Wall Street slumped concerning over U.S. banking sector, and the sentiment has spread to Asia financial stocks. Notwithstanding the collapse of Silvergate bank after it decided to wind down its operation and liquidise its assets, the SVB financial group’s liquidity issue worsened things. The Silicon Valley-based bank launched a share sale to shore up its balance sheet due to securities portfolio losses and declining deposits from venture capital. Cryptocurrencies are facing headwinds, with BTC plunged by more than 8% overnight due to the collapse of Silvergate bank and being pressured by macroeconomic factors such as Fed’s rate hikes. Elsewhere, oil prices edged lower after China’s economy data showed a weaker-than-expected economy recovery from the world’s top oil-importer. 

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Look Out For

Current rate hike bets on 22nd March Fed interest rate decision: 

25 bps (44.3%) VS 50 bps (55.7%) 

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Market Overview

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Economic Calendar

Market Movements

DXY

The US Dollar stumbled on Thursday, ahead of the release of crucial jobs data later in the day. The previous data revealed a surge in US jobless claims, which exceeded market expectations. It raised hopes that a softening labour market could lower the likelihood of the Federal Reserve reaccelerating its rate hikes. According to the Department of Labor, US Initial Jobless Claims climbed by 21,000 to a seasonally adjusted 211,000 for the week ended March 4, missing the economist forecast of 195,000. The market is now awaiting Friday’s Nonfarm Payroll data, with economists predicting growth of 205,000 jobs in February, significantly lower than the previous 517,000 gains in January.

The Dollar Index is trading lower while currently testing the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 40, suggesting the index might trade higher as the RSI rebounded from the oversold territory.    

Resistance level: 105.80, 106.25

Support level: 105.05, 104.25

XAU/USD

The price of gold has soared, as reports indicate that central banks worldwide continue to amass significant amounts of the precious metal to their reserves. The latest data from the World Gold Council reveals that central banks added a net 77 tons to their gold reserves in January, marking a staggering 192% increase from December. Against geopolitical uncertainty and escalating inflation, it is no surprise that central banks are choosing to fortify their coffers with gold at an accelerated pace. Meanwhile, investors are closely watching US jobs data for further trading signals as gold continues to attract significant attention as a hedge against economic uncertainty.

Gold prices are trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 60, suggesting the commodity might trade lower as technical correction since the RSI retreated from its overbought territory.     

Resistance level: 1830.00, 1845.00

Support level: 1820.00, 1805.00

EUR/USD 

The euro rebounded for the second consecutive day after the strengthened dollar hammered it in the early week. After releasing the initial jobless claim yesterday, the dollar was at ease from its bullish momentum. The data came higher than the market is expected at 211k and is higher than the previous reading at 190k. The data indirectly implies that the unemployment rate in the U.S. might be higher and the Fed may take into account the date before deciding for a higher rate hike. Investors may keep an eye on the NFP, which is set to be released later today to gauge the Fed’s next monetary moves. 

On the technical front, indicators gave a reversal signal for the pair where the RSI has rebounded strongly from above the oversold level to 50 while the MACD line has converged with the Signal line below the zero line. 

Resistance level: 1.0613, 1.0698

Support level: 1.0463, 1.0386

BTC/USD

BTC plunged by more than 8% last night and was once below the $20,000 psychological support level. There is massive selling pressure in the crypto market and the crypto’s market capitalization fell by more than 6% according to the measure of Coinmarketcap. The liquidation in the crypto market is concerned by the investors after the collapse of Silvergate bank, which previously served as a knot ties between the digital asset and the conventional banks. The crypto market is also under pressure due to a broader financial concern with the liquidity issue faced by SVB, as the bank is facing declining deposits. NFP data is set to be released later today; a higher reading than the market is expected would strengthen the dollar and, thus, suppress the prices of BTC.

Indicators showed that BTC has a strong bearish trend with the RSI falling deeply into the oversold zone while the MACD diverging below the zero line. 

Resistance level: 20659, 21600

Support level: 19645,  18894

USD/JPY

The US Dollar took a tumble as investors prepared for potentially disappointing economic data out of the United States. This led to a renewed selloff for the USD/JPY currency pair. Meanwhile, Japan’s GDP data also painted a bleak picture. The latest figures from the Cabinet Office show that Japan’s economy only grew at an annualised rate of 0.1% in Q4 of 2022, which falls short of initial estimates and economists’ forecasts. With investors eagerly anticipating key events later in the day, all eyes will be on the US jobs data to assess the likely trend for the USD/JPY in the future.

USDJPY is trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 41, suggesting the pair might extend its losses since the RSI stays below the midline. 

Resistance level: 137.20, 139.60

Support level: 134.80, 132.90

GBP/USD 

On Thursday, the pound increased by 0.56% to $1.1921 against the weakened dollar. The U.S. initial jobless claims data showed 211K claims last week, it is a higher-than-expected reading, prompting the dollar to drop and the pound to rise. Furthermore, market participants are looking at the forecasts on the U.K.’s economy, showing the likelihood could avoid a recession, entrenched inflation means traders are now pricing in more than 50% bets on Bank of England rates which will reach 5% later this year. Additionally, investors are now focused on U.S. non-farm payrolls data due on Friday, which could offer more clues on the Federal Reserve’s monetary policy path. 

The pound has its technical rebound after it slumped more than 1% on Wednesday. The overall trend remains indecisive, and MACD has illustrated bearish momentum ahead. RSI is at 50, indicating a neutral-bearish momentum ahead. 

Resistance level: 1.1926, 1.2044

Support level: 1.1845, 1.1634

Dow Jones

The Dow Jones Index slumped 1.66% to 32,254 points on Thursday, weighed down by major bank stocks. Investors fled after SVB Financial Group (SIVB.O) launched a share sale to shore up its balance sheet due to declining deposits from startups struggling for funding. SVB closed down 60% at $106.04 after falling at one point by around 63% and hitting its lowest level since August 2016 after the lender slashed its 2023 outlook and launched a share sale to shore up its balance sheet. Moreover, Investors were also stressing out before Friday’s U.S. nonfarm payrolls report for February, with expectations for large wage increases fueling inflation worries. The market was expecting a rise of 205,000 after January’s blowout 517,000 figure, which had already led markets to brace for a bigger rate hike. More data is needed to establish a trend. 

Dow Jones fall precisely to its support level of 32531 and now trading at 32254. The index has fallen into another region and could trading within the range from 30945 to 32531. MACD has illustrated bearish momentum. RSI is at 33, indicating the index is trading in a downward movement. 

Resistance level: 32531, 34308

Support level: 30945, 28760

CL OIL

Oil prices tumbled to a two-week low, extending their downward spiral, amid mounting concerns that the Federal Reserve’s aggressive tightening policy could brake on global economic growth, potentially sparking a recession and lowering oil demand. The oil market, considered a riskier asset, bears the brunt of investors’ shift towards safer assets, as the Fed’s hawkish stance prompts caution. Adding to the downward pressure on oil prices, China’s consumer and producer price indices came in worse than expected, indicating that manufacturing activity was running below full capacity. The disappointing readings and a softer GDP target for 2023 have dashed hopes of a robust economic rebound in China.

Oil prices are trading lower following the prior breakout below the previous support level. MACD has illustrated diminishing bearish momentum, while RSI is at 37, suggesting the commodity might experience technical correction since the RSI rebound from its oversold territory.      

Resistance level: 78.40, 80.55

Support level: 75.10, 73.85