S&P 500 reversed, but the upswing teemed with non-confirmations and oddities, the common denominator being strong market pressure on Powell to give up further tightening and actually cut rates soon, perhaps strengthened by the Yellen behind closed doors banking meeting, which didn‘t bring about any deposits game changer. The reality of almost $400bn fresh liquidity thrown at the issues over the last two weeks, remains... Deposits are still leaving smaller banks for bigger banks and money market funds – the KRE and XLF charts reflect the stress. This is a time of great uncertainty – financials can either stabilize through all the Fed actions and foreign swap lines (the same goes for Russell 2000), or decline considerably more. Either way, the dust hasn‘t settled yet. The consumer continues burning through excess savings, the savings rate is at historically low levels, credit card usage is up, and bank lending standards are tightening. Mortgages, car loans, credit card balances… meanwhile LEIs continue declining, and it‘s also exactly one year since the Fed started the steep rate raising cycle, meaning that the real economy still has to feel most of the rate hikes already in (steepest rate raising cycle since mid 1990s, by the way). Yet thanks to the banking troubles ushered in through the risk-free rate of return changes, markets have decided that it‘s time for Powell to officially pivot. Yes, they were thrown off whack by the 25bp hike, and chose to disregard the promise to hike once again (the bets on May being the pause month are 80%), and keep them restrictive. Likewise, it didn‘t listen to the remark that any tightening done through the lending standards of commercial banks, is actually equivalent to a hike. The market is looking forward for a pivot soon, without appreciating what such a pivot actually means (as in heralds)– a recognition of troubles ahead. And these would arrive either through more banking news, through job market weakness, or through earnings disappointments. The Q1 earnings estimates would have to be yet downgraded I‘m afraid, and the same goes for Q2 as a minimum. Read next: Energy: last week crude oil price went up despite news on the production returning to 12.3M BPD | FXMAG.COM Stocks don‘t get that yet, and are focusing on easing already in Jun, without asking whether we have signs of proper market bottom such as rising LEIs, accomodative Fed and loose commercial banking standards. None of these apply. That‘s why for all the Friday move higher, I continue being medium-term bearish as there isn‘t a rush out of dollars, precious metals rising on more than fits banking jitters, services inflation and nominal wage growth still hot (factors making the Fed restrictive), and market breadth limping along. Keep enjoying the lively Twitter feed via keeping my tab open at all times – on top of getting the key daily analytics right into your mailbox. Combine with Telegram that never misses sending you notification whenever I tweet anything substantial, but the analyses (whether short or long format, depending on market action) over email are the bedrock.So, make sure you‘re signed up for the free newsletter and that you have my Twitter profile open in a separate tab with notifications on so as to benefit from extra intraday calls. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook Instead of keeping price action below 3,945 - 3,958 „point of control“ zone, overcoming 4,015 on a closing basis again looms (bullish very short-term). Tech, semis and communications continue acting strong, but unless financials, value and Russell 2000 turn, this respite is only temporary even if it breaks 4,045, and even if it goes for 4,115. The internals are quite weak and VIX appears jsut resting. Credit Markets Bonds are still highly selective of risk. The fundamentals continue favoring LQD, TLT and TLH as opposed to HYG, JNK and the like – this isn‘t a hallmark of broad risk-on rally in stocks. Expect also the 10-y yield to continue retreating. Gold, Silver and Miners Precious metals are the stars – banking question marks, bets on Fed easing, stubborn inflation, nominal wage growth – all of these point to increasing appeal of gold and silver down the road (no matter any temporary hits). Thank you for having read today‘s free analysis, which is a small part of my site‘s daily premium Monica's Trading Signals covering all the markets you're used to (stocks, bonds, gold, silver, miners, oil, copper, cryptos), and of the daily premium Monica's Stock Signals presenting stocks and bonds only. Both publications feature real-time trade calls and intraday updates. While at my site, you can subscribe to the free Monica‘s Insider Club for instant publishing notifications and other content useful for making your own trade moves. Turn notifications on, and have my Twitter profile (tweets only) opened in a fresh tab so as not to miss a thing – such as extra intraday opportunities. Thanks for all your support that makes this great ride possible!

Typical market correlations broke down last week. The forced merger of Credit Suisse with UBS allayed European banking concerns temporarily. A ‘dovish hike’ from the Federal Reserve, and fears of a reduction in bank credit in the US, drove Treasury yields sharply lower. Risk assets were torn between banking concerns on the one hand and the positive impact of lower interest rates on the other, and ended the week nearly unchanged, while emerging market currencies mostly rose. The Norwegian krone was the standout for the week, driven higher by a hawkish central bank. Volatility is on the rise everywhere, particularly in fixed income markets. Activity this week will be dominated by inflation reports and (possibly) banking headlines. The Eurozone flash inflation report for March, out on Friday, will be the focus of the week. Markets are expecting yet another record high in the key core measure. The US PCE inflation report later the same day is for February, so it is unlikely to have the same impact. Aside from that, it will be mostly second-tier data from the main economic areas. GBP The Bank of England provided yet another head fake last week. A really nasty inflation surprise earlier in the week forced its hand and it delivered another 25bp hike. The rhetoric also turned hawkish, with emphasis on the recent positive growth surprises, while the guidance on rates in the statement was kept unchanged, despite the ongoing banking uncertainties. It could hardly have been otherwise: core inflation spiked and came in at an unprecedented 0.5% aboveconsensus, at 6.2%, reversing completely the modest progress of the past few months. Putting together the generally positive note of macroeconomic releases, the spike in inflation and the Bank of England’s apparent hawkish turn, we think that the path of least resistance for sterling will be up. EUR The contrast between the ECB’s hawkish rhetoric and the Fed’s dovish hike buoyed the common currency in the first half of the week, while the blowout PMI business sentiment numbers for March supported it on Friday. However, dubious rumours about Deutsche Bank and general nervousness forced it to give up its gains on Friday, which illustrates the volatility and nervousness in markets. The rumours were, however, denied by German PM Scholtz and that was enough for the euro to end the week modestly up against the dollar. Core inflation, due out on Friday, is expected to creep up to yet another all time high, and European banks appear to be in better shape than their US counterparts; so we expect no let up in the ECB’s hiking campaign, which should be positive for the euro. USD After wild gyrations over the past two weeks, markets settled on a 25bp rate hike prediction going into the Federal Reserve meeting last week, and that’s exactly what Powell delivered. However, the statement accompanying the decision, as well as the press conference, made clear that the Fed expects some degree of financial tightening as a result of the banking turmoil. This means the central bank will err on the side of caution until the extent of that tightening becomes clear over the next couple of months. Read next: German Ifo continues upward trend| FXMAG.COM In light of the Fed’s dovish rhetoric, and the sharp drop in US yields since the collapse of SVB, the gap in rates across the Atlantic, and between the US and most other G10 countries, is now closing fast. This should have bearish consequences for the US dollar, which has underperformed most currencies globally since the start of the banking turmoil. JPY As one would probably expect, the safe-haven yen has been by far and away the best performing currency since the start of the recent banking turmoil, extending its rally to more than 5% on the dollar in a little under three weeks. The yen has benefitted on a number of fronts. Firstly, the downward repricing in global rate expectations has narrowed the rate differentials between Japan and almost everywhere else, given the lack of room for BoJ cuts. Banking troubles in both the US and Switzerland have also held back the yen’s fellow safe-havens, the Swiss franc and US dollar, while JPY was trading at rather weak levels prior to the uncertainty, so has had plenty of scope for a rebound. BoJ governor Kuroda will be making one of his last public appearances tomorrow, although we think that Friday’s March inflation data will be a bigger market mover. CNY The yuan ended last week little changed against the US dollar and in trade-weighted terms, but lagged behind most of its EM and Asian peers. Xi Jinping’s visit to Russia provided little groundbreaking headlines, but it appears that the country’s growing dependence on China could support the yuan’s internationalisation push.Putin explicitly stated that the country is ‘in favour of using’ the yuan when trading with countries in Asia, Africa, and Latin America. Last week brought little economic news from China. Today’s industrial profit data, which showed a 22.9% YoY slump in the first two months of the year, adds to the argument that the recovery is not yet broad-based and demand appears to be rather fragile at this stage. Given that hard data shows a mixed picture of the recovery, the unexpected RRR cut earlier this month seems justified. Although lenders left the one- and five-year loan prime rates unchanged last week, some policy easing further down the road cannot be entirely ruled out. This week, attention will be on the NBS PMI data for March (Friday). To stay up to date with our publications, please choose one of the below: 📩 Click here to receive the latest market updates👉 Our LinkedIn page for the latest news✍️ Our Blog page for other FX market reports 🔊 Stay up to date with our podcast FXTalk Source: Lingering bank concerns drive down yields and US dollar | Ebury UK

WTI oil is back above $70 on Monday, having gained more than 2% since the start of the day. Today's short-term impulse is a halt in exports from Iraqi Kurdistan via Turkey. The latter move could be part of a broader oil recovery after being extensively oversold. Oil started last week with a final collapse below $65, its lowest since November 2021. The sell-off in oil has stopped at technically critical levels, from where buyers' interest in oil has returned. This disposition sets the stage for at least a medium-term rebound. A more optimistic scenario suggests a subsequent multi-month rally in quotations. The oil bulls managed to return the prices to the area above the 200-week average. This level has been a vital cycle indicator in previous years. In 2019, this level acted as significant support. In 2020, a dip under this line was an early indicator of a subsequent collapse. A strong surpass of this line in early 2021 was a harbinger of more than double-digit price increases in the following year. So far, there are more indications that oil has managed to stay above that level without plunging into free-fall as it did in 2020 and 2014 when going under the 200-week average intensified selling rather than attracting buyers as it did this time. Read next: Terraform Labs CEO charged, Balaji Srinivasan bets on Bitcoin | FXMAG.COM Zooming into the daily timeframes shows us a recovery of the Relative Strength Index from the oversold territory, which also argues for a short-term bounce. It is also noteworthy that oil managed to rise last week despite the news from the US. On Wednesday, EIA reported that production returned to 12.3M BPD, the region of February's highs. Stocks rose for a second week, 16.4% above levels the same week a year earlier. On Friday evening, Baker Hughes noted an increase in working rigs, but that did not prevent oil from closing firmly. The rally to start this week supports a bullish reversal in oil. At the same time, the very tense macroeconomic backdrop (recession risks, high-interest rates) is forcing a break on the upside. An important test of the sustainability of the bullish trend in oil is seen in the $73 area. This is the area of the local lows of the December-February trading range, from which the price pulled out during the March sell-off. A recovery above 73 would signal that we do not see a short-term corrective bounce but a new multi-month upward trend.

The British pound is trading quietly on Monday. In the European session, GBP/USD is trading at 122.49, up 0.15%. The pound has looked sharp of late, and last it touched a high of 1.2343, its highest level since late January. In the UK, there are no tier-1 releases this week, but that doesn’t mean it will be a quiet week for the pound. Investors will be listening closely as BoE Governor Bailey speaks at public engagements today and on Tuesday. The latter should be especially interesting, as Bailey will testify before the Treasury Select Committee about the Silicon Valley collapse. Bailey to testify on SVB collapse Bailey has sounded surprisingly optimistic, given that inflation remains in double digits despite the BoE raising rates 11 consecutive times. After the 25-bp rate hike earlier this month, Bailey said that he expected inflation to fall “quite rapidly” in the next few months. On Friday, Bailey said that the prospects for growth were better and there was a “pretty strong likelihood” that the country would avoid a recession this year. I’m not at all sure that lawmakers share the Governor’s optimism, and they will likely grill Bailey on the Bank’s rate policy, which has failed to reign in high inflation. Sticky inflation is not the only headache that Bailey needs to deal with. The banking crisis has caused stress in the financial markets, and investors remain concerned about the stability of the banking sector. Authorities in Switzerland and the US have acted quickly and decisively, which has helped calm down the markets. President Biden and Treasury Secretary Yellen have said that the banking system is safe, and on Friday, the Financial Stability Oversight Council, a group of financial regulators, said that the US banking system remains “sound and resilient”. The stresses on the banking system are being closely watched by central banks, which are fearful of the contagion spreading as well as a credit crunch, which could slow economic growth. ECB President Lagarde said last week that the bank crisis could help lower inflation, and UK lawmakers might ask Bailey if the crisis could dampen inflation in the UK. GBP/USD Technical GBP/USD is testing resistance at 1.2248. The next resistance line is 1.2341 There is support at 1.2152 and 1.2071 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds. GBP/USD - Will BoE's Bailey shake up the British pound? - MarketPulseMarketPulse

Sentiment is mixed, as the Deutsche Bank selloff revived the banking stress on Friday.  The DBK shares fell 8% and its CDS spiked after the bank announced to redeem a tier 2 subordinated bond earlier.  The announcement was supposed to restore confidence regarding the bank's balance sheet. But it revived a confidence crisis instead.  Despite the bank stress on both sides of the Atlantic, both, the Federal Reserve (Fed), the European Central Bank (ECB), the Bank of England (BoE) and the Swiss National Bank (SNB) haven't refrained from hiking the interest rates over the past two weeks, weighing – not necessarily on the health of the banks' balance sheets, but on worries regarding the health of the banks' balance sheets.   Today, it appears that the banking crisis is more of a confidence crisis than a fact-based panic – as it was the case in 2007 when banks really had a bunch of toxic assets in their balance sheets.   But confidence is the bread and butter of the banking sector. And watching the 166-year-old Credit Suisse go under did no good to anyone last Monday.   And even though Mr. Powell, Madame Lagarde, Mr. Bailey and Mr. Jordan kept their policy stance unchanged despite the mounting stress in banks, if other banks, the size of Deutsche Bank, get sucked in this confidence crisis, we could well see the interest rate expectations point more seriously at a pivot in major central banks' tightening plans.   In numbers  The German 2-year yield fell on Friday, on DBK stress, and the US 2-year yield tanked to 3.55%, the lowest since last September.   Activity on Fed funds futures gives more than 85% chance for a no rate hike in May.  Besides the Fed, the Bank of Canada (BoC) and the Reserve Bank of Australia (RBA) are also seen as central banks that could rapidly go back to cutting the interest rates.   And the ECB could well be next on that list.  The EURUSD got hit with the freshly emerging DBK stress on Friday, the pair fell to 1.0713 on Friday, after it was preparing to flirt with the 1.10 offers last week, on the back of persistently hawkish ECB and increasingly dovish Fed expectations.   But if stress over DBK gets worse, we could well see the ECB rate hike expectations hammered. And that could put the single currency under a renewed downside pressure.   Of course, the dovish swing in major central bank expectations, except for the Bank of Japan (BoJ) which cannot go more dovish than it already is, are supportive for the Japanese yen - not because the yen is a safe haven currency but because the dovish other central bank expectations simply reduce the gap between the BoJ and the others. The USDJPY is testing the 130 support to the downside, and could clear it sustainably depending on how much more stress is waiting the market in the next few days, and weeks.  If you are looking for the best performing assets of the bank crisis, I'd say, consider gold, which gained almost $200 per ounce since the SVB collapsed, and Bitcoin, which gained around $10K during the same period.   And that equity appetite?!  For equities, it looks like the falling yields overweigh the recession fears right now, even though the yields are falling due to recession worries which are triggered by the banking crisis which should restrict credit.  It is therefore a bit surprising to see the stock indices navigate this well the bank turmoil.   Yes, the Stoxx 600 lost 1.37% on Friday thanks to DBK, and yes the S&P500 looked ugly on Friday's open, but the index closed the session 0.56% higher, above the 200-DMA.  And US and European futures point at a positive start to the week.  Besides the banks?   Besides the banks, we will still keep an eye on a couple of important data points this week, including the latest GDP and PCE update from the US, fresh inflation estimate for the Eurozone, Australia and Japan.   But how much they will matter depends on what happens on the... banks front.

While US markets managed to close higher for the second week in succession, despite concerns about their smaller regional banks, European markets have struggled, and although the DAX and FTSE100 managed to close the week higher, drawing a line under 2 weeks of declines, concerns over the continent's banking sector have weighed on sentiment overall, with a big sell-off on Friday.   Having started last week in a positive fashion after the news that UBS had stepped in to bail out Credit Suisse sentiment took a turn for the worst in the wake of last week's rate hikes from the Federal Reserve and Bank of England and further hawkish noises from the European Central Bank. In particular, the banking sector took another leg lower, with the Euro Stoxx Banks index closing lower for the 3rd week in succession with the likes of  Deutsche Bank getting hit particularly hard. It's not immediately clear what set off this latest set of jitters, although the cost of insuring banks' AT1 debt has increased since the events of the previous weekend. This increase in costs might have something to do with the recent weakness, as well as perhaps some portfolio lightening when it comes to investor exposure to European banks more broadly. The recent rally off the lows of September/October last year has seen these banks put in some strong gains on the back of an improved economic outlook for the European economy as energy prices declined to levels last seen before the Russian invasion of Ukraine. The problems at Credit Suisse have undermined that positive narrative and with ECB President Christine Lagarde insisting that there is no trade-off between financial stability and price stability, there are increasing concerns the ECB could be on the cusp of another policy mistake, which could make things worse, a la 2008. Having realised way too late that inflation was not transitory and starting to raise rates too late, they appear to be on the cusp of another mistake by tightening too aggressively, in the face of an economic slowdown. Lagarde's comments last week that there is no trade-off between financial stability and price stability come across as naïve in the extreme, as there is always a trade-off between the two, and bond markets are pricing that already, with the sharp drop in yields that we've seen in the past few days. Read next: Paolo Ardoino from Tether says the company has $1.6 billion in excess reserves to support USDT | FXMAG.COM As we look to start a new week there is no question that investors and markets, in general, are much more concerned about the health of the banks than they were a few weeks ago, with the big question now being what happens next, given that the capacity of central banks to ride to the rescue this time is limited by still high levels of inflation. These concerns about further tightening are set to get another test at the end of this week, with the latest flash CPI numbers for March from Germany and the EU, with a particular focus on core CPI. Banks are already retrenching when it comes to lending, while consumers squeezed by higher interest rates will be reluctant to take on new borrowing, which is likely to impact on the prospects for the global economy over the next few months. As we look ahead to a new week as well as the end of the month and the end of the quarter, what was at one point set to be a positive start to 2023, could well turn out to be anything but, with all of the optimism of January and February, being replaced by concerns over financial and economic stability. Today we'll get to see how the recent turmoil of the last few weeks has affected German business confidence for March with the latest IFO survey which could see a slowdown from the pickup we saw in February. We also have the latest CBI retail sales numbers for March which could continue to reflect the improvement we've started to see in consumer sentiment since the end of last year. EUR/USD – failure last week at 1.0930 area saw the euro slip back as it continues to trade sideways finding support at the 50-day SMA. Could see further weakness in the coming days towards the 1.0620 area.   GBP/USD – failed above the 1.2300 area last week slipping back from the 1.2343 level. The pound continues to feel vulnerable to slipping back while below the highs for this year at 1.2447. We currently have support at the 1.2170 area, and below that at 1.2020. EUR/GBP – ran out of steam at the 0.8865 area last week, but still has trend line resistance at the 0.8900 level. Also have strong trend line support at 0.8720, from the lows last August. Support also at 0.8780. USD/JPY – slipped back to the 129.65 area last week, before rebounding strongly. Friday's rebound could see a test of resistance currently at the 131.80 area.    FTSE100 is expected to open 52 points higher at 7,457 DAX is expected to open 133 points higher at 15,090 CAC40 is expected to open 50 points higher at 7,065

UBS has agreed to buy Credit Suisse for a reported $3.2 billion, after the Swiss government brokered the deal to prevent a financial crisis. Credit Suisse's share value had fallen rapidly after managers disclosed "material weaknesses" in the bank's financial reporting controls, leading to concerns around the bank's stability. Justin Sun, known for his leadership role at Huobi and his former role as CEO of TRON, had offered to buy Credit Suisse for $1.5 billion and integrate it with blockchain technology and cryptocurrency, but it is unclear whether his offer was considered seriously. Ex-Coinbase CTO bets $1M on Bitcoin Balaji Srinivasan, the ex-CTO of Coinbase, has agreed to a $1 million bet on the performance of bitcoin (BTC) with social democrat James Medlock, with Medlock betting that the US will not go into hyperinflation. If BTC reaches $1 million within 90 days, Srinivasan would keep the 1 BTC and $1 million worth of USD Coin (USDC), a dollar-pegged stablecoin issued by Circle. Read the second part of Weekly Summary by coinpaprika: Thanks to @wallet bot, Telegram users can transfer USDT within chats | FXMAG.COM American professional poker player Isaac Haxton also joined the bet by offering to send 1 BTC to the escrow on behalf of Medlock and pledging to donate 70% to charity if he loses. Bitcoin is currently trading at $27,200.34, up approximately 36% over the past seven days. Terraform Labs CEO charged with fraud. Terraform Labs founder and CEO Do Kwon has been charged with eight counts of fraud by US prosecutors in New York, including commodities fraud, securities fraud, wire fraud, and conspiracy to defraud and engage in market manipulation. Kwon was reportedly arrested in Montenegro and faces investigations in South Korea and a red notice issued by Interpol. Charges against Kwon are in connection to the collapse of the Terra Luna Classic token and TerraClassicUSD stablecoin last May. Kwon allegedly made false and misleading statements about the adoption of the Terra blockchain and the effectiveness of USTC.

Telegram users can now send tether (USDT), the world's largest stablecoin by market cap, within chats in the messaging app, thanks to its addition to the @wallet bot. The stablecoin addition is a positive development for mainstream adoption, and the messaging app's cryptocurrency journey dates back to its Open Network (TON) blockchain project, which was abandoned in 2020 due to legal battles with the U.S. Securities and Exchange Commission, but has since been kept alive by The TON Foundation, a community group continuing to advance the project. Florida governor seeks to block CBDCs Florida Governor Ron DeSantis has introduced legislation that would shield Florida residents from a national central bank digital currency (CBDC) and urged other like-minded governors to adopt similar measures. If passed, the law would also protect Floridians from a global digital currency issued by a foreign central bank. However, unlike DeSantis, politicians in around 20 other states, including New Hampshire, North Dakota, Texas, and California, are supporting pro-CBDC laws. The U.S. Federal Reserve's forthcoming FedNow payments system has been widely believed to be a precursor to a programmable CBDC, though Fed officials have not yet agreed on a national CBDC. Read next: Paolo Ardoino from Tether says the company has $1.6 billion in excess reserves to support USDT | FXMAG.COM Goldman Sachs Data Shows Bitcoin Outperformance According to Goldman Sachs data, Bitcoin has outperformed traditional investment assets such as technology and gold, gaining 51% in year-to-date absolute returns and demonstrating strong risk-adjusted performance with a Sharpe Ratio score of 1.9. The recent surge in Bitcoin's price has been attributed to the growing likelihood of the US Federal Reserve eventually ditching its hawkish monetary policy, and the cryptocurrency has rebounded stronger than stocks from Wall Street amid the ongoing banking crisis, indicating a narrative shift in the perception of the largest cryptocurrency. However, the value of Bitcoin is still largely affected by changes in inflation rates and decisions made by the Federal Reserve regarding interest rates. Read the second part of Weekly Summary by coinpaprika: Terraform Labs CEO charged, Balaji Srinivasan bets on Bitcoin | FXMAG.COM