Oil slides 2.5% on concerns over health of banking sector

“Opportunity is missed by most people because it is dressed in overalls and looks like work.” —Thomas Edison 

 

 

HEADLINES

 

• Euro, sterling fall against rising dollar amid European bank jitters
• Gold set for weekly rise as bank worries spark rush to safety
• Oil slides 2.5% on concerns over health of banking sector
• Wall Street recovers as Fed officials calm bank fears
• Treasury yields slip as banking system concerns grow
• USD/JPY to plunge toward 127 by year-end – Wells Fargo
• USDJPY Near Term: Downside favored

 

 

Euro, sterling fall against rising dollar amid European bank jitters

 

The euro and sterling fell sharply against a strengthening dollar on Friday amid nervousness over banks, with better-than expected economic data failing to lift sentiment.

Banking stocks plunged in Europe with heavyweights Deutsche Bank (DBKGn.DE) and UBS Group (UBSG.S) pummelled by worries that the worst problems to hit the sector since the 2008 financial crisis have not yet been contained.

The dollar index rose 0.497% at 103.100, with the euro down 0.68% to $1.0756.

Better-than-expected flash Purchasing Managers' Index (PMI) data failed to lift the single currency as sentiment in markets were fragile with European banks (.SX7P) falling more than 3%.

 

 

COMMODITIES

 

Gold set for weekly rise as bank worries spark rush to safety

 

Gold prices were on track to end a volatile week higher on Friday as bank contagion fears bolstered both safe-haven demand and bets on a pause in Federal Reserve rate hikes, adding to the appeal of zero-yield bullion.

Spot gold was 0.4% lower at $1,985.36 per ounce by 1:13 p.m. ET, holding within a relatively narrow $20 range. U.S. gold futures were also down 0.4% at $1,987.80.

But gold futures looked set to post a weekly rise of around 0.7%, having climbed to its highest level in a year above $2000 on Monday.

 

 

ENERGY

 

Oil slides 2.5% on concerns over health of banking sector

 

Oil prices fell about 2.5% on Friday amid declining European banking shares and after U.S. Energy Secretary Jennifer Granholm said refilling the country's Strategic Petroleum Reserve (SPR) may take several years, dampening demand prospects.

Brent crude fell $1.85, or 2.4%, to $74.06 a barrel by 11:13 a.m. EST (1513 GMT, while West Texas Intermediate U.S. crude futures fell $1.79, 2.5%, to $68.23 a barrel.

Both benchmarks, which fell over 4% earlier in the session, were on track to end the week higher, after posting their biggest weekly declines in months last week due to banking sector turmoil and worries about a possible recession.

 

 

STOCKS

 

Wall Street recovers as Fed officials calm bank fears

 

Wall Street bounced back from an earlier sell-off on Friday at the end of a tumultuous week as U.S. Federal Reserve officials calmed investor skittishness over a potential liquidity crisis in the banking sector.

While all three major U.S. stock indexes started the session sharply lower on the heels of a sell-off among European banks, those losses reversed by early afternoon, repeating the intraday roller coaster ride of recent sessions.

The S&P 500 and the Dow were last modestly higher, while the Nasdaq remained in negative territory.

 

 

Treasury yields slip as banking system concerns grow

 

U.S. Treasury yields fell on Friday as investors considered what the Federal Reserve’s interest rate policy expectations could mean for the economy. A slide in Deutsche Bank shares also renewed concerns over the state of the global banking system and made Treasurys more appealing.

At 2:34 p.m. ET, the yield on the 10-year Treasury was down by almost 3 basis points to 3.376%. The 2-year Treasury yield was at 3.786% after falling by 2 basis points.

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

 

 

ANALYSIS

 

USD/JPY to plunge toward 127 by year-end – Wells Fargo 

 

“We believe the Japanese Yen can experience a strong rebound as bond yields, especially in the United States, eventually come down, and less negative yield spreads support the Japanese currency.”

“During the global tightening phase in which Japan maintained its easy monetary policy stance, the yen came under significant downside pressure. On the flip side, as the global monetary policy cycle turns to easing, we expect the Yen to be a key beneficiary and target a USD/JPY exchange rate of 127.00 by the end of this year.”

 

 

CHART

 

USDJPY Near Term: Downside favored

 

Technical View: Short position below 130.85. Target 129.7. Conversely, break above 130.85, to open 131.34.

Comments: The pair breaks below support.

 

 

 

 

Source: Trading Central 

 

 

CALENDAR

 

*Times in GMT

 

 

 

 

Source: FX Street Economic Calendar

 

Footnotes
https://www.reuters.com/markets/currencies/dollar-steady-after-feds-rate-pause-hints-yen-rises-2023-03-24/
https://www.cnbc.com/2023/03/24/gold-rises-slightly-as-fed-pause-bets-keep-outlook-bright.html
https://www.reuters.com/business/energy/oil-falls-us-holds-off-refilling-strategic-reserve-2023-03-24/
https://www.reuters.com/markets/us/futures-waver-bank-worries-linger-investors-weigh-rate-hike-pause-2023-03-24/
https://www.cnbc.com/2023/03/24/us-treasury-yields-investors-assess-economic-outlook-fed-policy.html
https://www.fxstreet.com/news/usd-jpy-to-plunge-toward-127-by-year-end-wells-fargo-202303241408