perspective, any subsequent move up is likely to confront stiff resistance near the overnight swing high, near the $1,937-$1,938 region. The next relevant hurdle is pegged around the $1,959-$1,960 area, or a multi-month top touched in February, which if cleared decisively will be seen as a fresh trigger for bullish and pave the way for a move towards the $2,000 psychological mark.

On the flip side, the daily low, around the $1,908-$1,907 area, seems to protect the immediate downside ahead of the $1,900 round figure. This is followed by the $1,886-$1,885 zone, below which Gold price could slide back to test the weekly low, around the $1,872-$1,871 region. Some follow-through selling will negate any positive outlook and shift the near-term bias in favour of bearish traders.

Key levels to watch

 

09:52
Spain 10-y Obligaciones Auction declined to 3.36% from previous 3.765%
09:48
USD/CNH: Downward bias alleviated above 6.9300 – UOB

The selling pressure around USD/CNH is expected to mitigate on a breakout of 6.9300, said UOB Group Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: “We highlighted yesterday that USD ‘appears to have moved into a consolidation phase and it is likely to trade between 6.8650 and 6.9050’. USD subsequently traded between 6.8722 and 6.9139 before closing slightly higher at 6.8940 (+0.16%). While the underlying tone has firmed somewhat, the price movements still appear to be consolidative. Today, we expect USD to trade in a range, likely between 6.8750 and 6.9100.”

Next 1-3 weeks: “After USD fell sharply on Monday, we highlighted on Tuesday (14 Mar, spot at 6.8600) that the ‘impulsive drop in USD is likely to continue’. However, USD has not been able to make any further headway on the downside. While the downside risk has decreased, only a break of 6.9300 (no change in ‘strong resistance’ level) would indicate that USD is not weakening further. Looking ahead, support level is at 6.8350.”

09:46
Crude oil prices to push above $100/bbl in the second half of the year – ANZ

Crude prices have plunged this week as risk aversion escalates amid the widening banking crisis. However, strategists at ANZ Bank expect the sell-off to be relatively short-lived, with fundamentals pointing to a tightening market.

OPEC to maintain its production cuts announced in late 2022

“For the moment, risks remain to the downside. We have subsequently trimmed our short-term (0-3M) target for Brent crude to $75/bbl.”

“We expect OPEC to keep the production cuts announced in late 2022 in place. Lower prices could also induce further demand, with the US to refill its strategic reserve.”

“As macro issues subside, we expect crude oil prices to push above $100/bbl in the second half of the year.”

 

09:43
Natural Gas Futures: Further consolidation in the pipeline

CME Group’s flash data for natural gas futures markets noted traders reduced their open interest positions for the second session in a row on Wednesday, this time by more than 10K contracts. On the other hand, volume kept the erratic activity well in place and went up by around 120.3K contracts.

Natural Gas faces extra range bound trade

Prices of the natural gas added to the previous daily pullback on Wednesday amidst shrinking open interest, which suggests that a potential rebound could be in the offing in the very near term. Looking ahead, the lack of strong drivers around the commodity is expected to leave the current consolidation well in place for the time being.

09:17
USD Index could rally wrongly if financial conditions deteriorate further – ING

The US Dollar Index, which rose more than 1% on Wednesday, stages a technical correction and trades in negative territory. Confidence crisis may spark the wrong kind of Dollar rally, economists at ING report.

Another nervous day in FX markets

“Expecting another nervous day in FX markets, we suspect investors will want to hang onto defensive trades such as long Japanese Yen on the crosses and probably long Dollar balances in case financial conditions deteriorate further.”

“Expect DXY to remain highly volatile in a 104-106 range – but the upside could come into focus (for the wrong reasons) if stress in the Dollar wholesale funding market were to spike again.”

 

09:09
USD/JPY: Further decline remains on the cards – UOB USDJPY

While further downside in USD/JPY appears likely, a test of 131.50 seems not favoured in the near term, comment UOB Group Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: “Yesterday, we expected USD to trade between 133.50 and 135.00. USD rose briefly to 135.11 in early London trade; plunged to 132.21 and then rebounded to close at 133.40 in NY (-0.61%). The volatile price action has resulted in a mixed outlook. Today, USD could continue to trade in a choppy manner, likely between 132.30 and 134.30.”

Next 1-3 weeks: “We indicated yesterday (15 Mar, spot at 134.30) that downward momentum has waned quickly but only a breach of 135.10 would indicate that USD is not weakening further. In London trade, USD rose briefly to 135.11 before plunging to 132.21. As there is no clear break of our ‘strong resistance’ level of 135.10, there is scope for USD to weaken further. That said, the major support at 131.50 is unlikely to come into view so soon.”

09:05
EUR/USD regains 1.0600 and beyond ahead of ECB EURUSD
  • EUR/USD partially fades Wednesday’s acute pullback.
  • The ECB is expected to hike rates by 50 bps later on Thursday.
  • Focus will be on Lagarde’s press conference and updated projections.

The single currency gives some signs of life and motivates EUR/USD to reclaim the area above 1.0600 the figure on Thursday.

EUR/USD looks bid on ECB-day

EUR/USD regains some upside traction and trims part of Wednesday’s sharp decline to fresh monthly lows near 1.0510 amidst alleviated risk aversion and fresh selling pressure around the greenback.

The pair, in the meantime, trades with decent gains ahead of the ECB monetary policy meeting, where the central bank is largely expected to hike interest rates by 50 bps. In addition, the central bank will publish its updated macroeconomic projections, while investors will closely follow the press conference by Chairwoman Lagarde regarding the potential next steps by the ECB as well as any mention on the European banking system in light of the recent news around Credit Suisse.

In the domestic calendar, final inflation figures in Italy showed the headline CPI rose 9.1% in the year to February. In the US, usual weekly Claims are due seconded by the Philly Fed Manufacturing Index.

What to look for around EUR

EUR/USD manages to leave behind some of the recent weakness and retakes the 1.0600 hurdle and above in pre-ECB trading on Thursday.

In the meantime, price action around the European currency should continue to closely follow dollar dynamics, as well as the potential next moves from the ECB past the March meeting, when the bank has already anticipated another 50 bps rate hike.

Key events in the euro area this week: ECB Interest Rate decision, ECB Lagarde (Thursday) – EMU Final Inflation Rate (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle amidst dwindling bets for a recession in the region and still elevated inflation. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is advancing 0.32% at 1.0609 and the breakout of 1.0759 (monthly high March 15) would target 1.0804 (weekly high February 14) en route to 1.1032 (2023 high February 2). On the other hand, the next support emerges at 1.0516 (monthly low March 15) seconded by 1.0481 (2023 low January 6) and finally 1.0323 (200-day SMA).

09:03
USD/CAD trades with modest losses below mid-1.3700s, downside seems cushioned USDCAD
  • USD/CAD meets with a fresh supply on Thursday and is pressured by a combination of factors.
  • A modest uptick in Oil prices underpins the Loonie and weighs on the pair amid a weaker USD.
  • The fundamental backdrop warrants some caution before positioning for any further downfall.

The USD/CAD pair extends the previous day's modest pullback from the vicinity of the weekly high, around the 1.3815 region, and remains under some selling pressure on Thursday. The steady intraday descent remains uninterrupted through the first half of the European session and drags spot prices to a fresh daily low, around the 1.3720 region in the last hour.

Crude Oil prices gain some positive traction and reverse a part of the overnight slump to a 15-month low amid the latest positive development surrounding the Credit Suisse saga. This, in turn, is seen underpinning the commodity-linked Loonie and dragging the USD/CAD pair lower amid the emergence of some US Dollar selling. The troubled Swiss bank announced this Thursday that it would borrow up to $54 billion from the Swiss National Bank (SNB) to shore up liquidity. This led to a modest recovery in the global risk sentiment and weighs on the safe-haven buck.

Investors, however, remain concerned about a broader systemic crisis against the backdrop of last week's collapse of two mid-size US banks - Silicon Valley Bank and Signature Bank. This, along with fresh turmoil in the European banking sector keeps a lid on the optimism, which is evident from the prevalent cautious mood around the equity markets. Apart from this, reviving bets for at least a 25 bps rate hike by the Federal Reserve at its upcoming meeting on March 21-22 should act as a tailwind for the Greenback and limit losses for the USD/CAD pair, for the time being.

Furthermore, worries that a deeper global economic downturn will dent fuel demand should cap any meaningful upside for the black liquid. This, along with the fact that the Bank of Canada (BoC) became the first major central bank to pause its rate-hiking cycle last week, could undermine the Canadian Dollar. The fundamental backdrop supports prospects for the emergence of some dip-buying around the USD/CAD pair. This, in turn, warrants some caution for aggressive bearish traders, or before positioning for any further intraday depreciating move for the major.

Market participants now look forward to the US economic docket, featuring the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, Building Permits and Housing Starts later during the early North American session. This, along with the European Central Bank (ECB)-inspired volatility and the broader market risk sentiment will drive the USD demand and provide some impetus to the USD/CAD pair. Traders will further take cues from Oil price dynamics to grab short-term opportunities around the major.

Technical levels to watch

 

09:01
Italy Consumer Price Index (YoY) registered at 9.1%, below expectations (9.2%) in February
09:01
Italy Consumer Price Index (MoM) came in at 0.2%, below expectations (0.3%) in February
09:01
Italy Consumer Price Index (EU Norm) (MoM) below forecasts (0.2%) in February: Actual (0.1%)
09:01
Italy Consumer Price Index (EU Norm) (YoY) registered at 9.8%, below expectations (9.9%) in February
08:55
ECB Preview: A 50 bps rate step could have a EUR-negative effect – Commerzbank

What will the ECB decide on today? And what will the FX market’s reaction be? We cannot be certain that market reaction on the ECB decision will be “normal”, economists at Commerzbank report.

How will the Euro react in case of a 50 bps step, and how with a 25 bps step?

“For a 50 bps rate step to have a EUR-positive effect again today, the market has to believe that such a step would be appropriate.” 

“If the FX traders consider the situation of the European financial system to be fragile they might consider a 50 bps step to constitute a mistake and come to the conclusion that this would require much stronger or earlier ECB rate cuts. In that case, a 50 bps rate step would have a EUR-negative effect. It is not certain whether the FX market thinks like that, perhaps not even very likely.” 

“I can quite imagine that the Euro will react positively if we see only 25 bps. The necessary condition of such a rate decision being EUR positive would be that the ECB is able to convince the market that if the financial system really does calm down the ‘missing’ 25 bps will be made up for. That means it depends on how convincing Lagarde is today.”

See – ECB Preview: Forecasts from 10 major banks, another 50 bps, but what’s next?

 

 

08:50
Crude Oil Futures: Room for further losses near term

Considering advanced prints from CME Group for crude oil futures markets, open interest resumed the uptrend and went up by around 20.6K contracts on Wednesday, quickly reversing the previous daily drop. Volume followed suit and rose to the highest level since February 24 2022 at 1.752M contracts, up for the third session in a row.

WTI: Next on the downside comes $62.50

Prices of the WTI plummeted below the $66.00 mark per barrel for the first time since December 2021 on Wednesday. The sharp retracement was on the back of increasing open interest and volume and leaves the door open to extra losses in the very near term. A deeper drop should target the December 2021 low at $62.46 (December 2). However, the proximity of the oversold territory carries the potential to spark a near-term bounce.

08:45
Lagarde Speech Preview: All about ECB press conference
  •  Christine Lagarde to hold key press conference on Thursday.
  •  European Central Bank expected to raise interest rates by 50 basis points.
  •  Q&A section of ECB President speech will be highly scrutinized.

Christine Lagarde, President of the European Central Bank (ECB), will hold a press conference on Thursday, March 16 at 13:45 GMT, 30 minutes after the publication of the ECB monetary policy decision statement. The Q&A session by Lagarde will be a highly anticipated one, as the current ECB tightening monetary policy seems to be questioned on the aftermath of the banking crisis triggered by the Silicon Valley Bank (SVB) collapse.

You can follow the ECB press conference, with Christine Lagarde’s speech, in the following video:

The European Central Bank has been raising interest rates in the past months, since the summer of 2022, lifting the main operations rate from 0% to the current 3.5%. Another 50 basis point interest rate hike is expected this time around, but the banking crisis that started in the United States with the default of SVB seems to have spread quickly to the European banking sector. It will be very important to see if Christine Lagarde addresses these issues – and whether they have impacted the ECB decision-making – in her prepared statement or in the following Q&A session, where she will surely be asked about it.

About Christine Lagarde

Christine Lagarde was born in 1956 in Paris, France. Graduated from Paris West University Nanterre La Défense and became President of the European Central Bank on November 1st 2019. Prior to that, she served as Chairman and Managing Director of the International Monetary Fund between 2011 and 2019. Lagarde previously held various senior ministerial posts in the Government of France: she was Minister of the Economy, Finance and Industry (2007–2011), Minister of Agriculture and Fishing (2007) and Minister of Commerce (2005–2007). 

About ECB press conference

Following the ECB´s economic policy decision, the ECB President gives a press conference regarding monetary policy. Her comments may influence the volatility of EUR and determine a short-term positive or negative trend. Her hawkish view is considered as positive – or bullish for the EUR – whereas her dovish view is considered as negative, or bearish.

08:32
EUR/GBP can push back above 0.8800 if the ECB hikes 50 bps without unnerving banking stocks – ING EURGBP

EUR/GBP seemed to come lower yesterday on stress in the Europan banking sector. Hoever, a 50 bps rate hike by the ECB could lift the pair above 0.88, economists at ING report.

GBP/USD to bounce around in a 1.20-1.22 range

“Once again, the performance of the European banking sector will probably determine the EUR/GBP performance over the near term – although should the ECB be able to credibly hike 50 bps today without unnerving banking stocks, EUR/GBP can push back above 0.8800.”

“Expect GBP/USD to bounce around in a 1.20-1.22 range until this banking sector crisis calms down.”

 

08:30
Hong Kong SAR Unemployment rate meets forecasts (3.3%) in February
08:30
NZD/USD should remain side-lined in the short term – UOB NZDUSD

In the view of Markets Strategist at UOB Group Quek Ser Leang and Senior FX Strategist Peter Chia see NZD/USD navigating between 0.6105 and 0.6265 in the next few weeks.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the bias for NZD still appears to be on the upside but a clear break of 0.6275 is unlikely’. While our view was not wrong as NZD rose to a high of 0.6265, we did not anticipate the sharp drop from the high (NZD dropped to 0.6173 in NY before extending its decline in early Asian trade). Downward momentum has improved, albeit not much. Today, NZD could decline but a sustained drop below 0.6145 is unlikely (the next support at 0.6100 is unlikely to come into view). Resistance is at 0.6200, followed by 0.6230.”

Next 1-3 weeks: “In our most recent narrative from Tuesday (14 Mar, spot at 0.6220), we highlighted that ‘upward momentum has improved, albeit not much’. We added, NZD has to break clearly above 0.6275 before a sustained advance is likely. Yesterday, NZD rose to 0.6265 before dropping sharply. The buildup of momentum has fizzled out. From here, NZD is likely to trade in a range, expected to be between 0.6100 and 0.6265.”

08:20
GBP/USD reclaims 1.2100 amid modest USD weakness, upside potential seems limited GBPUSD
  • GBP/USD regains positive traction and snaps a two-day losing streak to the weekly low.
  • A modest recovery in the risk sentiment undermines the USD and extends some support.
  • Fed-BoE policy divergence to cap gains amid fears of a full-blown global banking crisis.

The GBP/USD pair attracts fresh buyers near the 1.2040-1.2035 region on Thursday and recovers further from the weekly low, around the 1.2000 psychological mark touched the previous day. Spot prices climb beyond the 1.2100 mark, or a fresh daily top during the early part of the European session and, for now, seems to have snapped a two-day losing streak.

A generally positive tone around the equity markets prompts some selling around the safe-haven US Dollar and turns out to be a key factor pushing the GBP/USD pair higher. The slight improvement in the global risk sentiment comes after the troubled Swiss bank - Credit Suisse - announced that it will exercise an option to borrow up to $54 billion from the Swiss National Bank (SNB) to shore up liquidity. Furthermore, Saudi National Bank's Chairman, Ammar Al Khudairy, reportedly said that panic surrounding Credit Suisse is unwarranted and that regulators are ready to plug holes when they appear.

The muted market reaction, however, suggests that investors remain worried about a broader systemic crisis, especially after last week's collapse of two mid-size US banks - Silicon Valley Bank and Signature Bank. This might keep a lid on any optimism, which, along with the prospects for further policy tightening by the Federal Reserve, should act as a tailwind for the Greenback and cap gains for the GBP/USD pair. The US CPI report released on Tuesday indicated that inflation isn't coming down quite as fast as hoped and revived bets for at least a 25 bps Fed rate hike move at the March policy meeting.

In contrast, the markets are now pricing in a 50% chance that the Bank of England (BoE) will pause its rate-hiking cycle next week amid fresh turmoil in the European banking sector. This, in turn, warrants caution before placing aggressive bullish bets around the GBP/USD pair and positioning for a further intraday appreciating move. Traders now look to the US economic docket, featuring the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, Building Permits and Housing Starts. Apart from this, the ECB-inspired volatility could provide some impetus to the GBP/USD pair.

Technical levels to watch

 

08:14
ECB Preview: Four scenarios and their implications for EUR/USD – TDS EURUSD

Economists at TD Securities discuss the European Central Bank (ECB) interest rate decision and their implications for the EUR/USD pair.

Hawkish 50 bps hike (5%)

“The text is similar to February, but removes the guidance for the next meeting, and simply says that the Governing Council ‘intends to raise rates further’, with data dependency the key driver of future hikes. When asked, Lagarde clearly says that rates have further to rise, and that 25 or 50 is on the table for May (ie, the ECB is not ready to pause). Beyond May, there's no clear signal other than data dependency. EUR/USD -1% to -2%.”

Base Case: 50 bps hike (40%) Rules out further 50 bps hikes

“The Governing Council hikes 50 bps, but concretely signals a shift to 0 or 25 bps hikes going forward given uncertainties about the banking sector and spillovers from tighter financial conditions. Lagarde acknowledges that in such an uncertain environment, and as terminal approaches, it is prudent to move in smaller steps, i.e. the ECB rules out 50 bps hikes from here. EUR/USD -0.5%.”

25 bps Hike (35%)

“The ECB opts to hike rates by just 25 bps, with no forward guidance. LTRO-like operations are possible. Lagarde says that the pace of hikes must now become slower as terminal is approached, and effectively rules out further 50 bps hikes. She says that rates may still rise though, but the Governing Council will determine that at subsequent meetings. EUR/USD 0%.”

Rates on Hold (20%)

“The ECB keeps rates on hold to buy time given the volatile backdrop. Lagarde stresses that the ECB has not yet reached terminal, but that ongoing volatility in the global banking sector means the GC wants to take time to see the impact on the real economy, implying that financial markets are doing some of the ECB's work right now. EUR/USD +1.5%.”

 

07:56
USD/CNY: Yuan will continue to appreciate this year, but at a mild pace – Commerzbank

Economists at Commerzbank forecast CNY to appreciate mildly this year due to the tailwinds from Covid reopening.

Risks to growth and CNY remain significant

“Due to the Covid reopening and in anticipation of a weaker dollar later this year, we forecast CNY will continue to appreciate this year. But the pace of appreciation will be mild as we remain cautious about the speed of the economic recovery, especially in H2.”

“Confidence will be crucial to growth and the CNY path further down the road. But the degree to which confidence will be regained remains highly uncertain.”

“Meanwhile, the property slump will take time to turn around, and headwinds from global slowdown and US-China tensions will remain strong. Thus, risks to growth and CNY remain large.”

Source: Commerzbank Research

 

07:39
China’s Commerce Ministry: Willing to discuss basic issues that concern Australian-Sino trade

When asked if China will recommence the import of beef and barley from Australia, Shu Jueting, a spokesperson at China’s Commerce Ministry, said at a regular news conference that “China is willing to discuss basic issues that concern both nations.”

When asked if restrictions on the import of Australian coal have been lifted, he said “they can apply for coal import license normally.”

Additional comments

“Will continue to push for the relaxation of market access for foreign investment.”

“Will steadily expand institutional openness.”

“Local govts and firms say less orders remain the biggest challenge for 2023 trade development.”

Market reaction

AUD/USD has picked up fresh bids in early European trading, rising above 0.6650. The pair is adding 0.64% on the day.

07:35
USD/JPY keeps the red around 133.00 mark amid bank crisis fears, softer USD USDJPY
  • USD/JPY remains under some selling pressure for the second straight day on Thursday.
  • Concerns about a full-blown global banking crisis benefit the JPY and weigh on the pair.
  • A modest USD weakness further contributes to the offered tone surrounding the major.

The USD/JPY pair struggles to capitalize on the overnight late rebound from the 132.20 area, or a one-month low and attracts some sellers for the second successive day on Thursday. The pair, however, manages to rebound a few pips from the daily low and trades around the 133.00 mark during the early European session, still down nearly 0.40% for the day.

Despite the positive development surrounding the Credit Suisse saga, concerns about fresh turmoil in the global banking sector continue to drive haven flows towards the Japanese Yen (JPY) and exert pressure on the USD/JPY pair. The troubled Swiss bank announced that it will exercise an option to borrow up to $54 billion from the Swiss National Bank (SNB) to shore up liquidity. Investors, however, remain worried about a broader systemic crisis in the wake of the collapse of two mid-size US banks - Silicon Valley Bank and Signature Bank. This is evident from the prevalent cautious market mood and benefits traditional safe-haven currencies.

Apart from this, a modest US Dollar weakness turns out to be another factor acting as a headwind for the USD/JPY pair, though the prospects for further policy tightening by the Federal Reserve help limit losses. Investors still expect the US central bank to deliver at least a 25 bps rate hike at its upcoming policy meeting on March 21-22. In contrast, the Bank of Japan (BoJ) is expected to stick to its dovish stance to support the fragile domestic economy. In fact, the incoming BoJ Governor Kazuo Ueda recently stressed the need to maintain the ultra-loose policy settings and said that the central bank isn't seeking a quick move away from a decade of massive easing.

The aforementioned fundamental backdrop warrants caution before placing aggressive bearish bets around the USD/JPY pair and positioning for an extension of last week's rejection slide from the 200-day Simple Moving Average (SMA). Traders now look to the US economic docket, featuring the release of the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, Building Permits and Housing Starts. Apart from this, the European Central Bank (ECB)-inspired volatility could provide a fresh impetus.

Technical levels to watch

 

07:32
Forex Today: Another U-turn in markets as focus shifts to ECB

Here is what you need to know on Thursday, March 16:

Following Wednesday's intense flight to safety that was triggered by renewed fears over Credit Suisse collapsing after failing to receive additional financial support, market mood seems to have started to improve early Thursday. The European Central Bank (ECB) will announce its policy decisions later in the day and the US economic docket will feature February Housing Starts, Building Permits and the Federal Reserve Bank of Philadelphia's Manufacturing Survey for March.

ECB Preview: Banking jitters give arguments for doves.

Bloomberg reported early Thursday that Saudi National Bank's, Credit Suisse's biggest investor, Chairman, Ammar Al Khudairy said the panic surrounding Credit Suisse was unwarranted. Al Khudairy added that regulators were ready to "plug holes when they appear" while noting that the bank was unlikely to need more capital. More importantly, the Swiss National Bank (SNB) and the Swiss Financial Market Supervisory Authority (FINMA) came out with a statement late Wednesday, saying that Credit Suisse met the capital requirements imposed on banks and that they will provide liquidity if necessary. After having lost over 3.5% on Wednesday, Euro Stoxx 50 was up more than 1% in the pre-market trade. Furthermore, Credit Suisse shares are reportedly indicated more-than-20% higher opening on Swiss exchange.

In the meantime, the US Dollar Index, which rose more than 1% on Wednesday, stages a technical correction and trades in negative territory at around 104.50. The benchmark 10-year US Treasury bond yield is up more than 1% on the day following Wednesday's sharp decline. Finally, US stock index futures are up marginally in the early European session.

EUR/USD lost more than 150 pips on Wednesday and came within a touching distance of 1.0500 before staging a rebound. At the time of press, the pair was trading a few pips above 1.0600, adding 0.3% on the day.

GBP/USD fell toward 1.2000 during the American trading hours on Wednesday but managed to erase a portion of its daily losses before the end of the day. The pair stays relatively quiet early Thursday and trades in a tight range below 1.2200.

Despite the broad-based US Dollar strength, USD/JPY closed in negative territory as the Japanese Yen found demand as a safe haven. Early Thursday, the pair stays on the back foot and fluctuates in negative territory at around 133.00.

In the Asian session, the data from Australia showed that Employment Change was +64.6K in February, better than the market expectation of +48.5K. The Unemployment Rate declined to 3.5% from 3.7% and the Participation Rate improved modestly to 66.6% from 66.5%. Other data revealed that Consumer Inflation Expectation in March ticked down to 5% from 5.1% in February. AUD/USD gained traction after these data and was last seen rising 0.5% on the day at around 0.6650.

XAU/USD capitalized on plunging global bond yields on Wednesday and gained nearly 1%. Gold price edges lower amid recovering yields early Thursday and was last seen trading below $1,920.

Bitcoin snapped a three-day winning streak and lost more than 1% on Wednesday. BTC/USD seems to have regained its traction early Thursday and was last seen rising 1.3% at $24,700. Ethereum fell nearly 3% on Wednesday but managed to shake off the bearish pressure in the European morning, recovering toward $1,700.

07:28
ECB Preview: Forecasts from 10 major banks, another 50 bps, but what’s next?

The European Central Bank (ECB) is set to announce its decision on monetary policy on Thursday, March 16 at 13:15 GMT and as we get closer to the release time, here are the expectations as forecast by the economists and researchers of 10 major banks.

ECB is likely to hike the deposit rate by 50 basis points to 3.0% at its March meeting. All eyes will remain on the bank’s staff projections and policy guidance.

Nordea

“The ECB will hike by 50 bps at the March meeting, and we expect the central bank to signal another such step is likely in May. Amidst a divided Governing Council, Lagarde may seek a compromise by toning down the overall message further out, while signalling another large hike for May. In light of the high market expectations, we think even hints of a balanced message on the future would be met with a dovish market reaction. Core inflation forecasts are set to see further upside surprises, supporting further rate hikes ahead.”

Commerzbank

“It should be a done deal that the ECB will raise interest rates by 50 bps next week. What happens next will be largely determined by the new projections published next Thursday by the ECB experts, which the Governing Council will use to reassess the economic situation. We think the ECB will raise interest rates by another 50 bps in May, although the central bankers are unlikely to announce this move as early as this week. However, we expect a slower pace of rate hikes from June onwards, with rate steps of only 25 bps.”

TDS

“The decision to hike 50 bps in March was essentially made last month, and won't come as a surprise. We expect forward guidance to be dropped and a genuine shift to data-dependency from here. Projections will likely show lower headline inflation and stronger core inflation and growth. While we hold our terminal rate at 3.75%, terminal rate pricing around the ECB will likely remain fluid for some time yet, at least until the market can settle on the Fed. This is likely to keep EUR/USD stubbornly holding recent ranges but the EUR biased to outperform on the crosses, particularly against currencies that have household debt imbalances (for example SEK, CAD, AUD).”

Rabobank

“A 50 bps rate hike is all but a given. Risks to our 3.5% terminal rate forecast are skewed to the upside, with both the possibility of another 50 bps hike in May or a compromise of ‘slower for longer’ hikes after March.” 

Credit Suisse

“We expect the ECB to hike rates by 50 bps to 3.00% and maintain the guidance to ‘stay the course in raising rates significantly at a steady pace.’ We expect another 50 bps rate hike in May followed by two more 25 bps rate hikes in June and July – but we do not think the ECB will pre-commit to another 50 bps hike in May explicitly, as there is an increasing need to be data-reactive as rates enter restrictive territory. That may initially disappoint markets, as it would keep the door to a smaller 25 bps rate hike in May open in case data weaken. However, during the press conference, we would expect President Lagarde to note that the ECB may well continue hiking in 50 bps increments if the data remain strong – so the overall tone of the press conference may be more hawkish than the initial statement and sustain the current market pricing of a ~4% terminal rate.”

Deutsche Bank

“A 25 bps hike seems the more likely move than 50 bps, which would take the deposit rate up to 2.75%. Nevertheless, our view is that it would take a significant and persistent financial conditions shock to offset the upside risks to price stability. So with the re-acceleration in core inflation recently, we continue to see 3.5-4% as the main landing zone for the terminal rate.”

SocGen

“We expect the ECB to hike its key rates by 50 bps, and we raise our terminal rate forecast to 4% in September. We also expect a gradual rise in APP QT in 3Q and 4Q, and the start of PEPP QT in early 2024.”

Wells Fargo

“Policymakers have communicated and telegraphed a 50 bps rate hike, which in our view, local economic conditions still warrant following through on that guidance. Right now, we believe the ECB will deliver rate hikes that eventually take the Deposit Rate to 3.50%. However, we acknowledge upside risks to our forecast have materialized since our last forecast update. With inflation, primarily driven by wage gains, still elevated and softening only gradually, the Deposit Rate could be lifted toward a terminal rate closer to 4.00%. We will be particularly focused on forward guidance provided by the ECB statement as well as by ECB President Lagarde during her press conference immediately after the monetary policy decision.”

CitiBank

“We expect the council to avoid another explicit commitment (or public intention) to any given pace of rate hikes, not least as April is due to see a number of important data releases. However, we do expect fairly clear guidance that in order to slow and stop rate hikes, the council needs (1) several consecutive decreases in core inflation (2) buttressed by a deceleration in wage growth or a rise in unemployment.”

ANZ

“We expect that the ECB will maintain hawkish guidance on rates, and we maintain our forecast that it will raise rates to 4.0%. Financial stability considerations may persuade the ECB to diverge from its guidance that rates will rise 50 bps at this week’s meeting, but that will only extend the rate hiking cycle. The ECB, along with other central banks, must differentiate between financial stability policies and monetary policy. Returning inflation to target is fundamental to both. We also expect the ECB to indicate that future policy decisions will be determined by the data and outlook for inflation. That would preserve its hawkish guidance.”

 

07:28
USD/IDR pares gains below $15,400 on Bank Indonesia’s status-quo

Bank Indonesia (BI), the Indonesian central bank, announced no changes to its benchmark interest rate at its March policy meeting, leaving it at 5.75%.

Summary of the statement

Global economic growth seen better than previously anticipated at 2.6% in 2023.

US, Europe growth seen better than previously predicted, recession risks lower.

Monetary tightening by advanced economies and US bank collapse have increased market uncertainty.

This has reduced capital inflows to emerging countries.

To strengthen Rupiah stability to mitigate spillover impact from us bank closures on domestic financial markets, exchange rate.

Keeps 2023 GDP growth outlook bias towards upper end of +4.5% to +5.3%.

Q1 current account seen on a surplus, supported by large merchandise trade surplus.

Keeps 2023 c/a balance estimate at 0.4% deficit to 0.4% surplus of GDP.

Rupiah's YTD appreciation is better than some other Asian currencies.

Rupiah stability will be maintained in line with indonesia's economic prospects.

Core inflation seen staying within target in 2023.

Headline inflation seen returning to within 2%-4% target range from September 2023.

Banking liquidity adequate to support lending growth.

Stress test shows domestic banks are resilient

Indonesian banks has low NPF, high capital ratio, which support banking industry so that it will not be affected by closure of US banks.

Interest rate decision remains consistent with stance to ensure inflation expectations ease.

Bank Indonesia believes benchmark rate sufficient to ensure headline inflation returns to target range.

07:28
Indonesia Bank Indonesia Rate in line with forecasts (5.75%)
07:17
UK’s Hunt: News from Swiss authorities about Credit Suisse is encouraging

UK Finance Minister Jeremy Hunt said in a statement on Thursday, “news from Swiss authorities this morinng about Credit Suisse is encouraging.”

He added that they are “following the situation relating to Credit Suisse along with BoE (Bank of England).”

Market reaction

GBP/USD is trading around a flatline so far this Thursday, keeping its range near 1.2070, as of writing.

07:17
GBP/USD sticks to the consolidative range near term – UOB GBPUSD

Further range bound trade is still expected in GBP/USD, likely within 1.1950 and 1.2190, suggest Markets Strategist at UOB Group Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: “We did not expect the sharp drop in GBP to 1.2012 yesterday (we were expecting GBP to trade sideways). Despite the decline, there is no significant increase in downward momentum. Today, GBP could drop further but any decline is likely part of a lower trading range of 1.2000/1.2150. In other words, a clear break of 1.2000 is unlikely.”

Next 1-3 weeks: “On Tuesday (14 Mar, spot at 1.2185), we highlighted that upward momentum is beginning to build but GBP has to break clearly above 1.2240 before a sustained advance is likely. We added, ‘the chance of a clear break above 1.2240 will remain intact as long as GBP stays above 1.2040’. GBP did not break 1.2240 but instead, dropped to a low of 1.2012 yesterday. Despite the relatively sharp drop, downward momentum has not improved much. For the time being, GBP is likely to trade in a broad range, expected to be between 1.1950 and 1.2190.”

07:04
EUR/USD Price Analysis: Short-term downtrend resumes after four-day rally reverses, finger on risk EURUSD
  • EUR/USD slumps amid Credit Suisse woes, as the liquidity drained.
  • EUR/USD technical outlook: 21-DMA and 50-DMA weighing downside pressure.
  • Downside bias intact with eyes on the 1.0500 mark.
  • ECB meeting is only hours away.

EUR/USD took a sharp decline after a four-day rally. The declines came after some risk aversion in the wake of the worsening financial condition of Credit Suisse. This is the first sign in Europe that any bank has faced a liquidity crunch issue amid higher borrowing costs. All eyes will be on the European Central Bank (ECB) rate decision for any directional bias.

The EUR/USD pared back most of the gains that took it to the 1.0750 level, which is also pegged with the 50-Day Moving Average (DMA) and a multi-tested support zone coinciding with a 50% Fib level of the 2021-22 decline.

The EUR/USD found its ground after hitting a multi-month low at the 1.0526 mark. The previous day's rapid fall forced the pair to penetrate the 21-DMA, which is now acting as resistance on the rebound.

The 21-DMA is coinciding with the 23.5% Fib level of the 2023 rally and may act as a strong resistance zone. Any upside momentum will have to confront all Fib levels as well as the 21-DMA and 50-DMA. The downside bias is likely to remain intact, and all eyes will be on the 1.0500 key psychological mark; a break below will throw the pair into no man's land.

The short-term trend is down, supporting bears. The 1.04820 lows and the 100-day SMA both present as key support levels. A break and close on a daily timeframe below these levels would be necessary to provide impetus for more downside. If so, the next target comes in as the 200-day SMA at circa 1.0325. 

Given the high volatility expected around today’s ECB meeting, which begins with the release of the policy statement at 12:15 GMT, however, traders are advised to act with caution.

EUR/USD: Daily chart

07:01
USD/CHF slides further below 0.9300 as panic over Credit Suisse crisis subsides USDCHF
  • USD/CHF comes under heavy selling pressure on Thursday and snaps a two-day winning streak.
  • The positive news surrounding the Credit Suisse saga boosts the CHF and drags the pair lower.
  • A softer USD also contributes to the slide, though hawkish Fed expectations could limit losses.

The USD/CHF pair attracts some sellers near the 0.9340 area on Thursday and erodes a part of the previous day's massive rally of over 220 pips - the biggest single-day rise since 2015. The pair continues drifting lower through the early European session and slides back below the 0.9300 mark, hitting a fresh daily low in the last hour.

The Swiss Franc (CHF) strengthens in reaction to a positive development surrounding the Swiss lender Credit Suisse and turns out to be a key factor dragging the USD/CHF pair lower. In fact, the troubled Swiss bank announced that it will exercise an option to borrow up to $54 billion from the Swiss National Bank (SNB) to shore up liquidity. Adding to this,  Saudi National Bank's Chairman, Ammar Al Khudairy, reportedly said that panic surrounding Credit Suisse is unwarranted and that regulators are ready to plug holes when they appear.

This comes after Saudi National Bank - the largest shareholder of Credit Suisse Group AG - ruled out another call for additional liquidity on Wednesday and helps ease fears of a full-blown global banking crisis. This, in turn, dents the US Dollar's status as the global reserve currency and exerts additional downward pressure on the USD/CHF pair. That said, reviving bets for at least a 25 bps rate hike by the Federal Reserve at its upcoming meeting on March 21-22 could limit any deeper losses for the Greenback and lend some support to the major.

Nevertheless, spot prices, for now, seem to have snapped a two-day winning streak as traders now look to the US macro data for a fresh impetus. Thursday's US economic docket features the release of the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, Building Permits and Housing Starts. This, along with the European Central Bank-inspired volatility - might influence the buck and the USD/CHF pair.

Technical levels to watch

 

06:57
Gold Price Forecast: XAU/USD to initiate a fresh uptrend on daily close above the $1,919 barrier

Gold price is back in the red zone early Thursday. Dayli close above the key $1,919 level is needed to see a fresh leg higher, FXStreet’s Dhwani Mehta reports.

Immediate downside could be tested at the $1,900 threshold

“Daily closing above the $1,919 barrier will initiate a fresh uptrend toward the year-to-date highs of $1,960. The previous day’s high of $1,937 could challenge the bearish commitments, at first.”

“The immediate downside could be tested at the $1,900 threshold, below which Tuesday’s low at $1,895 could come into the picture. Further south, the previous day’s low at $1,886 will lend some support to Gold buyers. The last line of defense for them is seen at the mildly bullish 50-Daily Moving Average (DMA) at $1,877.”

“Gold price remains a ‘buy the dips’ trade amid looming banking sector risks across the globe.”

See – Gold Price Forecast: XAU/USD to soar toward $1,973/98 on a weekly close above $1,890/1900 – Credit Suisse

06:55
Gold Price Forecast: XAU/USD grinds near $1,925 hurdle amid sluggish yields – Confluence Detector
  • Gold price struggles to extend previous day’s run-up six-week high, mildly offered as of late.
  • Key resistance confluence, receding fears of full-fledged financial market crisis probe XAU/USD bulls.
  • Credit Suisse joins the league of SVB, Signature Bank to previously propel Gold price.
  • Second-tier data, bond market moves eyed for clear directions.

Gold price (XAU/USD) fades upside momentum despite recently bouncing off intraday low to $1,908 during early Thursday. In doing so, the precious metal justifies the previous day’s failure to cross the $1,923 key hurdle while also taking clues from the market’s indecision amid looming fears of financial market distress.

A European G-SIB – a global systemically important bank, namely Credit Suisse, rocked finance markets the previous day, joining the line of Silicon Valley Bank (SVB) and Signature Bank from the US. However, the global policymakers’ rush to placate the market fears, recently by the Saudi National Bank, seems to prod the XAU/USD’s haven demand. Also weighing on the Gold price could be the lackluster Treasury yields as bond traders lick their wounds after refreshing the multi-day low the previous day. Furthermore, intact hawkish hopes from the US Federal Reserve (Fed) and the European Central (ECB) also challenge the commodity buyers ahead of a likely another volatile day.

Also read: Gold Price Forecast: XAU/USD’s struggle with $1,919 extends amid banking crisis, ahead of ECB decision

Gold Price: Key levels to watch

As per the Technical Confluence Detector, the Gold price reversed from the $1,924 resistance confluence including Pivot Point one-month R1.

The XAU/USD pullback, however, remains elusive as the quote stays beyond the short-term key support surrounding $1,910, comprising Pivot Point one-week R2 and SMA10 on Four-hour.

It should be observed that Fibonacci 38.2% on one-day restricts the immediate downside of the Gold price near $1,917.

That said, the Gold price weakness past $1,910 could quickly drag it to the key $1,901-1900 support confluence encompassing Fibonacci 61.8% on one-month.

On the flip side, a clear upside break of $1,924 hurdle may need validation from the $1,925 mark comprising Fibonacci 23.6% on one-day before fueling Gold price towards the previous daily high surrounding $1,938.

In a case where XAU/USD remains firmer past $1,938, it can prod the $1,945 resistance mark signified by the Pivot Point one-day R1.

Here is how it looks on the tool

fxsoriginal

About Technical Confluences Detector

The TCD (Technical Confluences Detector) is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc.  If you are a short-term trader, you will find entry points for counter-trend strategies and hunt a few points at a time. If you are a medium-to-long-term trader, this tool will allow you to know in advance the price levels where a medium-to-long-term trend may stop and rest, where to unwind positions, or where to increase your position size.

06:42
USD Index retreats from weekly highs, back to the 104.50 zone
  • The index leaves behind Wednesday’s tops above 105.00.
  • Alleviated risk aversion removes some strength from the dollar.
  • Weekly Claims, Philly Fed index, housing data next on tap.

The USD Index (DXY), which gauges the greenback vs. a bundle of its main competitors, gives away part of the recent advance and returns to the mid-104.00s on Thursday.

USD Index looks to data, ECB meeting

The index trades on the defensive and retreats below the 105.00 mark after two consecutive daily gains amidst mitigated risk aversion and a small recovery in US yields across the curve.

In the meantime, investors’ concerns around the banking system looks somewhat alleviated after Credit Suisse announced it will borrow CHF 50B from the Swiss National Bank (SNB), although the cautious stance still prevails ahead of the key interest rate decision by the European Central Bank (ECB) due later in the afternoon in the old continent.

In the US data space, usual weekly Initial Claims are due seconded by the Philly Fed Manufacturing Index, Building Permits and Housing Starts.

What to look for around USD

The index comes under pressure after hitting fresh tops past the 105.00 mark on Wednesday.

The risk aversion derived from banking jitters appears somewhat diminished and supports some selling pressure in the dollar amidst firmer conviction among investors of a 25 bps rate hike by the Federal Reserve at the March 22 meeting.

So far, the index remains under pressure against the backdrop of reinvigorated bets of a Fed’s pivot in the short-term horizon. However, the still elevated inflation and the resilience of the US economy continue to play against that view.

Key events in the US this week: Initial Jobless Claims, Housing Starts, Building Permits, Philly Fed Manufacturing Index (Thursday) – Industrial Production, Flash Michigan Consumer Sentiment, CB Leading Index (Friday).

Eminent issues on the back boiler: Rising conviction of a soft landing of the US economy. Persistent narrative for a Fed’s tighter-for-longer stance. Terminal rates near 5.5%? Fed’s pivot. Geopolitical effervescence vs. Russia and China. US-China trade conflict.

USD Index relevant levels

Now, the index is retreating 0.24% at 104.48 and the breakdown of 103.48 (monthly low March 13) would open the door to 102.58 (weekly low February 14) and finally 100.82 (2023 low February 2). On the other hand, the next hurdle emerges at 105.88 (2023 high March 8) seconded by 106.64 (200-day SMA) and then 107.19 (weekly high November 30 2022).

 

06:23
Saudi National Bank: Regulators ready to plug holes, Credit Suisse panic is unwarranted

Citing Saudi National Bank's Chairman, Ammar Al Khudairy, Bloomberg tweeted out, “panic surrounding Credit Suisse is unwarranted," adding that “regulators are ready to plug holes when they appear.”

Al Khudairy said, “If you look at what even the Swiss National Bank said yesterday with all the ratios, they're all sound, everything is fine.”

more to come ...

06:22
Gold Futures: Strong recovery could take a breather

Open interest in gold futures markets shrank for the third session in a row on Wednesday, this time by around 2.8K contracts according to preliminary readings from CME Group. Volume, instead, resumed the uptrend and rose by around 178.8K contracts.

Gold: Interim support emerges at $1870

Gold prices advanced to new monthly highs near $1940 per ounce troy on Wednesday. The uptick, however, was accompanied by diminishing open interest and hints at the view that the current strong rebound could enter an impasse in the very near term. Immediately to the downside, the 55-day SMA at $1872 should offer provisional contention for the time being.

06:19
USD/TRY bulls poke 19.00 as global banking crisis joins Turkiye’s geopolitical hardships
  • USD/TRY grinds higher around intraday top amid sluggish markets.
  • Financial market fears from Credit Suisse, SVB join floods, earthquakes and looming general elections in Turkiye to lure bulls.
  • Second-tier US data, bond market moves are key for clear directions.

USD/TRY remains mildly bid near 19.00 as buyers keep the reins despite the US Dollar pullback during early Thursday. In doing so, the Turkish Lira (TRY) pair seems to justify fears emanating from the key banks, as well as geopolitical fears surrounding Turkiye. It’s worth noting, however, that the market’s consolidation mode seem to probe the pair’s latest upside.

That said, the latest fears emanating from Europe’s G-SIB – a global systemically important bank, namely Credit Suisse, renew fears of the 2008 financial crisis as it follows fallouts of the US banks, namely Silicon Valley Bank (SVB) and Signature Bank. Also highlighting the fears are headlines from Bloomberg suggesting China’s securities regulator is holding up approvals for new applications to sell global depository receipts, according to people familiar with the situation, potentially choking off a lucrative stream of listings in Europe.

It should be noted that the floods and earthquake probe serious threats to Turkish leader Recep Tayyip Erdoğan as he has to ally with a smaller party to confirm a majority in the May month general elections.

The risk-off mood underpinned the US Dollar’s haven demand and previously weighed on the USD/TRY prices before paring the gains a bit amid inactive Treasury bond yields.

The latest pullback in the US Treasury bond yields could be linked to the news that Credit Suisse's eyes borrowing up to CHF50 billion from the Swiss National Bank (SNB) to strengthen liquidity gained major attention and allowed USD/TRY bears to take a breather. On the same line could be the news that anonymous sources conveyed that the US banks are less vulnerable to the Credit Suisse debacle. Furthermore, the emergency talks by the Bank of England (BoE) and market chatters suggesting no immediate negative reaction by the Federal Reserve (Fed) and ECB, during their monetary policy meetings, also seem to tame the previous risk aversion. Recently, Goldman Sachs came out with its upwardly revised economic forecasts for China and tried to put a floor under the USD/TRY prices.

Looking ahead, bond market moves and geopolitical headlines from Turkiye may entertain the USD/TRY traders. Also important to watch will be the second-tier US data about employment, manufacturing and housing activities.

Technical analysis

Bullish MACD signals join the firmer RSI (14) line, not overbought, to keep USD/TRY buyers directed towards the all-time high marked the previous week near 19.10. Alternatively, pullback remains elusive unless breaking the late 2021 peak of 18.40.

06:13
EUR/USD faces a solid support around 1.0470 – UOB EURUSD

Markets Strategist at UOB Group Quek Ser Leang and Senior FX Strategist Peter Chia note further downside in EUR/USD is expected to meet a solid support around 1.0470.

Key Quotes

24-hour view: “Yesterday, we expected EUR to edge higher but we were of the view that ‘the major resistance at 1.0800 is not expected to come under threat’. EUR then rose to 1.0759 before lurching lower and nosediving by 1.46% (NY close of 1.0575), its largest 1-day drop since Sep last year. While EUR could weaken further, a clear break of 1.0500 is unlikely. Resistance is at 1.0610; a breach of 1.0640 would indicate that EUR is unlikely to test 1.0500.”

Next 1-3 weeks: “Our latest narrative was from Monday (13 Mar, spot at 1.0685) where we were of the view that EUR ‘is likely to consolidate between 1.0560 and 1.0800’. EUR rose to 1.0759 in London trade yesterday before plunging below 1.0560 (low has been 1.0514). While the rapid drop appears to be ‘too fast, too soon’, the risk of EUR dropping further has increased. However, 1.0470 is a major support, and it remains to be seen if EUR can break this level. Overall, only a breach of the ‘strong resistance’ at 1.0680 in the next days would indicate that the downside risk has faded.”

06:13
AUD/USD refreshes day high near 0.6650 as upbeat Aussie Employment stems more rates from RBA AUDUSD
  • AUD/USD has printed a fresh intraday high at 0.6645 as a correction in the USD Index has extended.
  • Federal Reserve might continue a 25 bps rate hike move as January’s upbeat US economic data was a one-time show.
  • An upbeat Australian Employment data has propelled the odds of more rates announcements from the Reserve Bank of Australia.
  • AUD/USD is consolidation near the critical support plotted from 0.6585.

AUD/USD has printed a fresh intraday high at 0.6645 in the early European session amid upbeat Australian labor market data and extended correction from the US Dollar Index (DXY). The Aussie asset has stretched its recovery from below the round-level support of 0.6600 as investors are paring positions from the USD Index, backed by fears of the global banking crisis.

The US Dollar Index (DXY) has stretched its correction to near 104.40 as investors are shifting their focus on the uncertainty associated with an upcoming monetary policy from the Federal Reserve (Fed). On Wednesday, investors shifted their funds into the USD index to dodge volatility fueled by Credit Suisse’s fiasco.

S&P500 futures are holding significant gains generated in the Asian session after a sell-off on Wednesday, portraying a minor rebound in investors’ risk appetite. However, the overall market mood is quite risk-off. Fears of global financial instability propelled by the debacle of Credit Suisse have fueled demand for US government bonds. This has led to declining in the 10-year US Treasury yields to 3.48%.

Less-hawkish stance looks likely by Federal Reserve

A few days back, market participants were anticipating bigger rates announcement from the Federal Reserve (Fed) as January’s United States economic data conveyed the inflation outlook is extremely stubborn. However, the release of the downbeat US Retail Sales and lower-than-anticipated Producer Price Index (PPI) figures on Wednesday after softening of the Consumer Price Index (CPI) and the print of a higher Unemployment Rate have conveyed that January’s data was a one-time blip. This has cemented the odds of the continuation of smaller rate hikes. Also, fresh fears of banking sector turmoil have opened doors for a steady monetary policy.

Along with bringing down persistent inflation, restoring of investors’ confidence after the Silicon Valley Bank (SVB) collapse, has become an important Key Responsibility Area (KRA) for Fed chair Jerome Powell.

Upbeat Australian Employment fuels hope of more rates from RBA

The release of the better-than-anticipated Australian Employment data has added to troubles for the Reserve Bank of Australia (RBA), which is devoting significant time to bringing down the elevated inflation. In February, the Australian economy added fresh 64.6K payrolls, significantly higher than the consensus of 48.5K. Investors should note that the Australian economy reported 11.5K lay-offs in January. The Unemployment Rate has been trimmed further to 3.5% from the estimates of 3.6% and the prior release of 3.7%.

This indicates that the labor demand is extremely solid and further requirements of talent will be offset by higher offerings from the firms. Escalating labor cost index is sufficient to fuel inflationary pressures further. RBA Governor Philip Lowe might continue to target more rates as a higher laborforce in action would result in spiking inflationary pressures further.

Earlier, Australian Consumer Inflation Expectations (Mar) data that demonstrate inflation projections for the next 12 months dropped to 5.0% from the consensus of 5.4% and the former release of 5.1%. The impact of lower consumer inflation expectations looks to fade after solid Australian labor market data.

AUD/USD technical outlook

AUD/USD is oscillating in a broader range of 0.6548-0.6718 on a daily scale. The Aussie asset has turned sideways after drifting to near the horizontal support plotted from November 14 low at 0.6585. The 20-period Exponential Moving Average (EMA) at 0.6713 is barricading the Aussie bulls.

Failure by the Relative Strength Index (RSI) (14) in shifting into the 40.00-60.00 range indicates more downside is in pipeline.

 

05:54
WTI price rebounds from $66 mark amid a risk-aversion environment
  • WTI hits December 2022 lows around $66 amid Credit Suisse crisis, causing a shift in global financial conditions.
  • Investors fading optimism for 2023 growth outlook drives Oil prices lower.
  • IEA reports a drop in Russian Oil exports and an increased global oil stockpile. 

West Texas Intermediate (WTI) prices hit lows not seen since December 2022, with the three-day sharp decline finding its floor around the $66 mark. Short-term relief arrived on Thursday after a backup plan was introduced for Credit Suisse's worsening financial conditions. Following Silicon Valley Bank's (SVB) fallout, Credit Suisse was next in line to address its troublesome liquidity issue, causing its shares to plunge heavily.

The WTI price dropped earlier this week due to sudden shifts in global financial conditions, led by historically high borrowing costs. As investors' optimistic growth outlook for 2023 fades, falling oil prices are inevitable.

With a diminishing global growth outlook, investors are abating risk assets like oil and equity complexes, and are rushing to purchase bonds in a risk-averse environment.

The International Energy Agency (IEA) published comments on Wednesday stating that Russian oil exports fell by more than 500k bpd in February. The global oil stockpile has risen to around 7.8 billion barrels, the highest level since September 2021, indicating a slower pace of oil consumption. Despite a pessimistic global growth outlook, the IEA has raised its global oil demand forecast for 2023 from 100 million bpd to 102 Mbpd.

In the medium to short term, WTI prices are likely to be driven by risk sentiment, with the downside bias remaining intact.

Levels to watch

 

05:45
EUR/GBP Price Analysis: Bounces off 100-DMA as ECB rate hike looms EURGBP
  • EUR/GBP picks up bids to consolidate the biggest daily loss in three weeks.
  • Bearish oscillators, sustained trading below one-week-old descending trend line keep sellers hopeful.
  • Bears could aim for 61.8% Fibonacci retracement, 200-DMA on breaking immediate support.

EUR/GBP renews intraday high near 0.8790 as it extends the late Wednesday’s bounce off the lowest levels since December 2022 heading into Thursday’s European session. In doing so, the cross-currency pair rebounds from the 100-DMA while paring the biggest daily loss in three weeks ahead of the key European Central Bank’s (ECB) Monetary Policy Meeting.

Although the key moving average allows buyers to return to the desk, their dominance remains doubtful as the MACD flashes bearish MACD signals. Also challenging the upside bias are the downbeat conditions of the RSI (14) line, not oversold, as well as a one-week-old descending trend line, around 0.8815.

Even if the EUR/GBP recovery crosses the 0.8815 immediate hurdle, the 0.8900 threshold and 0.8930 resistance level can challenge the pair’s further advances before directing bulls towards the yearly high marked in February near 0.8980.

Meanwhile, pullback moves need a daily closing below the 100-DMA support of 0.8770, as well as the 50% Fibonacci retracement level of the pair’s December 2022 to February 2023 upside near 0.8760, to convince sellers.

Following that, the 61.8% Fibonacci retracement, also known as the golden Fibonacci ratio, could challenge the EUR/GBP bears around 0.8710 ahead of highlighting the 200-DMA support of 0.8683.

EUR/GBP: Daily chart

Trend: Limited upside expected

 

05:31
Netherlands, The Unemployment Rate s.a (3M) fell from previous 3.6% to 3.5% in February
05:25
EUR/CHF Price Analysis: Double Bottom reversal activates as Credit Suisse’s fiasco continues
  • EUR/CHF is demonstrating a back-and-forth action around 0.9860 ahead of ECB policy.
  • A Double Bottom pattern has activated after a breakout of critical resistance placed at 0.9834.
  • The RSI (14) is oscillating in the bullish range of 60.00-80.00, which indicates more upside ahead.

The EUR/CHF pair is displaying a back-and-forth action around 0.9860 in the early European session. The cross has turned sideways after a perpendicular upside move and is expected to continue its upside momentum as the debacle of Credit Suisse is stretching further.

The Swiss National Bank (SNB) has promised an advance of 50bln Swiss Francs to Credit Suisse to support liquidity. However, the commentary from Credit Suisse chairman Axel Lehmann that state assistance "isn't a topic" for the bank as it seeks to recover from a string of scandals that have undermined the confidence of investors and clients indicates that the impact will be huge going forward.

Meanwhile, investors are keenly awaiting the interest rate decision by the European Central Bank (ECB). ECB President Christine Lagarde is expected to continue its 50 basis points (bps) rate hike spell as Eurozone’s inflation is extremely stubborn.

EUR/CHF has delivered a break above the critical resistance plotted from March 13 high at 0.9834 on an hourly scale. This has activated the formation of a Double Bottom chart pattern and has cemented a bullish reversal.

The 20-period Exponential Moving Average (EMA) at 0.9839 might continue to provide support to the Euro bulls.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the bullish range of 60.00-80.00, which indicates more upside ahead.

Should the asset delivers a mean-reversion to the 20-EMA near 0.9839, a bargain buying opportunity will be triggered, which will drive the cross toward the round-level resistance at 0.9900, followed by October 27 high at 0.9955.

In an alternate scenario, a downside break below March 15 low at 0.9706 will drag the asset toward October 12 low at 0.9643 and September 13 low at 0.9584.

EUR/CHF hourly chart

 

05:14
NZD/USD stays bearish around 0.6150 as downbeat NZ GDP joins Credit Suisse, SVB woes NZDUSD
  • NZD/USD struggles to overcome intraday losses despite recent pick up in Kiwi price.
  • New Zealand Q4 GDP came softer-than-expected raises fears of NZ credit rating cut.
  • Hardships for key banks in US, Europe tease return of 2008 financial crisis and weigh on riskier assets like Antipodeans.
  • Goldman Sachs’ economic outlook, China’s threat to European shares entertain traders amid sluggish session.

NZD/USD remains depressed near 0.6160, down for the second consecutive day, despite paring intraday losses heading into Thursday’s European session of late.

The Kiwi pair bears the burden of the downbeat prints of New Zealand’s (NZ) fourth quarter (Q4) Gross Domestic Product (GDP), as well as the market’s fears emanating from the latest bank fallouts in the US and Europe. It’s worth observing that the headlines suggesting improvements in economic conditions of China, one of New Zealand’s key customers, seem to join sluggish yields to probe the bears in the last few hours.

Earlier in the day, NZ Q4 GDP slid to -0.6% QoQ versus -0.2% market forecasts and 2.0% previous readings. Further, the YoY figures also eased to 2.2% compared to the 3.3% expected and 6.4% in previous readings. The figures become more worrisome as Bloomberg quoted Anthony Walker, a director of sovereign ratings for Australia, New Zealand and the Pacific at S&P on Wednesday to mention that "New Zealand’s credit grades with S&P Global Ratings could come under pressure if the nation’s current account deficit remains too big." It should be noted that the national Current Account Deficit shrank to $-9.45B in Q4, from $-10.2B in Q3. However, the Current Account – GDP Ratio slumped to -8.9% from -7.9% prior and -8.4% market forecasts.

Elsewhere, the latest fears emanating from Europe’s G-SIB – a global systemically important bank, namely Credit Suisse, renew fears of the 2008 financial crisis as it follows fallouts of the US banks, namely Silicon Valley Bank (SVB) and Signature Bank. Also highlighting the fears are headlines from Bloomberg suggesting China’s securities regulator is holding up approvals for new applications to sell global depository receipts, according to people familiar with the situation, potentially choking off a lucrative stream of listings in Europe.

On the positive side, news that Credit Suisse eyes borrowing up to CHF50 billion from the Swiss National Bank (SNB) to strengthen liquidity gained major attention and allowed NZD/USD bears to take a breather. On the same line could be the news that anonymous sources conveyed that the US banks are less vulnerable to the Credit Suisse debacle. Furthermore, the emergency talks by the Bank of England (BoE) and market chatters suggesting no immediate negative reaction by the Federal Reserve (Fed) and ECB, during their monetary policy meetings, also seem to tame the previous risk aversion. Recently, Goldman Sachs came out with its upwardly revised economic forecasts for China and tried to put a floor under the NZD/USD prices.

Against this backdrop, the S&P 500 Futures rise 0.40% intraday to reverse the previous day’s losses around 3,940 whereas the US 10-year Treasury bond yields stabilize around 3.48% after falling the most in four months on Wednesday. That said, the two-year Treasury bond coupons also pause the further downside around 3.94%, after falling to the lowest levels since September 2022.

Looking ahead, risk catalysts and the second-tier US data about employment, manufacturing and housing activities could entertain the NZD/USD pair traders. Though, major attention will be given to the bond market moves and headlines surrounding Credit Suisse, Silicon Valley Bank (SVB) and Signature Bank.

Technical analysis

NZD/USD pair’s inability to cross the one-month-old resistance line and 200-SMA, around 0.6240 and 0.6265 in that order, joins bearish MACD signals and the downbeat RSI (14) line, not oversold, to keep the Kiwi pair sellers hopeful.

 

04:51
Asian Stock Market: Risk aversion remains intact as fears of global banking crisis deepen, oil rebounds
  • Asian stocks are heavily battered further as global banking turmoil fears deepen after Credit Suisse’s debacle.
  • The Swiss National Bank (SNB) has promised an advance of 50bln Swiss Francs to Credit Suisse.
  • Oil price has rebounded as the US has no further appetite to levy sanctions on Russia.

Markets in the Asian domain are continuing with their downside journey as fears of banking turmoil stretch from the United States to Europe. Investors had yet not emerged of the Silicon Valley Bank (SVB) collapse and now the fiasco of Credit Suisse has spooked market sentiment further. Fears of global financial instability have deepened further and investors are dumping equities globally to dodge sheer volatility.

At the press time, Japan’s Nikkei225 tumbled 1.01%, Shanghai dropped 0.46%, Hang Seng plunged 1.65%, and Nifty50 surrendered 0.55%.

Dictation of ‘material weakness’ in internal controls of Credit Suisse’s financial reporting conveyed something ugly about the banking firm. The headline was followed by a blunt decline by the Saudi National Bank for infusing more funds into Credit Suisse, the leading investor in the Swiss banking firm, which accelerated fears of some internal financial issues and led to a nosedive move in the share price of Credit Suisse.

After the Credit Suisse debacle, China’s China Securities Regulatory Commission has paused approvals for the sale of Global Depositories Receipts (GDRs) as it could threaten domestic market stability, as reported by Bloomberg.

Meanwhile, the Swiss National Bank (SNB) has promised an advance of 50bln Swiss Francs to Credit Suisse. However, the investment banking firm would require plenty of time in the healing process.

Chinese stocks have witnessed an immense sell-off despite hopes of demand recovery. Bloomberg reported that China’s home prices rose in February for the first time in 18 months, a sign that government efforts to revive the battered market are starting to pay off. Generally, optimism in a battered economy initiates with rising realty sector prices and expand further to productivity.

On the oil front, oil prices have rebounded further above $68.00 as G-7 economies have opposed further decline in the price cap for Russian crude oil. US President Biden had told European Commission President Ursula von der Leyen in the Oval Office of the White House last week there was no appetite in Washington for adjusting the oil sanctions, as reported by Wall Street Journal.

 

04:45
Goldman Sachs raises odds of a US recession in the next 12 months by 10% to 35%

Economists at Goldman Sachs raised their probability of the US economy entering a recession in the next 12 months by 10 percentage points from 25% to 35%, the latest client note showed.

The US banking giant’s recession forecast reflects increased near-term uncertainty around the economic effects of the small bank stress.

Related reads

  • Credit Suisse group takes steps to improve liquidity
  • Fed pause ECB hike as markets battle bank crisis
04:45
GBP/JPY falls below 160.50 mark amid uncertainty surrounding Credit Suisse
  • GBP/JPY bears eye on 159.00 level amid liquidity crisis.
  • BoE in discussion over Credit Suisse’s worsening situation.
  • Global bond yields drop amid risk aversion; boost to Japanese yen. 

GBP/JPY has been plummeting from the 164.00 level as Japanese Yen demand surges. It has been a while since the Yen acted as a safe haven, with the US Dollar typically taking that role. However, falling US Treasuries are diminishing US Dollar demand, and as a result, the conventional safe-haven Japanese Yen is in high demand amid risk aversion.

Some headlines earlier in the Asian trading session suggested that the Bank of England (BoE) is in talks with its international counterparts regarding Credit Suisse's worsening situation. Subsequently, remarks appeared from Credit Suisse proposing preemptive steps to resolve the liquidity crunch, either through a public offering of debt securities or by obtaining a CHF50 billion covered loan facility from the Swiss National Bank (SNB).

Amid the uncertainty surrounding Credit Suisse and Silicon Valley Bank, market participants are seeking government bonds as safe-haven assets, causing yields to fall globally. The falling yields are further boosting Yen demand in a risk-averse environment.

Meanwhile, unscheduled comments from former Bank of Japan (BoJ) Governor Kuroda hit the wires, stating that the central bank has implemented an effective, sustainable policy. In addition, Japanese Merchandise Trade Balance data revealed that yearly Import data for February came in at 8.3%, lower than the 12.2% expected, and Export data registered 6.5%, compared to the 7.1% expected. The directional bias for GBP/JPY is likely to remain on the downside amid a risk-averse environment.

Levels to watch

 

 

04:41
USD/CAD Price Analysis: Stays pressured towards 1.3690 support USDCAD
  • USD/CAD fades bounce off three-week-old support line, grinds lower of late.
  • Receding bullish bias of MACD, descending RSI line lure sellers.
  • 100, 200 EMAs act as additional downside filters.
  • Weekly descending trend line holds the key to Loonie pair’s run-up towards refreshing 2023 top.

USD/CAD holds lower ground near 1.3750 as it pares the biggest daily gains in a week during early Thursday morning in Europe. In doing so, the Loonie pair fades the previous day’s bounce off a three-week-old ascending support line while printing mild losses of late.

Apart from failing to rebound from the short-term key support, the receding bullish bias of the MACD signals and the RSI (14) line’s downward move, not oversold, also keeps the USD/CAD bears hopeful of poking the 1.3690 level, comprising the aforementioned trend.

It’s worth noting, however, that the 100-bar and 200-bar Exponential Moving Averages (EMAs), respectively near 1.3660 and 1.3585, could challenge the USD/CAD bears afterward.

Also acting as a downside filter is the 50% Fibonacci retracement level of the pair’s February-March upside, near 1.3565.

On the flip side, a downward-sloping resistance line from March 10, close to 1.3810 at the latest, appears crucial for the USD/CAD buyers to watch during the pair’s further upside as a clear break of which could quickly refresh the year 2023 peak, currently around 1.3860.

In that case, October 2022 peak surrounding 1.3980 and the 1.4000 psychological magnet will gain major attention.

USD/CAD: Four-hour chart

Trend: Further downside expected

 

04:31
Japan Capacity Utilization registered at -5.5%, below expectations (0.1%) in January
04:31
Japan Industrial Production (YoY) below forecasts (-2.3%) in January: Actual (-3.1%)
04:31
Japan Industrial Production (MoM) came in at -5.3%, below expectations (-4.6%) in January
04:09
USD/INR Price News: Skids below 82.80 as USD Index eyes downside, hawkish Fed bets wane
  • USD/INR has slipped to near 82.68 as USD Index has extended its correction.
  • Investors are anticipating a less-hawkish monetary policy stance from the Fed after scrutiny of February’s US economic data.
  • Oil price is struggling to extend its recovery above $68.00 as fears of a banking sector meltdown would result in lower advances.

The USD/INR pair has shifted its auction below the critical support of 82.80 in the Asian session. The asset is expected to remain on the tenterhooks as investors are anticipating a less-hawkish monetary policy stance from the Federal Reserve (Fed) after scrutiny of United States economic data (Feb). The major has slipped to near 82.68 and it seems that more losses are in pipeline ahead.

S&P500 futures have eased some of the gains generated in the early Asian session as the risk-aversion theme has not entirely faded. The 500-US stocks basket futures are likely to remain volatile as fears of the global banking crisis have stretched after the debacle of Credit Suisse. Although the Swiss National Bank (SNB) has promised to provide liquidity support to the investment banking firm, fears of global financial instability cannot be ruled out.

Considering the statement from Credit Suisse chairman Axel Lehmann that state assistance "isn't a topic" for the bank as it seeks to recover from a string of scandals that have undermined the confidence of investors and clients, Bloomberg reported, the downfall of Credit Suisse is not expected to heal sooner.

The US Dollar Index (DXY) has extended its correction to near 104.50 amid soaring uncertainty over the interest rate decision by the Federal Reserve (Fed), which will be announced on March 22. The rally in the USD Index, witnessed on Wednesday, was backed by fears of global banking turmoil. And now investors are expected to discount the less-hawkish pitch to be delivered by Fed chair Jerome Powell over interest rates next week.

In order to restore the confidence of households and investors, the Fed might keep the borrowing rates steady or go for a 25 basis point (bps) rate hike to continue weighing pressure on the United States inflation.

Meanwhile, oil price is struggling to extend its recovery above $68.00 as fears of a banking sector meltdown would result in the lower release of advances. This might scale down the oil price further. It is worth noting that India is one of the leading importers of oil in the world and lower oil prices would trim India’s fiscal deficit.

 

03:59
Australian Treasurer Chalmers: Banks are well capitalized

Australian Treasurer Chalmers: Banks are well capitalized

more to come ....

03:42
EUR/USD skates on thin ice near 1.0600 as Credit Suisse upset prods ECB hawks EURUSD
  • EUR/USD sticks to mild gains while paring the biggest daily loss since September 2022.
  • ECB policymakers are likely to cite inflation fears to justify anticipated 50 bps rate hike, forward guidance will be crucial.
  • As Credit Suisse crisis follows US bank fallouts, fears of financial market crackdown like 2008 could weigh on Euro pair.
  • Bond market moves, ECB’s signals for future rate hikes and economic conditions will be crucial for near-term directions.

EUR/USD picks up bids to 1.0600 as it pares the biggest daily loss in almost six months ahead of the European Central Bank’s (ECB) Monetary Policy Meeting. However, the major currency pair remains mostly sidelined in the last few hours as traders doubt the hawkish concerns about the old continent’s central bank after the Credit Suisse crisis.

On Wednesday, Reuters cited a source familiar with the matter, Reuters reported on Wednesday that European Central Bank (ECB) policymakers are leaning toward a 50 basis points (bps) rate hike on Thursday. The news also said, “Despite turmoil in the banking sector, policymakers expect inflation to remain too high in the Eurozone,” while adding that the Governing Council doesn't want to damage its credibility by ditching the 50 bps rate increase after having repeatedly noted that this was their intention.

It should be noted that the Saudi National Bank’s rejection of infusing more funds into Credit Suisse propelled the key European bank’s Credit Default Swaps (CDS) and triggered the crisis for the financial markets on Wednesday. Further amplifying the sour sentiment was the news that the European Central Bank (ECB) officials contacted banks to ask about exposures to Credit Suisse. The bank’s crisis becomes crucial to the global financial sector as Credit Suisse is a G-SIB – a global systemically important bank and the drama erupts after the latest fallouts of the US banks, namely Silicon Valley Bank (SVB) and Signature Bank.

However, the news that Credit Suisse eyes borrowing up to CHF50 billion from the Swiss National Bank (SNB) to strengthen liquidity gained major attention and allowed EUR/USD bears to take a breather. On the same line could be the news that anonymous sources conveyed that the US banks are less vulnerable to the Credit Suisse debacle. Furthermore, the emergency talks by the Bank of England (BoE) and market chatters suggesting no immediate negative reaction by the Federal Reserve (Fed) and ECB, during their monetary policy meetings, also seem to tame the previous risk aversion.

Amid these plays, the S&P 500 Futures rise 0.40% intraday to reverse the previous day’s losses around 3,940 whereas the US 10-year Treasury bond yields stabilize around 3.48% after falling the most in four months on Wednesday. That said, the two-year Treasury bond coupons also pause the further downside around 3.94%, after falling to the lowest levels since September 2022.

Looking ahead, the ECB’s reaction to the Credit Suisse crisis will be the key for EUR/USD traders to watch as 50 basis points (bps) of a rate hike from the bloc’s central bank is a done deal. As a result, ECB President Christine Lagarde’s Press Conference will be more important and could drown the EUR/USD pair despite announcing a rate hike if raising doubts about the future rate lifts and economic conditions.

Also read: ECB Preview: Set for 50 bps rate hike, Lagarde holds the key

Technical analysis

A convergence of the 100-DMA and an ascending trend line from early December 2022, near 1.0550, appears a tough nut to crack for bears.

 

03:36
Gold Price Forecast: XAU/USD corrects to near $1,910 despite deepening fears of global banking turmoil
  • Gold price has sensed selling pressure while extending its rally, however, the upside is still solid.
  • The USD Index is expected to face the heat of uncertainty over monetary policy by the Fed, scheduled for next week.
  • Rising odds for an unchanged Fed’s monetary policy are backed by softening US inflation and a higher jobless rate.

Gold price (XAU/USD) has demonstrated a corrective move in the Asian session after printing a fresh six-week high at $1,937.39. A correction in the precious metal looks short-lived as gold’s appeal is extremely solid amid deepening fears of the global banking crisis. Credit Suisse’s fiasco after the collapse of Silicon Valley Bank (SVB) has triggered the risk of financial instability globally and uncertainty over the interest rate decision by the Federal Reserve (Fed), scheduled for next week, has cemented strong appeal for Gold price.

S&P500 futures have shown a recovery move after a sell-off on Wednesday as investors are digesting the uncertainty associated with the banking sector. However, the risk aversion theme has not completely faded yet.

The US Dollar Index (DXY) is juggling in a narrow range of around 104.60 in the Asian session. It seems that the impact of banking sector turmoil is maturing for the USD Index and investors are starting to discount the expectations for next week’s monetary policy. As per the CME FedWatch tool, the odds for a 25 basis point (bps) interest rate hike by Fed chair Jerome Powell have scaled above 70%. While 30% chances are advocating an unchanged interest rate policy.

Rising odds for an unchanged monetary policy are backed by softening United States Consumer Price Index (CPI), higher Unemployment Rate, weak Retail Sales, and lower Producer Price Index (PPI) figures.

Gold technical analysis

Gold price has corrected after a bearish divergence on a two-hour scale as the asset formed a higher high while the Relative Strength Index (RSI) (14) formed a lower high that resulted in a loss in the upside momentum. The upside bias is still sold as the asset has not broken the higher high higher low structure.

The Gold price has shown a mean reversion to near the 20-period Exponential Moving Average (EMA) at $1,910.30 after a perpendicular move.

The Yellow metal has comfortably established above the 61.8% Fibonacci retracement (placed from February 02 high at $1,959.80 to February 28 low at $1,804.76) at $1,900.00.

Gold two-hour chart

 

03:31
GBP/USD lackluster around 1.2070 as the market awaits clarity on Credit Suisse front GBPUSD
  • GBP/USD is in silent mode amid BoE emergency talks on Credit Suisse crisis.
  • Liquidity squeeze and falling yields are dialing back aggressive tightening across the globe.
  • US PPI eased the price pressure while Retail Sales showed muted activity. 

GBP/USD is in a consolidative phase in early Asian trading hours on Thursday amid reports suggesting that the Bank of England (BoE) is in emergency talks as the Credit Suisse crisis worsens following the Swiss National Bank's (SNB) intervention.

Many headlines are picking up on the Credit Suisse front on Thursday amid liquidity issues. Adding to this, the Bank of England was holding emergency talks with international counterparts on bolstering liquidity in the event of a worsening situation. The chain reaction began with Silicon Valley Bank's (SVB) fallout, where the UK division was rescued by HSBC bank, while in the case of Credit Suisse, both BoE and SNB are in hot haste.

Moving on to the US Dollar, a squeeze in liquidity amid banking and financial sectors is dampening the US Dollar demand as US Treasury bond yields have started to fall. Given the liquidity issues from SVB and Credit Suisse, investors are trimming the chances of aggressive monetary tightening across the globe.

The market outlook for the Federal Reserve (Fed) rate hike for the March FOMC meeting has softened due to back-to-back liquidity issues arising from higher borrowing costs.

Meanwhile, the US Producer Price Index (PPI) released on Wednesday came in below expectations and eased some price pressure from producers, while US Retail Sales signaled a slowdown in retail activity.

In the absence of any top-tier data from the UK, GBP/USD is likely to take cues from the US data including the Building Permits, Housing Starts, Initial Jobless Claims, and the Philadelphia Fed Manufacturing Survey amid volatile risk sentiments.

Levels to watch

 

03:11
AUD/USD Price Analysis: Any recovery remains elusive below 0.6705 AUDUSD

  • AUD/USD pares the biggest daily loss in a week amid sluggish markets, retreats from daily high of late.
  • Bearish MACD signals, steady RSI suggests a continuation of downtrend.
  • Six-week-old descending resistance line, 100-SMA restrict immediate upside.
  • Aussie bulls remain confused below 200-SMA; one-week-long horizontal support puts a floor under the prices.

AUD/USD struggles to keep the daily gains around 0.6620 as it consolidates the biggest slump in a week during Thursday’s sluggish morning in Europe, after a volatile Wednesday that rocked markets with a risk-off mood.

In doing so, the Aussie pair justifies the bearish MACD signals and RSI (14) line, as well as the repeated failures to cross a 1.5-month-long resistance line and the 100-SMA, to tease the intraday sellers.

However, an area comprising multiple lows marked since March 07, between 0.6565 and 0.6575, appears a tough nut to crack for the AUD/USD bears.

Also acting as the downside filters are the tops marked during October 2022 around 0.6545 and 0.6520.

On the contrary, the aforementioned resistance and the 100-SMA, respectively near 0.6690 and 0.6705, restrict short-term AUD/USD advances amid downbeat oscillators.

Even if the AUD/USD bulls manage to cross the 0.6705 hurdle, the monthly high near 0.6785 and the 0.6800 round figure will precede the 200-SMA resistance of around 0.6830 to challenge the risk-barometer pair’s further upside.

To sum up, AUD/UDS is likely to remain bearish but the road towards the south appears bumpy.

AUD/USD: Four-hour chart

Trend: Further downside expected

 

02:53
USD/JPY bears attack 133.00 despite steady yields as Credit Suisse turmoil appears far from over USDJPY
  • USD/JPY clings to mild losses as market sentiment remains sour despite latest consolidation.
  • Yields stabilize near multi-day low as policymakers rush to tame financial market fears.
  • Upbeat Japan data, challenges for hawkish central bank moves due to Credit Suisse crisis also weaken the Yen pair.
  • Risk catalysts, bond market moves eyed for clear directions.

USD/JPY fades late Wednesday’s corrective bounce off a one-month low as it prints mild losses around 133.00, down for the second consecutive day during early Thursday.

In doing so, the Yen pair ignores the latest inaction of the US Treasury bond yields, as well as the global policymakers’ efforts to placate the financial market fears emanating from the Credit Suisse crisis. The reason could be linked to the upbeat Japan data and less confidence in the Federal Reserve’s (Fed) hawkish bias.

Japan’s Machinery Orders for January, 9.5% MoM versus 1.8% expected and 1.6% prior, joins an improvement in Merchandise Trade Balance Total of ¥-897.7B compared to ¥-1,069.4B analysts’ estimations and ¥-3,498.6B previous readings to weigh on the USD/JPY pair.

Elsewhere, Reuters’ headlines suggesting that Credit Suisse eyes borrowing up to CHF50 billion from SNB to strengthen liquidity gain major attention and allow USD/JPY bears to take a breather. On the same line could be the news that anonymous sources conveyed that the US banks are less vulnerable to the Credit Suisse debacle. Furthermore, the emergency talks by the Bank of England (BoE) and market chatters suggesting no immediate negative reaction by the Federal Reserve (Fed) and ECB, during their monetary policy meetings, also seem to tame the previous risk aversion.

While portraying the mood, the S&P 500 Futures rise half a percent to reverse the previous day’s losses around 3,940 whereas the US 10-year Treasury bond yields stabilize around 3.49% after falling the most in four months on Wednesday. That said, the two-year Treasury bond coupons also pause the further downside around 3.96%, after falling to the lowest levels since September 2022.

Moving forward, Japan’s Industrial Production and Capacity Utilization will precede the second-tier US data concerning employment, manufacturing and housing activities to direct intraday moves of the USD/JPY pair. Though, headlines surrounding Credit Suisse, Silicon Valley Bank (SVB) and Signature Bank, as well as the bond market’s reaction to the same, will be crucial for clear directions.

Technical analysis

50-DMA puts a floor under the USD/JPY prices around 132.50 amid bearish MACD signals, which in turn suggests limited downside room for the Yen pair.

 

02:40
USD/MXN Price Analysis: Mexican Peso buyers lurk around 19.10
  • USD/MXN struggles for clear directions after posting one more failure to cross 100-DMA, 5.5-month-old resistance line.
  • Bullish MACD signals, sustained trading beyond two-month-long horizontal support keep buyers hopeful.
  • Descending resistance line from July 2022, 200-DMA act as additional upside filters to prod the Mexican Peso pair buyers.

USD/MXN seesaws around 18.95, mildly offered during early Thursday, after posting another failure to cross the 19.10 resistance confluence the previous day.

It’s worth noting that the risk-off mood propelled Mexican Peso (MXN) pair the previous day but failed to cross the convergence of the 100-DMA and a downward-sloping resistance line from late September 2022, around 19.10 at the latest.

The corrective pullback, however, remains elusive amid the bullish MACD signals. Also likely to challenge the USD/MXN bears is a two-month-old horizontal support area around 18.50-55.

In a case where the quote drops below 18.50, the 18.00 round figure could test the bears before directing them to the multi-month low marked earlier in March around 17.90.

Alternatively, a clear upside break of the 19.10 hurdle isn’t an open invitation to the USD/MXN bulls as a downward-sloping resistance line from mid-July 2022, around 19.48, precedes the 200-DMA level of 19.63 to challenge the upside momentum.

Even if the USD/MXN buyers manage to keep the reins beyond 19.63, the late 2022 peak surrounding 19.90 and the 20.00 psychological magnet could test the pair’s further advances.

Overall, USD/MXN is likely to pare some of the latest gains but the bears are far from taking control.

USD/MXN: Daily chart

Trend: Further upside expected

 

02:30
Commodities. Daily history for Wednesday, March 15, 2023
Raw materials Closed Change, %
Silver 21.77 0.33
Gold 1918.15 0.72
Palladium 1462.6 -2.37
02:21
USD/CHF pares the biggest daily jump in eight years near 0.9300 amid Credit Suisse crisis USDCHF
  • USD/CHF prints mild losses to consolidate the biggest daily gains since 2015 amid mixed sentiment.
  • Credit Suisse eyes SNB loan to overcome liquidity crisis.
  • Global policymakers rush to placate financial market fears after US, European banks tease pessimists.
  • Second-tier Swiss, US data may entertain traders but bond market moves are the key to clear directions.

USD/CHF clings to mild losses around 0.9320 as it holds lower grounds near the intraday bottom during early Thursday. That said, the Swiss currency pair rallied the most since 2015 on Wednesday as Credit Suisse amplified financial market fears. However, the global policymakers’ efforts to tame the risk-off mood seem to help the Swiss currency pair in consolidating the latest moves.

Among the key positive developments, Reuters’ headlines suggesting that Credit Suisse eyes borrowing up to CHF50 billion from SNB to strengthen liquidity gains major attention. On the same line could be the news that anonymous sources conveyed that the US banks are less vulnerable to the Credit Suisse debacle. Furthermore, the emergency talks by the Bank of England (BoE) and market chatters suggesting no immediate negative reaction by the Federal Reserve (Fed) and ECB, during their monetary policy meetings, also seem to tame the previous risk aversion.

Amid these plays, the S&P 500 Futures rise half a percent to reverse the previous day’s losses around 3,940 whereas the US 10-year Treasury bond yields stabilize around 3.49% after falling the most in four months on Wednesday. That said, the two-year Treasury bond coupons also pause the further downside around 3.96%, after falling to the lowest levels since September 2022.

On Wednesday, the Saudi National Bank’s rejection of infusing more funds into Credit Suisse propelled the key European bank’s Credit Default Swaps (CDS) and triggered the crisis for the financial markets on Wednesday. Further amplifying the sour sentiment was the news that the European Central Bank (ECB) officials contacted banks to ask about exposures to Credit Suisse.

It should be noted that the mixed US data failed to gain any major attention, even if the US Dollar rose. That said, US Retail Sales dropped to -0.4% in February versus -0.3% expected and upwardly revised 3.2% prior while the Producer Price Index (PPI) slide to 4.6% YoY from 5.7% in January and 5.6% market forecasts. Further, NY Empire State Manufacturing Index dropped to -24.6 for March compared to analysts’ estimations of -8.0 and -5.8 prior.

Moving ahead, Swiss SECO Economic Forecasts and second-tier US data concerning employment, manufacturing and housing activities could entertain theee USD/CHF pair traders. However, major attention will be given to the bond market moves and headlines surrounding Credit Suisse, Silicon Valley Bank (SVB) and Signature Bank.

Technical analysis

Overbought RSI, failure to cross the 100-SMA and the previous support line from early February, close to 0.9325 and 0.9350 in that order, USD/CHF bears remain in the driver’s seat.

 

01:53
Silver Price Analysis: XAG/USD eases from key EMA confluence below $22.00
  • Silver price takes offers to refresh intraday low, extends late Wednesday’s pullback from five-week high.
  • Multiple key Exponential Moving Averages (EMAs) challenge XAG/USD bulls even as MACD signals favor upside.
  • 6.5-month-old ascending trend line appears the key support to watch.

Silver price (XAG/USD) renews intraday low near $21.70 as it consolidates the previous day’s gains, extending pullback from a five-week high, during early Thursday. In doing so, the bright metal portrays the fourth consecutive failure on a day to cross the convergence of the key Exponential Moving Averages (EMAs).

That said, the 50-EMA joins 100-EMA and 200-EMA to highlight $21.80-90 region as a tough nut to crack for the Silver buyers.

Even so, bullish MACD signals join an upward-sloping trend line from the early September 2022 to restrict immediate downside of the XAG/USD around $20.00.

Ahead of that, the previous weekly top around $21.30 and the $21.00 could lure the Silver bears.

In a case where the Silver price remains bearish past $20.00, the odds of witnessing a slump towards November 2022 low near $18.80 can’t be ruled out.

On the flip side, a daily closing beyond the $21.90 appears necessary for the XAG/USD bulls to retake control.

Even so, the $22.00 threshold and January’s low near $22.75 could challenge the Silver buyers before giving them control.

Overall, Silver price remains far from the buyer’s radar unless crossing $21.90. However, the downside room also appears limited.

Silver price: Daily chart

Trend: Further weakness expected

 

01:53
USD/CAD drops below 1.3750 as street anticipates an unchanged Fed policy USDCAD
  • USD/CAD has slipped below 1.3750 as expectations for Fed’s steady policy escalate.
  • A scrutiny of February’s US inflation-linked data indicates that January’s inflation revival was a one-time blip.
  • Oil price looks vulnerable above $68.00 as tightening policies for banking system by central banks could dent oil demand ahead.

The USD/CAD pair has corrected to near the critical support of 1.3750 in the Tokyo session. The Loonie asset is facing the heat as the upside momentum in the US Dollar Index has started fading now. The street is anticipating maintenance of status-quo by the Federal Reserve (Fed) next week as United States inflation has resumed its softening spell meaningfully.

Scrutiny of February’s US Consumer Price Index, Employment report, Retail Sales, and Producer Price Index (PPI) figures indicate that January’s economic data was a one-time blip. The US inflation has resumed its downside journey and the joining of fears associated with the global banking crisis is stemming an unchanged policy stance on interest rates.

The odds of a 50 basis point (bps) interest rate hike by the Fed have majorly faded, however, the other school of thought is still standing with a 25 bps rate hike expectation. Citing former senior Bank for International Settlements official and ex-New York Fed research director Stephen Cecchetti, MNI reported on Wednesday, “The Fed will likely approve a quarter-point interest rate increase next week as focus shifts from strong economic data to restoring confidence in the banking system.”

S&P500 futures have recovered a majority of Wednesday’s losses in the Asian session as investors have started shrugging off the uncertainty associated with global banking turmoil after Credit Suisse’s debacle and Silicon Valley Bank’s (SVB) collapse. The US Dollar Index (DXY) has turned sideways near the immediate support of 104.60 and is expected to remain on tenterhooks ahead.

Meanwhile, the oil price looks vulnerable above $68.00 after a recovery move as tightening policies for the banking system by central banks could dent oil demand further. It is worth noting that Canada is the leading exporter of oil to the United States and lower oil prices would impact the Canadian Dollar.

 

01:53
BoJ’s Kuroda: Central bank has enacted an effective and sustainable policy

Bank of Japan’s (BoJ) outgoing Governor Haruhiko Kuroda said on Thursday that “the Bank has enacted an effective and sustainable policy.”

Nothing further has been reported from the BoJ Chief.

Market reaction

USD/JPY is dropping back toward 133.00, unable to hold the recovery near 133.50. The renewed weakness in the US Treasury bond yields seems to weigh on the major.

01:39
AUD/NZD surges above1.0750 after the upbeat Australian Jobs number
  • Australian Employment data boosts AUD/NZD, eye on 1.07800 mark.
  • Disappointing NZ GDP data weigh on the NZD, fueling AUD/NZD gains.
  • Aussie jobs number boost 25 bps RBA hike for the next meeting. 

AUD/NZD is up around 0.50% following the release of February's Australian Employment Change data. The jobs number exceeded expectations, with Employment Change at 64.6K vs. 48.5K expected, from a prior -11.5K. The Unemployment rate also ticked down to 3.5% from the previous 3.7%. Full-time employment saw a significant surge to 74.9K from the previous -43.3K. 

The positive jobs numbers, coming after two downbeat readings in December and January, will likely encourage the Reserve Bank of Australia (RBA) to implement an additional 25 basis points (bps) rate hike in their next meeting, despite signaling a pause thereafter.

In contrast, the New Zealand Gross Domestic Product (GDP) data for the fourth quarter of 2022came in worse than expected, with the quarterly reading at -0.6% vs. -0.2% from the previous 2% and the yearly reading at 2.2% vs. 3.3%, from the prior 6.4%. 

The economic contraction was driven by flat consumption, a decline in real national gross disposable income, and muted investment in the industrial sectors. It's important to note that this figure, representing Q4 2022, does not include the economic impact of cyclone Gabrielle.

This growth data may prompt the Reserve Bank of New Zealand (RBNZ) to reconsider its hawkish stance during the next RBNZ meeting scheduled on April 5th. Despite many market forecasters anticipating a 25 bps rate hike from the RBNZ in April, the upside bias for AUD/NZD remains intact as economic data continues to diverge for both economies.

Levels to watch

 

01:37
Credit Suisse group takes steps to improve liquidity

Reuters reported early Thursday that Credit Suisse Group AG undertook decisive action to pre-emptively strengthen liquidity and announces public tender offers for debt securities.

Additional takeaways

“Taking decisive action to pre-emptively strengthen its liquidity by intending to exercise its option to borrow from SNB up to CHF50 billion under a covered loan facility as well as a short-term liquidity facility.”

“Announces offers by Credit Suisse International to repurchase certain OPCO senior debt securities for cash of up to about CHF3 billion.”

Market reaction

Markets are seeing a minor recovery in the risk sentiment, following the bloodbath fuelled by the Credit Suisse crisis on Wednesday. The rescue plan announced by Credit Suisse could offer additional comfort to the traders but risks continue to loom ahead of the European Central Bank (ECB) policy decision.

The S&P 500 futures are up 0.46% on the day while the EUR/USD pair clings to recovery gains at around 1.0600 so far.

01:34
S&P 500 Futures print mild gains as Treasury bond yields lick Credit Suisse-inflicted losses

  • Markets consolidate Credit Suisse-infused fears as global policymakers rush to placate fears of financial crisis.
  • S&P 500 Futures rise 0.45% to reverse the previous day’s losses as Credit Suisse eyes SNB loan to strengthen liquidity.
  • US 10-year, two-year Treasury bond yields seesaw around multi-day low marked the previous day.
  • ECB, risk catalysts should be observed for fresh impulse, bond market moves are the key.

The risk profile improves a bit, stabilizing after the previous day’s heavy risk-off mood, as global policymakers rush to placate the Credit Suisse-linked financial market fears.

Adding strength to the cautious optimism could be the latest headlines suggesting the European bank’s efforts to regain liquidity by taking loans from the Swiss National Bank (SNB). “Credit Suisse to borrow up to CHF50 billion from SNB to strengthen liquidity,” said Reuters.

While portraying the mood, the S&P 500 Futures rise half a percent to reverse the previous day’s losses around 3,940 whereas the US 10-year Treasury bond yields stabilize around 3.49% after falling the most in four months on Wednesday. That said, the two-year Treasury bond coupons also pause the further downside around 3.96%, after falling to the lowest levels since September 2022.

The Saudi National Bank’s rejection of infusing more funds into Credit Suisse propelled the key European bank’s Credit Default Swaps (CDS) and triggered the crisis for the financial markets on Wednesday. On the same line was the news that the European Central Bank (ECB) officials contacted banks to ask about exposures to Credit Suisse, which in turn fanned the risk-off mood.

To tame the risk aversion, the Swiss National Bank stepped forward while anonymous sources conveyed to Reuters that the US banks are less vulnerable to the Credit Suisse debacle. On the same line, the Bank of England (BoE) also held emergency talks. Furthermore, market chatters suggesting no immediate negative reaction by the Federal Reserve (Fed) and ECB, during their monetary policy meetings, also seem to tame the previous risk aversion.

It’s worth mentioning that the US data came in mixed the previous day but failed to gain major attention amid the Credit Suisse crisis. That said, US Retail Sales dropped to -0.4% in February versus -0.3% expected and upwardly revised 3.2% prior while the Producer Price Index (PPI) slide to 4.6% YoY from 5.7% in January and 5.6% market forecasts. Further, NY Empire State Manufacturing Index dropped to -24.6 for March compared to analysts’ estimations of -8.0 and -5.8 prior.

To sum up, challenges emanating from the US and European banks to the financial markets weigh on the Treasury bond yields and allow the US Dollar, as well as the Gold price, to remain firmer despite the latest retreat.

Looking ahead, ECB Monetary Policy Meeting will be the day’s key event to watch clear directions. Also important to watch will be the bond market moves and headlines surrounding Credit Suisse, Silicon Valley Bank (SVB) and Signature Bank.

Also read: Forex Today: Dollar and Yen jump as panic takes over markets

01:31
China House Price Index climbed from previous -1.5% to -1.2% in February
01:15
EUR/USD Price Analysis: Recaptures 1.0600 as USD Index extends correction, ECB policy eyed EURUSD
  • EUR/USD is likely to remain in action ahead of the interest rate decision by the ECB.
  • The Euro has shown responsive buying from below 1.0530 amid hawkish ECB bets.
  • The RSI (14) is making efforts in leaving the bearish range oscillation, which indicates a bullish reversal.

The EUR/USD pair has stretched its recovery to near the round-level resistance of 1.0600 in the Asian session. The major currency pair is attracting bids as the European Central Bank (ECB) is expected to maintain its higher gear for interest rates ahead. An announcement of third consecutive 50 basis points (bps) is expected in the interest rate decision by ECB President Christine Lagarde despite Credit Suisse’s fiasco as stubborn Eurozone inflation is needed to be prioritized.

S&P500 futures are showing decent gains in the Asian session, indicating that investors are digesting the turmoil of Credit Suisse, however, the risk aversion is not entirely faded yet. The US Dollar Index (DXY) has extended its correction to 104.54 as the rally was backed by fears of a global banking crisis, not of bigger rates announcement by the Federal Reserve (Fed).

EUR/USD has shown a recovery move after testing the horizontal support plotted from February 27 low at 1.0533 on a two-hour scale. The shared currency pair has shown a responsive buying move, which indicates a ‘value buying’ at lower levels.

The 20-period Exponential Moving Average (EMA) at 1.0638 is still declining, which indicates that the short-term trend is bearish.

Contrary to that, the Relative Strength Index (RSI) (14) is making efforts in leaving the bearish range oscillation, which indicates a bullish reversal.

For further action, a decisive move above the round-level resistance at 1.0600 will drive the asset toward February 28 high at 1.0645. A breach above the latter will expose the asset to March 01 high at 1.0691.

On the flip side, a slippage below February 27 low at 1.0533 would expose the asset to psychological support at 1.0500 and December 07 low at 1.0443.

EUR/USD two-hour chart

 

01:11
Gold Price Forecast: XAU/USD bulls seek a test of daily resistance
  • Gold price bulls in the market as derisking favors the safe havens.
  • Bulls eye a break of recent highs and then the $2,000s.

Gold price rallied sharply as investors rushed to have assets. Bank stocks, already reeling from two large bank failures in the past week, were under pressure due to the Credit Suisse crisis. Shares of the Swiss lender dropped more than 20% after the chairman of its biggest backer — the Saudi National Bank — said it won’t provide further financial support. Gold price hit a high of $1,937.

The US Dollar weas also bid on safe-haven flows and despite producer prices in the US unexpectedly falling in February. This comes following strong consumer prices earlier in the week. However, fresh woes at Credit Suisse saw safe haven buying continue to pick up. This was aided by the sharp drop in yields on US Treasuries.

The two-year Treasury notes, which move in step with interest rate expectations, have tumbled 98 basis points in the last five days, the biggest drop since the week of Black Monday on Oct. 19, 1987. On Wednesday, they dropped further from 4.413% to pay as low as 3.72%. Benefitting Gold price, the yield curve, as a result, narrowed its inversion further, with the gap between two-year and 10-year yields contracting to -28.60 bps and the tightest spread since October.

Looking to the Federal Reserve next week, markets are now pricing in an 80% chance of a 25 basis point hike and are pricing in a 50% chance of no change. Moreover, the December Fed funds futures, which reflect the overnight rate that banks use to lend to each other has dropped to 3.62% in a sign that the market expects the Federal Reserve to be cutting interest rates by year's end, if not before.

Gold technical analysis

Gold price bulls are in the market and the bullish close on Wednesday opens prospects of a move to test the 2023 highs near $1,960 that guard a monthly move towards the $2,000s.

01:05
NZD/USD Price Analysis: Keeps pullback from 200-SMA below 0.620 NZDUSD
  • NZD/USD bounces off intraday low but stays down for the second consecutive day.
  • Bearish MACD signals, downbeat RSI keeps sellers hopeful amid failures to cross 200-SMA, one-month-old resistance line.
  • Weekly ascending trend line, YTD low lures Kiwi bears.

NZD/USD picks up bids to pare intraday losses around 0.6175 during early Thursday. Even so, the Kiwi pair remains down for the second consecutive day after reversing from the 200-SMA and one-month-old resistance line the previous day.

The NZD/USD pair’s failure to cross the aforementioned key hurdles joins bearish MACD signals and the downbeat RSI (14) line, not oversold, to keep the sellers hopeful of witnessing the quote’s further downside.

As a result, an upward-sloping support line from the last Thursday, near 0.6115 at the latest, gains the attention of intraday bears ahead of the monthly low, as well as the 2023 bottom, marked around 0.6085 in the last week.

It should be noted that the NZD/USD pair’s weakness past 0.6085 will need validation from the July 2022 low of 0.6060 to aim for the 0.6000 psychological magnet, also comprising the early September 2022 bottom.

Meanwhile, the 23.6% Fibonacci retracement level of the Kiwi pair’s February-March downside, near 0.6190, precedes the 0.6200 threshold to restrict immediate NZD/USD upside.

In a case where the quote remains firmer past 0.6200, the previously mentioned resistance line from mid-February and the 200-SMA, respectively near 0.6240 and 0.6265, will be in the spotlight.

NZD/USD: Four-hour chart

Trend: Further downside expected

 

00:41
AUD/USD scales to 0.6640 on upbeat Australian Employment AUDUSD
  • AUD/USD has stretched its recovery to near 0.6640 on better-than-projected Australian labor market data.
  • RBA Lowe Lowe might continue to target more rates as a higher labor force in action would result in spiking inflation further.
  • Investors believe that the reason behind global banking system failure is the fastest and steepest rate hikes by the Fed.

The AUD/USD pair has extended its recovery to near 0.6640 as the Australian Bureau of Statistics has reported upbeat Employment data. The Australian economy added fresh 64.6K payrolls in February higher than the consensus of 48.5K. In January, the Australian economy reported 11.5K lay-offs. The Unemployment Rate has been trimmed further to 3.5% from the estimates of 3.6% and the prior release of 3.7%.

An upbeat Australian labor market data is going to add to troubles for the Reserve Bank of Australia (RBA), which is designing the roadmap for bringing inflation down. RBA Governor Philip Lowe might continue to target more rates as a higher labor force in action would result in spiking inflationary pressures further.

Earlier, Australian Consumer Inflation Expectations (Mar) data that demonstrate inflation projections for the next 12 months dropped to 5.0% from the consensus of 5.4% and the former release of 5.1%.

Meanwhile, S&P500 futures are showing minimal gains in the Asian session, which could be considered as a dead cat bounce after turmoil on Wednesday. The debacle of Credit Suisse after the Silicon Valley Bank (SVB) collapse has deepened the risk of global banking turmoil. One school of thought believes that the rationale behind global banking system failure is the fastest and steepest interest rate hikes by the Federal Reserve (Fed) and other western central banks.

The US Dollar Index (DXY) is looking to extend its correction below 104.60 as investors are expecting a less-hawkish interest rate decision by the Federal Reserve (Fed), scheduled for next week. After a one-time blip in the United States inflation in January, the US inflation has re-routed south, which has faded the expectations of a severe hawkish stance from Fed chair Jerome Powell.

 

00:37
AUD/JPY pays little heed to upbeat Australia Employment report as yields drop on Credit Suisse fears
  • AUD/JPY remains pressured around intraday low, fades late Wednesday’s bounce off three-month low.
  • Australia Employment Change, Unemployment Rate improved during February.
  • Aussie Consumer Inflation Expectations ease to 5.0% for March.
  • Yields remain pressured even as policymakers rush to placate fears emanating from Credit Suisse debacle.

AUD/JPY struggles to cheer the upbeat Aussie employment report for February during early Thursday as risk-off mood weighs on the cross-currency pair. Even so, the quote pauses the initial fall near the intraday low of 87.83.

Australia’s headlines Employment Change jumps by 64.6K versus 48.5K expected and 11.5K prior while the Unemployment Rate also dropped to 3.5% from 3.7% previous readings and 3.6% expected.

Also read: Breaking: AUD/USD recued on positive Aussie jobs report

Earlier in the day, Australia’s Consumer Inflation Expectations eased to 5.0% for March versus 5.4% market forecasts and 5.1% prior.

It should be noted that the upbeat prints of Japan’s Machinery Orders for January, 9.5% MoM versus 1.8% expected and 1.6% prior, joins an upbeat Merchandise Trade Balance Total of ¥-897.7B compared to ¥-1,069.4B analysts’ estimations and ¥-3,498.6B previous readings to also weigh on AUD/JPY.

Above all, the fears emanating from the Credit Suisse turmoil weigh on the AUD/JPY prices as yields drop. The Saudi National Bank’s rejection of infusing more funds into Credit Suisse propelled the key European bank’s Credit Default Swaps (CDS) and triggered the crisis for the financial markets on Wednesday. On the same line was the news that the European Central Bank (ECB) officials contacted banks to ask about exposures to Credit Suisse, which in turn fanned the risk-off mood.

That said, the US 10-year Treasury bond yields dropped the most in four months before bouncing off a four-month low to 3.44% at the latest. On the same line, the US two-year bond coupons refreshed a six-month low before ending the volatile Wednesday near 3.84%.

Having witnessed the initial reaction to the Aussie employment data and the Reserve Bank of Australia (RBA) Bulletin for the fourth quarter (Q4), AUD/JPY traders should pay attention to the risk catalysts and the yields for clear directions. Should the market’s risk aversion continue to drown the bond coupons, the cross-currency pair has more downside to portray on the chart.

Technical analysis

A clear U-turn from a three-month-old previous support line, around 90.15 by the press time, directs AUD/JPY towards late 2022 bottom surrounding the 87.00 threshold.

 

00:33
Breaking: AUD/USD rescued on positive Aussie jobs report AUDUSD

The Employment data for Australia has been released by the Australian Bureau of Statistics as follows:

  • Australia Employment Change Feb: 64.6K (est 50.0K; prev -11.5K; prevR 10.9K).
  • Unemployment Rate Feb: 3.5% (est 3.6%; prev 3.7%) .
  • Participation Rate Feb: 66.6% (est 66.6%; prev 66.5%).
  • Full-time employment change Feb: 74.9k (prev -43.3k; prevr -42.4k).
  • Part-time employment change Feb: -10.3k (prev 31.8k; prevr 31.5k).

AUD/USD update

The Australian and New Zealand dollars were on the defensive on Thursday following the NZ Gross Domestic Product miss and due to the fears for the global banking system.

This data for Australia is a lifeline for the currency that is rallying on the outcome:

About the Employment Change

The Employment Change released by the Australian Bureau of Statistics is a measure of the change in the number of employed people in Australia. Generally speaking, a rise in this indicator has positive implications for consumer spending which stimulates economic growth. Therefore, a high reading is seen as positive (or bullish) for the AUD, while a low reading is seen as negative (or bearish).

00:32
Australia Part-Time Employment dipped from previous 31.8K to -10.3K in February
00:30
Australia Full-Time Employment climbed from previous -43.3K to 74.9K in February
00:30
Australia Unemployment Rate s.a. registered at 3.5%, below expectations (3.6%) in February
00:30
Australia Employment Change s.a. came in at 64.6K, above expectations (48.5K) in February
00:30
Australia Participation Rate in line with expectations (66.6%) in February
00:30
Stocks. Daily history for Wednesday, March 15, 2023
Index Change, points Closed Change, %
NIKKEI 225 7.44 27229.48 0.03
Hang Seng 291.91 19539.87 1.52
KOSPI 30.75 2379.72 1.31
ASX 200 60 7068.9 0.86
FTSE 100 -292.65 7344.45 -3.83
DAX -497.57 14735.26 -3.27
CAC 40 -255.86 6885.71 -3.58
Dow Jones -280.83 31874.57 -0.87
S&P 500 -27.36 3891.93 -0.7
NASDAQ Composite 5.9 11434.05 0.05
00:24
WTI holds down near lowest closing price since Dec 2021
  • WTI drops hard on technical selling and in risk-off markets.
  • Institutions were dumping crude futures to limit their exposure to falling prices in the options market.

US crude prices ended the day down 5.2% at $68.20 a barrel, the lowest closing price since Dec. 3, 2021 and the largest one-day percentage decline in more than two months on a wave of technical selling.

Credit Suisse's 2022 annual report was published on Tuesday and it cited "material weaknesses" in its internal controls over financial reporting, noting that it had not yet stemmed customer outflows. This has provoked a flight to safety in financial markets, hurting the oil price.

Analysts at ANZ Bank said financial institutions were dumping crude futures to limit their exposure to falling prices in the options market. ´´This comes amid renewed fears of weakness in the physical market. The International Energy Agency warned that higher-than-expected Russia exports will keep the market in surplus for the first half of the year,´´ the analysts explained. ´´The Paris-based group highlighted that oil inventories have climbed to their highest levels in 18 months as demand growth remains subdued amid lingering fears of a recession.´´

Meanwhile, Russia Energy Ministry warned that its likely to lower its oil output in 2023, the analysts noted. ´´In the US, crude oil inventories jumped by 1.55mbbls last week. However, there were signs of stronger demand. Stockpiles of gasoline and distillate fell last week by 2,061kbbls and 2,537kbbls respectively.´´

 

00:21
US Dollar Index: DXY pares Credit Suisse-inspired gains below 105.00, yields in focus
  • US Dollar Index pares the biggest daily gains in a week, renews intraday low of late.
  • Credit Suisse turmoil renews market’s fears surrounding 2008 crisis, especially after SVB, Signature Bank fallout.
  • Moody’s back 0.25% Fed rate hike concerns despite recent crisis, US data came in mixed.

US Dollar Index (DXY) renews intraday low near 104.60 as it consolidates the biggest daily gains in a week during early Thursday.  That said, the market’s inaction and the global policymakers’ rush to placate the fears emanating from the Credit Suisse turmoil seem to favor the DXY’s latest pullback. However, the hawkish Fed bets and an absence of any major developments that could defy the financial market risks keeps the US Dollar Index on the bull’s radar.

The Saudi National Bank’s rejection of infusing more funds into Credit Suisse propelled the key European bank’s Credit Default Swaps (CDS) and triggered the crisis for the financial markets on Wednesday. On the same line was the news that the European Central Bank (ECB) officials contacted banks to ask about exposures to Credit Suisse, which in turn fanned the risk-off mood.

To tame the risk aversion, the Swiss National Bank stepped forward while anonymous sources conveyed to Reuters that the US banks are less vulnerable to the Credit Suisse debacle. On the same line, Bank of England (BoE) also held emergency talks. Hence, the global policymakers’ rush to placate the market’s fears seem to weigh on the DXY of late.

Furthermore, global rating giant Moody’s crossed wires via Reuters while stating that it’s analysts expect the Federal Open Market Committee (FOMC) to raise the federal funds rate by 25 basis points at its March 22 meeting.

The risk-aversion propelled the market’s demand for the US Treasury bonds and drowned the yields, which in turn allowed the greenback’s gauge versus six major currencies to rally despite unimpressive data. That said, the US 10-year Treasury bond yields dropped the most in four months before bouncing off a four-month low to 3.46% at the latest. On the same line, the US two-year bond coupons refreshed a six-month low before ending the volatile Wednesday near 3.89%.

It should be noted that US Retail Sales dropped to -0.4% in February versus -0.3% expected and upwardly revised 3.2% prior while the Producer Price Index (PPI) slide to 4.6% YoY from 5.7% in January and 5.6% market forecasts. Further, NY Empire State Manufacturing Index dropped to -24.6 for March compared to analysts’ estimations of -8.0 and -5.8 prior.

Looking ahead, the second-tier data surrounding employment and activities from the US will join the risk catalysts to direct intraday DXY moves. Also important to watch will be the European Central Bank’s (ECB) action considering the latest banking fiasco in the bloc. Above all, bond market is the key to follow for fresh impulse.

Technical analysis

Failure to cross the 100-DMA, around 104.90 by the press time, directs US Dollar Index towards another attempt to break the 50-DMA support surrounding 103.45.

 

00:15
Currencies. Daily history for Wednesday, March 15, 2023
Pare Closed Change, %
AUDUSD 0.6615 -0.94
EURJPY 141.024 -2.12
EURUSD 1.05759 -1.46
GBPJPY 160.707 -1.52
GBPUSD 1.2049 -0.88
NZDUSD 0.61628 -1.13
USDCAD 1.37626 0.58
USDCHF 0.933 2.12
USDJPY 133.36 -0.66
00:13
USD/JPY Price Analysis: Eyes on 132.00 amid falling yield and Credit Suisse concerns USDJPY
  • USD/JPY consolidates amidst falling US Treasury bond yields. 
  • 50-DMA and Fib levels set the stage for USD/JPY's next move.
  • Descending trendline and RSI signal limited upside for USD/JPY.

USD/JPY is consolidating between 21- and 50-DMAs for the last three days on the back of falling US Treasury (UST) yields. The pair found support around the 132.35 level, which is a resistance turned into a support level. The support zone starting from 132.00 is considered an important mark since it provides a combination of the 50-DMA as well as a 50% Fib level, starting from the daily low at 127.21 on the daily timeframe.

Given the fact that falling UST bond yields are likely to put continuous pressure on USD/JPY, a break below the 50-DMA is very much likely. If so, USD/JPY will likely head towards the 132.00 key psychological level which is just above the 61.8% Fib level. Any upside gains are likely to be limited around the descending trendline starting from the 138.00 mark or at the 23.6% Fib level, which coincides with 21-DMA.

The lower lows on the Relative Strength Index (RSI) signals further downside room for USD/JPY. UST bond yields are fading the Federal Reserve (Fed) rate-hiking optimism in the wake of Credit Suisse bank's concerns. The downside bias for the pair looks relatively solid both technically and fundamentally.

USD/JPY: Daily chart

 

00:05
EUR/JPY drops below 141.00 despite hawkish ECB bets amid Credit Suisse debacle EURJPY
  • The recovery move from EUR/JPY has met resistance at 141.60 and has dropped to near 140.50.
  • ECB Lagrade is expected to continue her sheer hawkish stance on the interest rate policy despite Credit Suisse's turmoil.
  • Japan Kishida is aiming to raise minimum wages beyond JPY¥1,000 to sustain inflation above the desired target.

The EUR/JPY pair has surrendered the immediate support of 141.00 as the debate over the continuation 50 basis points (bps) interest rate hike by the European Central Bank (ECB) is getting ugly. After the debacle of Credit Suisse due to its ‘material weakness’ in internal controls over financial reporting, the street believes that a global banking crisis is brewing and the ECB could slow down its pace of hiking interest rates.

Considering the stubborn inflation in the Eurozone economy led by resilient consumption and tight labor demand, ECB President Christine Lagarde is expected to continue her sheer hawkish stance on the interest rate policy. Therefore, a consecutive third 50 bps rate is expected in the interest rate decision by the ECB.

Reuters reported that “Despite the turmoil in the banking sector, policymakers expect inflation to remain too high in the Eurozone.” Additionally, the Governing Council doesn't want to damage its credibility by ditching the 50 bps rate increase after having repeatedly noted that this was their intention.

Considering the statement from Credit Suisse chairman Axel Lehmann that state assistance "isn't a topic" for the bank as it seeks to recover from a string of scandals that have undermined the confidence of investors and clients, Bloomberg reported, the downfall of Credit Suisse is not expected to heal sooner.

On the Japanese Yen front, Bank of Japan (BoJ) policymakers and Japanese officials are pulling their socks to provide a cushion to inflation to remain steady above the 2% target. Japan’s PM Fumio Kishida said on Wednesday that they are aiming to raise minimum wages beyond JPY¥1,000 nationwide. Superlative wage gains are going to add effectively to the upside filters for the inflationary pressures as households will be equipped with more funds for disposal.

 

00:02
Australia Consumer Inflation Expectations came in at 5% below forecasts (5.4%) in March

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