Oil rises 2% as reports of Saudi, Russia meeting calm investors

 

“The only real mistake is the one from which we learn nothing.” —Henry Ford

 

 

HEADLINES

 

 

• Sterling ticks lower as banking turmoil clouds rate outlook
• Gold prices hold firm as banking worries persist
• Oil rises 2% as reports of Saudi, Russia meeting calm investors
• Shares stay positive as ECB jacks up rates again
• Treasury yields rise as traders weigh a potential First Republic rescue
• EUR/USD: systemic risk fears look set to dominate price action – Danske
• USDJPY Near Term: Downside favored

 

 

Sterling ticks lower as banking turmoil clouds rate outlook

 

The pound eased on Thursday, losing out to the euro ahead of the European Central Bank's policy decision later in the day, but held steady against the dollar, as a degree of calm returned to global markets.

Sterling was last down just 0.1% against the dollar at $1.2048, easing for a third day in a row, while against the euro it sank 0.4% to 88.06 pence.

A little more stability crept into markets after Credit Suisse (CSGN.S) said it would use a $54-billion lifeline from the Swiss National Bank to shore up liquidity and restore investor confidence that has taken a bashing this week as problems at Switzerland's second-biggest bank have mounted.

 

 

COMMODITIES

 

 

Gold prices hold firm as banking worries persist

 

Gold prices edged higher on Thursday, bouncing towards last session's 1-1/2 month peak as concerns about the banking crisis continue after the European Central Bank hiked interest rates despite the ongoing financial stability risks.

Spot gold was up 0.1% at $1,919.31 per ounce by 01:53 p.m. EDT (1753 GMT), after jumping to its highest since early February at $1,937.28 on Wednesday.

U.S. gold futures settled 0.4% lower to $1,923 per ounce.

 

 

ENERGY

 

 

Oil rises 2% as reports of Saudi, Russia meeting calm investors

 

Oil prices rose 2% on Thursday after dropping to near 15-month lows earlier in the session, supported by reports that top producers Saudi Arabia and Russia met to discuss ways to enhance market stability.

Brent crude futures rose $1.61, or 2.2%, to $75.30 a barrel. West Texas Intermediate crude futures (WTI) rose $1.53, or 2.3%, to $69.14 a barrel.

Earlier in Thursday’s session both contracts had dropped by more than $1 a barrel to near 15-month lows. On Wednesday, the third straight day of declines, U.S. crude fell below $70 a barrel for the first time since Dec. 20, 2021.

 

 

STOCKS

 

 

Shares stay positive as ECB jacks up rates again

 

Banking shares had to overcome another wobble on Thursday as the ECB jacked up its interest rates by a hefty 50 basis points less than 12 hours after Credit Suisse was handed a 50 billion Swiss franc ($53.94 billion) lifeline.

The European Central Bank pressed forward with a 50 basis point hike despite recent turmoil in financial markets. European government bond borrowing costs were higher and gold gained too, although a number of key stress indicators relaxed.

Credit Suisse's shares spent most of the day up around 20% (.CSG.S) after the ECB's counterpart, the Swiss National Bank (SNB), swooped in with support.

 

 

Treasury yields rise as traders weigh a potential First Republic rescue

 

Treasury yields rose Thursday, reversing an earlier decline, as traders weighed a potential rescue for beaten-down regional U.S. bank First Republic.

The 10-year Treasury yield climbed 6 basis points to trade at 3.56%. The 2-year rate, meanwhile, jumped 17 basis points to 4.15%. Yields and prices move in opposite directions. One basis point is equivalent to 0.01%.   

CNBC’s David Faber reported, citing sources, that a group of financial institutions was in talks to provide about $20 billion deposits for First Republic. Goldman Sachs, Morgan Stanley and JPMorgan Chase are among those in the talks, the sources said.

 

 

ANALYSIS

 

 

EUR/USD: systemic risk fears look set to dominate price action – Danske 

 

“Despite the large uncertainty with respect to the rate decision, the reaction in FX markets was remarkably limited. We entered the meeting with a fundamental predisposition of wanting to sell EUR/USD rallies on a 50bp hike but the cross hardly reacted with the FRA curve flattening upon announcement.”

“Looking ahead, systemic risk fears look set to dominate price action among majors. Our bias remains for systemic fears to subside over the coming weeks, but we humbly acknowledge the high sensitivity to negative news, which leaves us side-lined with no high-conviction calls near term. On a 3-6M horizon, we still pencil in a lower EUR/USD compared with current spot levels.”

“We expect the ECB deposit rate to peak at 4%, with a 50bp rate hike in May followed by a 25bp hike in both June and July.”

 

 

CHART

 

 

USDJPY Near Term: Downside favored

 

Technical View: Short position below 133.55. Target 132.25. Conversely, break above 133.55, to open 134.1.

Comments: The pair is expected to resume descent after correction.

 

 

 

 

 

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

 

 

 

 

Source: FX Street Economic Calendar

 

Footnotes
 

https://www.reuters.com/markets/currencies/sterling-ticks-lower-banking-turmoil-clouds-rate-outlook-2023-03-16/
https://www.reuters.com/markets/commodities/gold-pauses-rally-traders-seek-clarity-banking-crisis-2023-03-16/
https://www.cnbc.com/2023/03/16/oil-regains-ground-after-falling-to-2021-lows-on-banking-sector-fears.html
https://www.reuters.com/markets/global-markets-wrapup-1pix-2023-03-16/
https://www.cnbc.com/2023/03/16/us-treasury-yields-investors-mull-over-stock-market-outlook.html
https://www.fxstreet.com/news/eur-usd-systemic-risk-fears-look-set-to-dominate-price-action-danske-202303161820