Oil prices rebound after hitting lowest since 2021 on banking fears

Listen, smile, agree, and then do whatever you were gonna do anyway.“ —Robert Downey 

 

 

HEADLINES

 

 

• Sterling kicks off BoE week higher, shrugs off banking crisis fears
• Gold drops from 1-year peak as banking fragility drives wild swings
• Oil prices rebound after hitting lowest since 2021 on banking fears
• Scramble for safety subsides as markets digest Credit Suisse rescue
• Treasury yields rise to start the week after UBS’s takeover of Credit Suisse
• EUR/USD to rally if the Fed blinks on Wednesday – Scotiabank
• AUDUSD Near Term: Upside favored

 

Sterling kicks off BoE week higher, shrugs off banking crisis fears

 

 

Sterling rose on Monday ahead of a key Bank of England (BoE) rate decision and inflation data due this week, while the Swiss government-backed takeover by UBS of Credit Suisse failed to soothe market nerves, weakening the dollar.

Global financial markets continue to be rattled by the collapse of some regional U.S. banks and the troubles of larger Swiss lender Credit Suisse.

With UK inflation data on Wednesday expected to show some easing and amid the global financial market instability, money markets are pricing in a 50% chance of no interest rate hike by the BoE on Thursday and the same chance of a 25 basis-point increase.

 

 

COMMODITIES

 

 

Gold drops from 1-year peak as banking fragility drives wild swings

 

 

Gold prices retreated from their highest level in a year in volatile trading on Monday, as share markets and Treasury yields bounced back on central banks' efforts to shore up confidence in the financial sector.

Spot gold dipped 0.5% to $1,977.18 per ounce by 1:57 p.m. EDT (1757 GMT), after sliding over 1%, while U.S. gold futures rose 0.5% to settle at $1,982.80.

Earlier in the session, prices of the yellow metal had climbed 1% to their highest since March 2022 at $2,009.59, just shy of a record set during the onset of the COVID-19 pandemic.

 

 

ENERGY

 

 

Oil prices rebound after hitting lowest since 2021 on banking fears

 

 

Oil prices bounced up on Monday in volatile trade after diving to their lowest levels in 15 months as the market worried that risks in the global banking sector could spark a recession that would sap fuel demand.

Brent crude futures for May edged higher 3 cents to $73.00 a barrel by 1:20 p.m. EDT (1720 GMT). U.S. West Texas Intermediate crude futures for April were down 4 cents at $66.70 on the eve of the contract's expiry. The more actively traded May futures were up 6 cents at $66.99 a barrel.

Oil prices rebounded as Wall Street posted gains. Earlier, Brent and WTI fell about $3 a barrel to the lowest since December 2021, with WTI sinking below $65 a barrel at one point. Last week, both benchmarks shed more than 10% as the banking crisis deepened.

 

 

STOCKS

 

 

Scramble for safety subsides as markets digest Credit Suisse rescue

 

 

Bank stocks rallied on Monday and a cross-asset scramble for safety abated, as investors heaved a tentative sigh of relief that a historic weekend rescue of financial heavyweight Credit Suisse is containing the banking crisis for now.

Sunday saw the most dramatic state intervention since the 2008 global financial crisis, with UBS buying Credit Suisse for 3 billion francs ($3.2 billion) in a takeover backstopped by unlimited funding pledges from the world's top central banks.

The speedy orchestration of Credit Suisse's takeover was received by investors as an acceptable measure to stem contagion, but fears that other struggling banks might teeter next kept markets on edge.

 

 

Treasury yields rise to start the week after UBS’s takeover of Credit Suisse

 

 

U.S. Treasury yields rose Monday as investors considered the stability of the banking sector after Swiss bank UBS agreed to buy its rival Credit Suisse.

At 12:43 p.m. ET, the yield on the 10-year Treasury was up by 8 basis points at 3.466%. The 2-year Treasury yield was trading at around 3.92% after rebounding to trade 7 basis points higher.

Yields and prices move in opposite directions and one basis point equals 0.01%.

 

 

ANALYSIS

 

 

EUR/USD to rally if the Fed blinks on Wednesday – Scotiabank 

 

 

“More range trading seems the likely course of events for now but the EUR will benefit if the Fed blinks on Wednesday after the ECB delivered last week.”

“Weak trend momentum on the short (intraday/daily) DMIs suggests that the roughly sideways Feb/Mar range in the EUR should extend a little more – with EUR gains slowing above 1.07.”

“We see firm resistance around 1.0750/60 for now.”

“Support is 1.0625/30 intraday.”

 

 

CHART

 

 

AUDUSD Near Term: Upside favored

 

 

Technical View: Long position above 0.669. Target 0.6735. Conversely, break below 0.669, to open 0.6675.

Comments: The pair breaks above the resistance.

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

Footnotes
https://www.reuters.com/markets/currencies/sterling-kicks-off-boe-week-higher-shrugs-off-banking-crisis-fears-2023-03-20/
https://www.reuters.com/world/india/gold-lacklustre-credit-suisse-ubs-deal-spurs-risk-on-mood-2023-03-20/
https://www.reuters.com/markets/commodities/oil-edges-up-historic-swiss-banks-deal-central-banks-support-2023-03-20/
https://www.reuters.com/markets/global-markets-wrapup-3-2023-03-20/
https://www.cnbc.com/2023/03/20/us-treasury-yields-investors-weigh-ubs-takeover-of-credit-suisse.html
https://www.fxstreet.com/news/eur-usd-to-rally-if-the-fed-blinks-on-wednesday-scotiabank-202303201358