A round of risk-taking is boosting risk assets against the safe-haven dollar today!
Will this lead to Cable extending its short-term uptrend?
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Saudi Aramco CEO Amin Nasser expects oil markets to “remain tightly balanced” thanks to China’s reopening and pickup in jet fuel demand
In a bid to stop “depositor panic,” the U.S. Treasury Department, Federal Reserve, and the Federal Deposit Insurance Corp. (FDIC) designated SVB and Signature Bank as “systemic risk” to the financial system. This enabled the authorities to cover all of the banks’ uninsured deposits starting Monday.
The Fed announced its emergency Bank Term Funding Program that offers short-term loans to help banks meet the needs of all their depositors.
Tourism, post-holiday spending helped boost New Zealand’s BusinessNZ services index from 54.7 to 55.8 in February
New Zealand’s food prices accelerated from 10.3% to 12% y/y in February, the fastest increase since 1989.
A business survey of Japan’s large manufacturers fell from -3.6 to -10.5 in Q1, while non-manufacturers also slipped from 2.7 to 0.6 in the same period
Price Action News
Asian session traders were getting ready to extend Friday’s anti-dollar sentiment when U.S. financial authorities stepped in and announced that they will cover ALL of SVB and Signature Bank’s deposits.
In addition to that, the Fed has also launched a new lending program that would enable depository institutions to use collaterals (U.S. Treasuries included!) and borrow money for up to one year to cover their customers’ deposits.
Aside from easing contagion and banking institution fears, today’s announcement also led investors to adjust their Fed rate hike projections from a 50bps rate hike in May to a 25bps increase or maybe NO rate hike. Whoa!
The U.S. dollar was trading near its fresh March lows but the announcement boosted it back up to Friday’s closing prices.
Risk appetite has taken over, however, and now the safe-haven USD is back to losing pips against its “riskier” counterparts.
Upcoming Potential Catalysts on the Forex Economic Calendar:
New Zealand’s visitor arrivals at 9:45 pm GMT
AU Westpac consumer sentiment at 11:30 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
GBP/USD: 15-minute
A fresh round of dollar-selling has pushed GBP/USD to new monthly highs during the Asian session.
Cable jumped above the R1 of its Standard Pivot Point and rose by as much 60 pips or half of its daily ATR before pulling back down to its open prices.
Are we looking at a pullback that would push GBP/USD back to its intraday highs?
There are no top-tier data releases today so GBP/USD’s price action will likely depend on risk sentiment and positioning ahead of the U.S. CPI release.
Look out for a bounce from the 1.2115 levels that are near a key trend line support, the 50% Fibonacci retracement of today’s upswing, and an area of interest on Friday and today’s Asian session trading.
An extension of today’s pro-risk, anti-USD trading could take GBP/USD to its 1.2140 intraday highs if not the 1.2200 R2 and full ATR levels.
But if traders go back to pricing in higher interest rates from the Fed, then GBP/USD might break its trend line support in favor of retesting today’s lows near Friday’s closing prices.
