Yesterday’s Market Wrap
It appears that troubles in the banking sector have abated which has led to a more positive outlook for risk assets. Indices opened with a bullish gap and continued higher. US futures have also turned higher by nearly 1% ahead of the cash open later.
Bond yields have also moved higher, with the 2-year German bond yields up to 2.56%, and 2-year Treasury yields up 26 bps at the moment to 4.18%. The better risk mood has also led to a rise in USD/JPY by 100 pips to 132.60s, even as the dollar trades more mixed on the session. On the other hand, Gold is continuing to back further away from above $2,000 which it pierced on Monday and fell to around $1,940 by the end of the day.
EUR/USD and USD/CHF were also seeing some decent gains as European investors relax after the Credit Suisse concern, while commodity dollars were struggling after the RBA minutes yesterday morning revealed that policymakers had already been looking to head to the sidelines even before the whole banking turmoil.
Today’s Market Expectations
Today we had the UK CPI inflation report, which showed aa cool-off in February, as the headline number fell below 10% for the first time since August. Now, all the attention is on the FOMC meeting in the evening. Early this month, there was a debate in the FED outlook regarding whether inflation would continue to rise enough to justify the “6% terminal rate trade”. This was a change from the beginning of the year when markets were not even considering rates above 5%. The prevailing narrative was that rates would remain high for a long time. However, after the collapse of SVB and Credit Suisse’s rescue, the expectations for the FED outlook have shifted and now the consensus is that rates will be lower and will come down sooner than expected. But, let’s see what Powell has to say.
Yesterday we opened five signals, as the volatility slowed compared to last week. The volatility was both was in most forex pairs, while Gold made a strong bearish reversal, which caught us on the wrong side. We opened five trading signals in commodities as well as in forex, and closed the day with three losing signals and two winning trading signals.
GOLD Can’t Hold Gains Above $2,000
Gold was showing enormous strength until Monday, when it pierced above $2,000 as the bullish momentum picked up. But, retreated back down below that major zone and after a spinning top candlestick on Monday we saw a big bearish candlestick yesterday.
XAU/USD – Daily chart
WTI Facing the 50 SMA
US WTI crude broke the support zone above the $70 level which was holding for several months, as the risk sentiment deteriorates in the last two weeks on banking failure. Crude Oil fell to $64.40 but reversed higher in the last two days and is now facing the 50 SMA (yellow) on the H4 chart.
US Oil – H4 chart
Cryptocurrencies are not blinking as they continue to take advantage from all the uncertainties with the traditional banking sector. They started surging higher and continue to pushed to new highs for the year, as Bitcoin heads for $30,000 while moving averages act as support.
BITCOIN Breaking Above $28,000
Bitcoin has resumed the bullish momentum again and has broken above $28,000, finding support at the 20 SMA (gray) on the H4 chart, which has been supporting the price since the return above $20,000. We saw a retreat to this moving average yesterday, but buyers returned and continue to remain in control.
BTC/USD – H4 chart
ETHEREUM Breaking Above $1,800
Ethereum pushed above moving averages in January which soon turned into support, particularly the 200 SMA (purple) on the daily timeframe chart. This moving average has turned into support, holding ETH/USD twice during retreats lower. We saw the last bounce off this moving average earlier this month and now the price is heading for $2,000.