It appears as though the clock ran out on First Republic Bank.

Reuters, citing sources, reports that the US Federal Deposit Insurance Corporation is preparing to place the struggling bank under receivership „imminently“.

It’s no surprise as reports on Friday suggested that time was running out and that no private sector-led rescue was coming. Various reports said there were banks who were prepared to buy and run FRC within the FDIC resolution mechanism.

Shares of the company fell 43% on Friday and have tumbled precipitously this week to $3.51 from $16 at the start of week. This week’s breakdown was precipitated by a report from the bank that showed $100B of $176B in consumer deposits fleeing, which was worse than analysts had expected.

Equity holders are highly likely to be wiped out as the FDIC takes over but depositors will be made whole.

For the broader market, this is unlikely to be a meaningful event. Other regional banks reported much smaller drawdowns in deposits and shares held relatively steady through the latest storm. If anything, I suspect the resolution will help to put the episode in the rearview mirror and put the focus back on economic data.

Update: The WSJ now reports that JPMorgan and PNC have bid to take over First Republic after the FDIC seizes the bank.

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

• US March PCE core inflation 4.6% vs 4.5% expected
• Canada GDP for February 0.1% versus 0.2% estimate
• US employment cost index for Q1 +1.2% q/q vs +1.1% expected
• April final UMich consumer sentiment 63.5 vs 63.5 expected
• Dallas Fed trimmed mean PCE price index +3.4% annualized in March
• Germany April preliminary CPI +7.2% vs +7.3% y/y expected
• Atlanta Fed GDPNow initial estimate for Q2 growth at 1.7%
• First Republic: „The window is closing fast“ – report
• Shares of First Republic fall more than 40% as receivership looms
• Baker Hughes US oil rig count unchanged at 591

Markets:

• Gold up $1 to $1989
• WTI crude oil up $1.95 to $76.71
• US 10-year yields down 9 bps to 3.43%
• S&P 500 up 0.9%
• GBP leads, JPY lags

The big story of the day was the Bank of Japan leaving policy unchanged and the yen taking a beating. It tumbled right across the board but arguably the biggest move in a technical sense was in EUR/JPY as the pair broke above the 2014 high and the 150.00 level, both for the first time since 2008.

Other yen crosses also made big moves and that could signal a fresh round of divergence. The BOJ staying easy also helped to put a bid in bonds.

The PCE headlines were hawkish but my sense is that the market sniffed it out based on the details in the GDP report. It was also another reminder that the market has moved past inflation worries and is more concerned the Fed is going to snuff out growth. The PCE inflation numbers appear certain to fall below 4% in short order and that could come as soon as next month.

Banking worries continue to percolate but they’re isolated around First Republic with the regional bank ETF up 1.7% on the day.

Cable was strong starting in North American trade in a move that foreshadowed the positive sentiment in equities that later appeared. Perhaps that was a coincidence and due to month-end flows but it was a strong move for the pound, perhaps with the lift of GBP/JPY bids.

One of the biggest intraday turns was in USD/CAD as the pair mirrored a reversal in oil and sentiment. USD/CAD rose as high as 1.3667 before sinking to 1.3550 late.

Have a great weekend.

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

Here’s how the week played out.

It started with worries about First Republic Bank and that ultimately led to a death spiral of the company as it reported much larger deposit outflows than anticipated. Shares hit $16 on Monday and are finishing the week around $3.50 with an FDIC takeover looming.

So what changed even as sentiment worsened? Mainly, the pain at FRC didn’t spread to other regional banks and that’s a case I made early in the week. The problem was that dip buyers didn’t want to wade in until mega-cap tech earnings were released. Even after strong Microsoft earnings, the market was skittish.

When Meta later had great earnings as well and some others were solid, that was enough to turn the tide and quickly led to FOMC. That feeling extended today despite some modest warnings about data centers from Amazon.

Here are the closing changes in North American markets today:

• S&P 500 +0.9% — up 39 points to 4192
• DJIA +0.8%
• Nasdaq Comp +0.7%
• Russell 2000 +1.0%
• Toronto TSX Comp +0.5%

On the week:

• S&P 500 +0.9%
• DJIA +0.9%
• Nasdaq Comp +1.3%
• Russell 2000 -1.3%
• Toronto TSX Comp -0.3%

On the month:

• S&P 500 +1.5%
• DJIA +2.5%
• Nasdaq Comp flat

Seasonally, April is the strongest month of the year and it’s another victory for that trade but it certainly wasn’t smooth sailing.

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

The market has been reluctant to fully price in a hike from the Federal Reserve next week with odds hovering around 85%. Some of that may reflect uncertainty about First Republic Bank but it’s also a signal that the end of rate hikes is near. Even if the Fed does hike on May 3, the market isn’t expecting anything afterwards.

„The Fed needs to hike in May and go away,“ writes CIBC today. „By standing pat for a couple of quarters, the FOMC will gain considerable insight into the drag from developments at regional banks. With growth slowing, inflation is unlikely to run away to the upside, but we’ll need time to let it ease off enough. So our call is for May’s move to be the final hike for this cycle.“

The estimate that the impacts of the banking strain are roughly equivalent to 50 bps but that’s much more art than science because each banking episode is unique and it’s too early to tell.

„All of this is complicated by the fact that we were overdue for a retrenchment from the bloated liquidity seen during the pandemic. The 4% year-on-year decline in the money supply is without precedent since the Great Depression, but in level terms, the money supply still looks ample relative to its prior trend line.“

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

MUFG Research maintains a long EUR/USD and a short USD/JPY exposure in its ToTW portfolio. The short USD/JPY trade suffered today longs after the Bank of Japan left policy unchanged.

MUFG is long EUR/USD from 1.0950, targeting a move towards 1.1350, with a
stop at 1.0750. It last traded at 1.1016.

MUFG is also short USD/JPY from 134.70, with a target
at 129.00, and a stop at 138.50. It last traded at 136.24.

„We are maintaining our long EUR/USD trade idea and our short USD/JPY
trade idea despite today’s large post-Boj rebound,“ MUFG notes.

For bank trade ideas, check out eFX Plus. For a limited time, get a 7 day free trial, basic for $79 per month and premium at $109 per month. Get it here.

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

Headlines:

• BOJ maintains YCC band unchanged, tweaks forward guidance
• BOJ’s Ueda says will not hesitate to ease monetary policy further if necessary
• BOJ’s Ueda: Will make changes to monetary policy as needed during review period
• BOJ’s Ueda: Policy review does not signify stance that monetary easing was ineffective
• BOJ’s Ueda acknowledges yen drop today but does not want to comment on it
• Eurozone Q1 preliminary GDP +0.1% vs +0.2% q/q expected
• Germany Q1 preliminary GDP 0.0% vs +0.2% q/q expected
• France Q1 preliminary GDP +0.2% vs +0.2% q/q expected
• Spain Q1 preliminary GDP +0.5% vs +0.3% q/q expected
• Italy Q1 preliminary GDP +0.5% vs +0.2% q/q expected
• Saxony April CPI +7.6% vs +8.3% y/y prior
• Bavaria April CPI +7.2% vs +7.2% y/y prior
• France April preliminary CPI +5.9% vs +5.7% y/y expected
• Spain April preliminary CPI +4.1% vs +4.4% y/y expected
• Germany April unemployment change 24k vs 10k expected
• US officials reportedly coordinating rescue talks for First Republic Bank

Markets:

• USD leads, JPY lags on the day
• European equities lower; S&P 500 futures down 0.3%
• US 10-year yields down 5.5 bps to 3.473%
• Gold down 0.3% to $1,982.89
• WTI crude up 0.8% to $75.32
• Bitcoin down 1.2% to $29,256

It was mostly all about the BOJ today as the central bank delivered a late decision, though without much surprises.

There was just a mild tweak to the forward guidance but the key takeaway is that they did not deliver any policy changes nor did they hint at any to come in the months ahead. The yen fell right off the bat and extended losses ahead of Ueda’s first policy press conference as BOJ governor.

My take was that he definitely overcommunicated and stressed on things he needn’t to. The central bank said that they were going to conduct a policy review, which could take longer than a year to complete. And that was enough for markets to take it as a more dovish tilt, in spite of Ueda’s back and forth explanations.

USD/JPY raced higher from 133.80 all the way to above 136.00 in European trading, gradually extending gains throughout the session. The yen’s capitulation was broad-based with EUR/JPY also climbing up to 149.50 – its highest levels since December 2014. Meanwhile, GBP/JPY also climbed up to 169.50 which is its highest levels since November last year.

The BOJ decision weighed on bond yields initially but that worsened after German Q1 GDP disappointed on estimates. The German economy was seen stagnating in the first three months this year and that saw the euro slip alongside regional bond yields, while equities also nudged lower amid global growth worries.

EUR/USD fell back from 1.1010 to 1.1080 as the dollar caught a bid across the board. GBP/USD also declined from 1.2470 to 1.2450 before recovering slightly to 1.2460 now.

Elsewhere, AUD/USD remains under pressure as it is down 0.7% to 0.6580 – its lowest levels in seven weeks.

It was certainly a lively session and looking ahead, we still have US PCE price data as well as month-end trading to look forward to before the weekend comes around.

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

On the daily chart below for EURUSD, we can
see that the price keeps struggling extending the rally above the 1.1033 high.
If the market fails again to break out here, then we may be in front of a big double
top pattern
with the neckline at the 1.0533 level. For now, the buyers keep being in
control with the moving
averages offering support.

Yesterday the US
GDP showed
resilience in consumer spending under the hood and the US
Jobless Claims data beat expectations after several weeks of
misses. This lifted treasury yields as the market repriced the interest
rates cuts expected by the end of the year and boosted the USD.

EURUSD technical analysis

On the 4 hour chart below, we can
see that the whole rally within the rising channel has been diverging with the MACD. This is generally a signal of a
weakening momentum and it’s often followed by pullbacks or reversals.

The price is now again at the
lower bound of the channel, which is the level where we will see a bounce or a
breakout. Today we will have the US PCE and ECI
reports. If the data beats, then we should see a breakout and a quick selloff,
but if the data misses, we should get another bounce and possibly new highs.

On the 1 hour chart below, we can
see that the sellers leant on the black downward trendline to push the price to the lower
bound of the channel. The buyers should be waiting there to enter the market
and target a breakout of the black trendline and ultimately new highs with the
upper bound of the channel in focus. The sellers, on the other hand, will want
to see the price to break down and jump onboard aggressively to extend the
selloff.

This article was written by ForexLive at www.forexlive.com.

This is a firm breakout above the 135.00 mark and was triggered in the run up to BOJ governor Ueda’s press conference earlier. Ueda himself failed to offer much clear communication (you can check out my recap here) and so markets are running with the decision that the BOJ is not going to make any big changes any time soon.

The jump above 135.00 also looks to be triggering some stops as we see the pair now hit a high of 136.18 in European trading.

From a technical perspective, it was already highlighted earlier that the pair now has scope to roam towards the 200-day moving average (blue line) at 136.96 and that is very much in play right now.

The March high of 137.90 will come next before buyers may set their sights towards the 140.00 mark.

The only gripe I have with any major extension in the pair is that it might need some help from the bond market. Today is an exception due to it being a BOJ-related move. So, the break in correlation between the yen and bond yields is quite notable.

However, given time, USD/JPY and 10-year Treasury yields tend to move in synchronicity and if yields are to hold lower, it may only be a matter of time before the currency pair turns back the other way around.

I mean, as mentioned in the linked post above, today does not mark a shift in BOJ thinking. It was just mostly some market players feeling disappointed that there was no surprise followed up by poor communication from Ueda.

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

Acquiring the
ability to formulate a strong trading plan and implement it is vital in online
trading. A well-crafted plan will provide you with direction on selecting the
suitable market to trade in, help you identify the ideal moment to take
profits, or recognise when to close loss-making positions. In this article, we
will look at what a trading plan is and the various steps you can follow to
build a strong trading process.

Building a
strong trading plan and creating a strong trading process is not an easy task
and should be revised according to your skills and progress.

One of the
first things you need to do is write a comprehensive plan with clear objectives
that cannot be changed during trading, but that can be reevaluated when the
markets are closed. This plan should be adjusted based on changing market
conditions and your own increasing skill level. It’s crucial that you create
your own plan, taking into account your trading style and objectives. Using
someone else’s plan would not reflect your unique trading characteristics.

What is a
trading plan?

A solid trading
plan is a thorough guide that aids in making decisions related to your trading.
It assists in determining what to trade, when to trade, and how much to trade.
It’s essential to develop a personalised trading plan rather than using someone
else’s plan as your own as their level of risk tolerance and available funds
may vary greatly from yours.

A trading plan
is important because it can assist in making rational trading choices and
defining the ideal parameters for your trades. It is beneficial to have a
well-structured trading plan as it can prevent impulsive decisions made in the
heat of the moment.

Trading plan
vs. Trading strategy

A trading plan
is a methodical approach utilised for identifying and trading securities,
taking into account various factors such as investment goals, risks, and time.
Having a strong trading process will help you establish guidelines and criteria
for selecting asset classes and executing trades. It should be noted that a
trading plan is distinct from a trading strategy, which dictates how to enter
and exit trades to maximise profitability and minimise risk exposure. A trading
strategy may be based on either technical analysis or fundamental analysis.

Advantages
of having a trading plan

1. By having a
strong trading process in place, you can trade easily without having to waste
time or energy, as you have already done all the hard work.

2. A plan will
guide you to make decisions without any emotional effect, and will be ready to
take profits or cut losses rationally.

3. By following
your trading ideas and plan, you will have a clear head and will be more
objective, gaining more insight into your trades and finding what works and
what doesn’t.

4. By keeping
records, you can learn from your mistakes and make better and more
well-informed trading decisions in the future. A profitable trading process may
take time, and will involve challenges and mistakes, but as long as you
minimise losses and improve on past mistakes, you will find the confidence and
build the trading strength to face new challenges and be more prepared.

Trading plan:
Things to have in mind

Your trading
plan may encompass any information that you find helpful, but it should always
try to address the following questions:

1. Do you have the skills needed to start
trading?

2. What motivates you to start trading?

3. How much time do you want to commit to
trading?

4. What are your trading goals?

5. Are you ready to take risks?

6. How much capital can you allocate for
trading?

7. What markets do you want to trade?

8. What steps will you take for keeping
records?

1. Skills

You need to
approach trading as a job and not as a hobby, ensuring that you have done your
homework, acquired the necessary knowledge and practised your strategies.

2. Motivation

To do well in
trading, you need to have an incentive that is deeper than the desire to make
money. Find out what trading means to you at a personal level and why it is
important to you. What draws you to the markets, for example? If you have the
desire to solve a puzzle, enjoy the feeling of trading as a stimulating and
intellectually challenging experience, or as an exciting game of probabilities
and chances then you know what makes you tick as a trader. You may like the
adrenaline of competition or making decisions based on instinct, or you may
want to enjoy working from home. If you know the answer, then you know your
goals and you can formulate a style of trading that fits your profile.

3. Time

Think about how
much time you can dedicate to trading. Can you trade while you’re working, will
you make many trades a day, or you’ll need more time? Don’t forget to set aside
enough time to prepare for trading, practice your strategies, get more trading
tips and trading ideas, and analyse the
markets.

4. Goal-setting

You should set
goals you can achieve and be very specific. Don’t set unattainable goals,
otherwise you will get disappointed.

5. Taking risks

Before you jump
into trading, it’s crucial to figure out how much risk you’re comfortable
taking on. This includes considering how much risk you’re willing to take for
each trade as well as for your overall trading strategy. Keep in mind that
market prices are constantly fluctuating, and even the safest trades come with
some level of risk. Some beginners prefer to start with a lower- risk approach
to get a feel for things, while more advanced traders are willing to take on
more risk in pursuit of bigger rewards. Ultimately, it’s up to you to decide
what level of risk you’re willing to tolerate.

6. Capital

Before you dive
into trading, it’s important to take a look at your finances and figure out how
much money you can comfortably allocate towards it. Remember, never risk more
than you can afford to lose because trading can be risky and you could end up
losing all of your trading capital. If you don’t have enough funds to start
trading yet, you can practice on a demo account until you’re ready to go live.

7. Markets

Select the
market you want to trade in. Are you trading forex or shares, indices or
futures? Each one of these is different and will require specific knowledge.
Learn as much as you can about each asset class including how volatile the
market is and the factors that influence the price of each asset and trading
instrument you want to trade.

8. Keeping
records

If you want
your trading plan to be successful and build a strong trading process, it’s
important to keep a record of all your trades in a trading diary. This will
help you figure out what’s working well and what isn’t. If you ever deviate from
your plan, make sure to write down why and what the outcome was. The more
detailed your diary is, the more helpful it will be.

If you’re ready
to start trading, you can open a live account with T4Trade or try out the demo
account to practice without risking any money.

T4Trade live
trading account

To open a trading account, you can visit T4Trade’s website and click the Sign up button at the top right-hand corner. You can then fill in all your personal
details. When your account is approved, you will receive an email with your
trading account details, how to fund your account and how to upload all the
required supporting documentation. To unlock the full functionalities of your
account, you will have to upload proof of identification (passport, ID, driver’s
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other official document less than 6 months old).

For more information, you can log in
to the Client Portal or contact T4Trade’s friendly customer support team which is always available 24 hours a
day, 5 days a week.

DISCLAIMER:
This information is not considered as investment advice or an investment
recommendation, but is instead a marketing communication

This article was written by ForexLive at www.forexlive.com.

This fits with what we saw from the other state readings earlier, with the monthly reading showing an increase of 0.3% in consumer price inflation. Putting everything together, the national reading later should show annual headline inflation at around 6.9% to 7.1% roughly perhaps instead of the 7.3% reading estimated.

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