USD

• The Fed left interest rates unchanged as
  expected at the last meeting and dropped the tightening bias in the statement.
• The US PCE came
  in line with expectations.
• The NFP report beat
  expectations on the headline number, but the unemployment rate and the average
  hourly earnings missed notably.
• The latest US ISM
  Manufacturing PMI missed expectations by a big margin
  remaining in contraction with the US ISM Services
  PMI
  following suit but holding on in expansion.
• The US Consumer
  Confidence missed expectations across the board.
• The market expects the first rate cut in June.

CAD

• The BoC left interest rates unchanged at
  5.00% as expected stating that further easing in underlying inflation is needed.
• The latest Canadian CPI missed expectations across the
  board with the underlying inflation measures falling.
• On the labour market side, the latest report beat
  expectations but we saw a fall in wage growth which is something that the BoC
  is watching closely.
• The Canadian PMIs improved in
  January although they remain both in contractionary territory.
• The market expects the first rate
  cut in June.

USDCAD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCAD broke
below the key trendline and
triggered a strong selloff as the sellers piled in to position for a drop into
the 1.3360 level. The pair recently pulled back into the moving averages from
overstretched levels and got rejected as the sellers stepped in again to target
the 1.3360 level with a better risk to reward setup.

USDCAD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we had a
strong resistance zone
around the 1.35 handle where we had also the confluence of the
50% Fibonacci retracement level
and the moving averages. This is where the sellers stepped in with a defined
risk above the Fibonacci level to position for a drop into the 1.3360 level.
The buyers, on the other hand, will need the price to break above the
resistance zone to start targeting the 1.36 handle.

USDCAD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action. We can notice that we have a key support
around the 1.3470 level. This is where the buyers are likely to step in with a
defined risk below the level to position for a break above the resistance with
a better risk to reward setup. The sellers, on the other hand, will want to see
the price breaking lower to invalidate the bullish setup and increase the
bearish bets into new lows.

Upcoming Events

Today we have the main event of the week, that is
the US CPI report. On Thursday we get the US PPI, the US Retail Sales and the
US Jobless Claims figures. On Friday, we conclude the week with the University
of Michigan Consumer Sentiment survey.

This article was written by FL Contributors at www.forexlive.com.

The pair caught a bid in Asia trading earlier today, following remarks from BOJ governor Ueda. He failed to provide any clues about an imminent policy change next week and that sort of disappointed yen bulls a little. USD/JPY moved up from 146.90 to 147.30-40 levels in the aftermath and has been stuck around there since:

It looks like traders are getting comfortable in consolidating price action for now. All before making their next move based on what the US CPI data has to offer later in the day.

In the bigger picture, the 100-day moving average at 147.65 will be a key resistance point to watch for USD/JPY. And in gauging the near-term bias, the 100-hour moving average – now seen at 147.75 – will also be one to watch. As such, the region around 147.65-75 will be crucial in determining whether sellers can maintain their stranglehold on the recent downside momentum.

As for key support levels to watch, the 38.2 Fib retracement level at 146.82 is a notable one on the daily chart. That comes before minor support and bids layered closer to 146.50 and then the 200-day moving average at 146.23.

Those are the key levels to watch in the technical play-by-play for USD/JPY this week.

This article was written by Justin Low at www.forexlive.com.

The drop last month indicates a more tepid mood among small businesses in the US to start the year. The reading is the 26th consecutive month below the 50-year average of 98, so that provides some colour to the data over the last two years. On the inflation front, only 21% of owners are expecting to raise their average selling prices and that is the lowest since January 2021. That should be some good news for the Fed at least. However, employment conditions are softening and that is one to keep an eye out for in the months ahead.

This article was written by Justin Low at www.forexlive.com.

Trump also says that „I would not allow other countries to get off the US dollar“. It’s all political appeasement but crypto traders ain’t going to care. Bitcoin is now up 5.5% to $72,160 on the day.

He’s also going on about additional tariffs on other countries again. No better time to bring out this gem again:

This article was written by Justin Low at www.forexlive.com.

Headlines:

• USD/JPY nudges lower, eyes on next key technical level
• Bitcoin takes another look above $70,000 to start the week
• ECB’s Kažimír says should wait until June for first rate cut
• Japan Business Federation head says feeling greater momentum for wage hikes this year
• China still can’t shake off property market woes
• SNB total sight deposits w.e. 8 March CHF 477.4 bn vs CHF 478.5 bn prior

Markets:

• JPY leads, AUD lags on the day
• European equities lower; S&P 500 futures down 0.2%
• US 10-year yields down 0.7 bps to 4.081%
• Gold flat at $2,177.42
• WTI crude down 0.3% to $77.25
• Bitcoin up 4.8% to $71,688

It’s a quiet start to the new week in Europe, with little on the agenda to really get traders out of bed. All eyes are on the bigger events later this week, so there’s not much to get excited about today.

In FX, the Japanese yen continues to hold firm and maintains its form from last week. USD/JPY dipped early in Asia to 146.53 before recovering to 147.00 and then falling back to 147.50 during the session. As for the dollar itself, it is mostly steadier and trading within narrow ranges against the other major currencies.

Instead, it was Bitcoin that is the main mover as the cryptocurrency looks to seal a break above $70,000. It is up nearly 5% now in a run towards the $72,000 mark on the day.

In the equities space, European indices are lower as they take a bit of a cue from Wall Street on Friday. US futures also slumped a little during the session but are now just down slightly by 0.2% on the day.

In other markets, bonds and gold are looking rather lackluster for the most part. The changes are light as it doesn’t look like traders have much appetite to chase anything before the US CPI data tomorrow.

This article was written by Justin Low at www.forexlive.com.

Last Friday, the Dow Jones ended the day negative
following the US NFP report.
There was something for everyone. In fact, for the buyers, the payrolls number
beat expectations while the average hourly earnings missed. For the sellers,
the unemployment rate jumped to 3.9% and the household survey showed a third
consecutive month of job losses. In this case, the technicals should help in
determining the next move for the market as we break some key levels.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones broke
out of the rising wedge to the
downside and the buyers failed to rally back above the bottom trendline. This
has opened the door for a bigger correction into the 38043 level first and upon
a further break lower, the 37128 level. The sellers will now pile in with more
conviction to position for the drop into new lows. The buyers, on the other
hand, will want to see the price reversing and rising back above the bottom trendline
to invalidate the bearish setup and target new highs.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that
the price has been diverging with
the MACD for a
long time. This is generally a sign of weakening momentum often followed by
pullbacks or reversals. In this case, given the break of the wedge, we could be
in front of a reversal. We can see that the price recently got rejected from
the resistance formed
by the downward minor trendline and the red 21 moving average.
That’s where the sellers stepped in with a defined risk above the trendline to
position for a drop into the 38043 level.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see more
closely the recent price action with the rejection from the downward trendline.
The sellers are now in control and a break below the swing low at 38570 should
trigger a stronger selloff as the sellers will increase the bearish bets into
new lows. The buyers should wait for the price to reach the 38043 level to buy
the dip with a better risk to reward setup or wait for the price to break above
the downward trendline to invalidate the bearish setup and position for new
highs.

Upcoming Events

Tomorrow we have the main event of the week, that is
the US CPI report. On Thursday we get the US PPI, the US Retail Sales and the
US Jobless Claims figures. On Friday, we conclude the week with the University
of Michigan Consumer Sentiment survey.

This article was written by FL Contributors at www.forexlive.com.

In its filing to the SEC, Reddit plans to raise up to $748 million as it sells about 22 million shares – of which 15.3 million will be Class A common shares. The range for the launch is between $31 to $34 per share, with the fully diluted valuation being near $6.5 billion if taking the top end of the range.

This is going to be one of more anticipated launches as it also represents the first major tech IPO for the year. And considering where the market is trading, the interest could be taken as a litmus test for overall sentiment.

But a key distinction here is that Reddit is more of a social media platform/forum at best. I won’t be one to deny that I browse through it every day as the Subreddits make it extremely easy to follow, gather information, ask questions, and stay up to date with whatever your interests may be.

As such, this makes Reddit the first social media IPO since Pinterest back in 2019. At its peak, Reddit is said to be valued around $10 billion back during the pandemic. So, $6.5 billion is not quite as ecstatic if you needed some context on the numbers above.

Nonetheless, it will still be one of the more closely watched stocks this year once it launches. Reddit will go live under the ticker RDDT, with reports suggesting that the counter will open on 21 March.

This article was written by Justin Low at www.forexlive.com.

• Rushing the move is not smart nor beneficial
• Upside risks to inflation are „alive and kicking“
• Need more hard evidence on inflation outlook
• Only in June will we reach the confidence threshold on that
• But discussions on easing should ready start, will use the weeks ahead for that

This just reaffirms the current market expectations. If all goes according to plan, the ECB should communicate its intention to pivot in April. That will be followed up by the first rate cut in June. The odds of an April move are a measly ~13% with June fully priced in at the moment.

This article was written by Justin Low at www.forexlive.com.

UPCOMING EVENTS:

• Tuesday: Japan
  PPI, UK Labour Market report, US NFIB Small Business Optimism Index, US
  CPI.
• Wednesday: UK GDP,
  UK Industrial Production, Eurozone Industrial Production.
• Thursday: US
  PPI, US Retail Sales, US Jobless Claims, New Zealand Manufacturing PMI.
• Friday: US
  Industrial Production, US University of Michigan Consumer Sentiment
  Survey, PBoC MLF.

Tuesday

The UK Unemployment Rate is expected to
remain unchanged at 3.8% vs. 3.8% prior.
The Average Earnings Ex-Bonus is expected to tick lower to 5.7% vs. 5.8% prior,
while the Average Earnings including Bonus is seen at 6.2% vs. 6.2% prior. Weak
figures, especially on the wage growth part, should bring expectations for rate
cuts forward, while strong data might not change much for now. The markets
expect the BoE to deliver the first rate cut in August.

The US CPI Y/Y is expected at 3.1% vs.
3.1% prior,
while the M/M measure is seen at 0.4% vs. 0.3% prior. The Core CPI Y/Y is
expected at 3.7% vs. 3.9% prior, while the M/M figure is seen at 0.3% vs. 0.4%
prior. This report comes after a series of weak US data, especially on the
labour market side, so (in my opinion) this particular release is likely to be
faded in case of a hawkish reaction to a beat. Conversely, if the data misses,
we should see the market price back in a May rate cut.

Thursday

The US PPI Y/Y is expected at 1.2% vs.
0.9% prior,
while the M/M measure is seen at 0.3% vs. 0.3% prior. The Core PPI Y/Y is
expected at 2.0% vs. 2.0% prior, while the M/M figure is seen at 0.2% vs. 0.5%
prior. As mentioned for the CPI report, the market might look through a beat in
the data considering the weaker data from the labour market and the ISM PMIs.

The US Retail Sales M/M is expected at
0.7% vs. -0.8% prior, while the Ex-Autos M/M measure is seen at 0.4% vs. -0.6%
prior. The last
report surprised to the downside across the
board, although some weakness was expected due to negative weather conditions.
Another weak report would add to dovish expectations.

The US Jobless Claims continue to be one
of the most important releases every week as it’s a timelier indicator on the
state of the labour market. Initial Claims keep on hovering around cycle lows,
while Continuing Claims remain firm around cycle highs. This week the consensus
sees Initial Claims at 218K vs. 217K prior,
while there’s no consensus for Continuing Claims at the time of writing
although the prior week saw an increase to 1906K vs. 1889K prior.

Friday

The PBoC is expected to keep the MLF rate
unchanged at 2.50%. The central bank recently delivered two bigger than
expected cuts to its RRR
rate and the 5-year LPR
rate. This weekend the Chinese
Inflation data beat expectations across the
board by a big margin with the Headline Y/Y reading jumping to 1.0% and the
Core Y/Y measure to 1.2%. The PBoC might not feel the urgency to cut rates
further at the moment.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

A year ago today marks are dark day for one banking equity analyst at JPMorgan.

The topic was Silicon Valley Bank, the once high-flying bank that catered to tech startups. It often lent founders huge sums at rates as low as zero per cent so long as they parent company continued to do business with SVB. That obvious conflict of interest hasn’t yet resulted in shareholder lawsuits or IRS trouble (that I know of) but it wasn’t that kind of self-dealing that unwound the bank. Instead it was a reach for yield with bank capital that blew up as rates rose.

In any case, once questions began a run on the bank started. And as the old saying goes: „What do you do when there’s a lineup outside your bank? …Get in it.“

The bank was doomed but JPMorgan analyst Steven Alexopoulos didn’t know it. He lowered his target to $177 from $270 in this note.

Addressing Questions Including What to Do with SIVB Shares Post the Sell-Off and Industry Read-Through
SIVB shares declined 60% in response to the intra-quarter update as well as a number of strategic actions being announced. While the mid-quarter update from the company pointed to an incremental $5B of deposit outflows anticipated during 1Q23, on the surface this did not appear dramatic enough to warrant the company having also announced that it had sold $21B of AFS securities (which triggered a $1.8B loss being recognized). With the company also increasing its term borrowings by $15B (to $30B), these actions to dramatically boost liquidity we believe sends the message (from SVB management) that it’s a much more prudent strategy to have more robust liquidity levels on hand given a still uncertain environment ahead rather than adjusting to liquidity needs on a „just in time“ basis. While we fully acknowledge that we did not see these aggressive actions coming to boost liquidity (as well as common raise), given that the cash burn from startup clients as well as pace of investments by VC firms each remain moving targets, on an overall basis we see this as a very prudent strategy from the company. Turning to the stock, while the mid-quarter fundamental update would have resulted in a -15% reduction to our 2023e EPS, very sharp selling pressure on the stock accelerated once the stock started trading below TBV. In fact, for those that were not around during GFC, when a bank completes a common equity raise below TBV, the lower the stock goes the more dilutive the raise is to TBV. The cure for this downward spiral is for the company to complete the raise and satisfy the market that enough capital is now in hand. With this fully being our expectation, with capital as well as liquidity positions bolstered we see the intense selling pressure abating. Although SIVB shares closed at $106, with the capital raise still pending, shares closed at $82.50 in the post-trading session. If we were to assume that the common equity raise was completed in the $80 range, our 2023e TBV is in the $177 range, which based on the $82.50 close in the post-trading session would imply a valuation of only 0.5x 2023e TBV. While it’s likely in our view that SVB stock opens much higher than the post-trading session close should the news emerge that the common equity raise was completed, we would be buyers of SIVB shares at this highly attractive valuation. SVB is a world class and highly valuable global franchise and the option to purchase the shares below TBV we believe more than adequately compensates investors for the risk being taken. To this end, we are revising our price target down from $270 to $177 which assumes the shares trade in line with 2023e TBV. With our revised price target implying considerable upside potential, we are maintaining our Overweight rating.

What happened next to the „highly attractive valuation“?

It fell apart almost instantly and the FDIC was forced to step in the next day — March 10, 2023 — leaving shareholders zeroed out.

How did it work out for Alexoploulus? Evidently not too badly as he remains an equity analyst covering mid and small-cap banks at JPM.

What now? Held-to-maturity bonds remain a big problem in the US banking sector but it’s been swept under the rub by account that doesn’t require marking to market. That’s all-and-good, until someone needs to raise money.

This article was written by Adam Button at www.forexlive.com.