Market Drivers – US Session 20/03/2023

Mohamed Abdelhamid 21 March, 2023 3:57 am Commodities, Forex Market, Market Update

The currency market reacted to the uptick in market’s sentiment on Monday. The Fed’s meeting and banking industry developments will be the main influences on the upcoming sessions.

On early Tuesday, the FOMC meeting gets started. The Fed is in a challenging situation. The market is pricing a 70% probability of a 25 basis points rate hike, with attention on the forward guidance and the wording of the statement.

Economic Data

The Producer Price Index in Germany increased 15.8% from a year ago in February, which is a lesser decline than was anticipated. Although EUR/CHF rocketed to 0.9960, EUR/USD climbed beyond 1.0700, approaching the peak from last week.

Key Developments

Wall Street rejoiced on the news that said UBS was buying Credit Suisse and coordinated central bank action. More than 1% was added to the Dow Jones. After reaching new monthly lows, US rates ended unchanged, with the 10-year yield rising to 3.50%. The US Dollar Index experienced its lowest closing in a month as the CBOE Volatility Index (VIX) decreased by about 6%.

French President Emmanuel Macron’s government has survived a vote of no confidence. In her speech to the European Parliament, Christine Lagarde, president of the European Central Bank (ECB), reiterated that inflation is expected to stay “too high” for “too long.”

GBP/USD broke its 5-day trading range, rising to above 1.2270, the highest since early February. The Bank of England will announce its monetary policy decision on Thursday.

NZD/USD fell from monthly highs to 0.6230 on Monday, making the Kiwi one of the weakest performers. On Tuesday, New Zealand will present its trade statistics. After recovering at 0.6660, AUD/USD is maintaining its position above 0.6700. The minutes from the most recent meeting of the Reserve Bank of Australia (RBA) will be made public.

The USD/CAD fell, matching the bottom from last week at 1.3650, a crucial support level supported by the 20-day Simple Moving Average (SMA). The Consumer Price Index for February in Canada will be released on Tuesday; an increase of 0.6% is anticipated.

During a tumultuous session that saw gold reach a new one-year high above $2,000 and then fall to $1,965, the precious metal stabilized at $1,980.

Bitcoin experienced a slight decline, dropping below $28,000, after hitting a new nine-month high. The price of crude oil fell to its lowest level since December 2021 before recovering by almost 2%. Concerns about the economic environment were partially countered by the improvement in attitude.

Also Read:
WTI hovers around $67.60s after nosediving to fresh lows