Both the dollar and gold gained sharply yesterday after another fresh banking crisis blew out the global financial markets. Credit Suisse, one of the largest banks in the world, is seeking help from Switzerland’s central bank to fuel its liquidity after its biggest shareholder Saudi National Bank announced it would stop increasing its stake in Credit Suisse. Since major global central banks are increasing interest rates and harming bond prices, Credit Suisse has been badly impacted and faces liquidity issues. Global equity markets were hit by the news, with bloodshed in the banking sector that saw JP Morgan, CitiBank and Morgan Stanley drop nearly 5%. On top of that, oil prices traded to their lowest since December 2021 due to reverberating effects of the banking crisis; the weekly U.S. crude inventories report also reflects that the oil demand is diminishing. 

---

Look Out For

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

25 bps (33.6%) VS 50 bps (66.4%) 

---

Market Overview

Economic Calendar

Market Movements

DXY

The ongoing turbulence in the banking sector has reignited fears of a global financial crisis, with investors scrambling for safe-haven assets amidst mounting uncertainty. Credit Suisse’s recent disclosure of material weaknesses in its financial reporting has only added to concerns about the stability of the financial system, coming hot on the heels of crises at Silicon Valley Bank and Signature Bank. With top shareholders like Saudi National Bank shunning Credit Suisse, market participants are understandably jittery about the prospects for the storied Swiss bank. In this environment of heightened risk aversion, safe-haven currencies like the US Dollar have surged.

The Dollar Index is trading higher while currently nearby the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 62, suggesting the index might trade lower as technical correction since the RSI retreated sharply from overbought territory. 

Resistance level: 105.10, 105.80

Support level: 104.15, 103.65

XAU/USD

The current economic uncertainty and fears of a potential global banking crisis have led investors to seek refuge in safe-haven assets such as gold. As the situation at Credit Suisse continues to unfold and concerns about the stability of the banking sector increase, investors are turning to gold to hedge against potential losses in the stock market.

Gold prices are trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 66, suggesting the commodity might trade higher since the RSI above the midline.  

Resistance level: 1960.00, 1995.00

Support level: 1885.00, 1835.00

EUR/USD 

The U.S. dollar is highly sought after by investors after the financial market is blown out with boat-rocking news with a looming banking crisis. Credit Suisse has liquidity problems and creates unease to the financial market; thus, investors rush into dollars as a safe-haven asset amid uncertainties. Although the market perceived that the Fed might introduce a lenient rate hike in March as the inflation rate reading came favourable and uncertainties are surrounding the financial sector; the dollar has regained its strength with the dollar index up by more than 1% after the Credit Suisse news was disclosed. The ECB is going to release its interest rate decision later today with the market consensus of a 50 bps rate hike, any number deviating from 50 bps may fluctuate the euro. 

On the technical front, the indicators show that the pair is resilient in holding the bearish momentum with the RSI rebounding before falling into the oversold zone and the MACD rebounding after it touched the zero line. 

Resistance level: 1.0613, 1.0698

Support level: 1.0540, 1.0462

BTC/USD

BTC prices have little changed last night while the financial market is unsettled with the banking crisis looming globally. Bitcoin prices dropped by slightly more than 1.5% as investors turned on risk-off sentiment amid uncertainty. The dollar appreciated with higher demand as a safe-haven asset for investors. Bullish momentum for BTC has eased after it rebounds sharply from below $19000 a week ago due to the spreading of the banking crisis. 

The indicators show BTC has little affected by the potential global financial crisis as the RSI is constantly flowing near to the 70-level; however the MACD and the signal lines have converged implies the bullish momentum has eased. 

Resistance level: 24967, 26248

Support level: 23713,  22816

USD/JPY

The Japanese yen rose by 1.30% to 132.89 per dollar on Wednesday as investors are rushing for the global safe havens of the U.S. dollar, U.S. treasuries and the Japanese yen after Credit Suisse’s banking crisis. In the latest blow to investors’ confidence in the financial sector, Credit Suisse’s shares on Wednesday plunged as much as 30%. But soon, the Swiss’s central bank pledged to fund Credit Suisse with liquidity if necessary. Even if a full resolution for Credit Suisse is announced and markets surge in a relief rally on Thursday morning, financial crises are not resolved in a few days. Therefore, investors won’t stray too far from the safe-haven like the dollar, treasuries and the yen. 

The pair is testing its support level around 132.87 as of writing. In the near term, we expect the pair might break its support level because the yen is in demand on renewed fears of a global banking crisis. MACD has illustrated a bearish momentum. RSI is at 36, indicating a neutral-bearish momentum ahead. 

Resistance level: 134.82, 137.19

Support level: 132.87, 129.89

GBP/USD 

The pound dropped 0.77% to $1.2071 against the strengthened dollar on Wednesday. Traders now are predicting the Bank of England to pause its rate hike at its March policy meeting. As we can see, the interest rate hike bets show a 40% chance of a 25 basis-point hike and a 60% chance they keep the rates unchanged. Last week, the possibility of the BoE rate pause stood at around only 10%. Investors also await British finance minister Jeremy Hunt announced a fiscal plan that he hopes will speed up UK’s stagnating economy, while upgraded economic forecasts hinted the economy would now avoid a recession this year. 

The pound has rebounded after it touched the support level of 1.2044 and was trading at 1.2071 as of writing. It indicates the overall sentiment for the pound remains bullish. MACD has illustrated a neutral-bullish momentum in the short term. RSI is at 48, indicating a neutral-bullish momentum ahead. 

Resistance level: 1.2126, 1.2211

Support level: 1.2044, 1.1926

Dow Jones

The Dow dropped with risk-off sentiment in the global financial market. The spectre of a potential global banking crisis looms large as fears surrounding the health of the financial system intensify amidst a slew of recent setbacks. The latest blow was dealt to Credit Suisse, which saw its already weakened position in the market further eroded by the disclosure of “Material weaknesses” in its financial reporting. As a result, contagion fears have spread across the entire banking sector, further diminishing investor confidence in the banking stock and global financial markets.

The Dow is trading lower while currently near the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 37, suggesting the index is entering oversold territory. 

Resistance level: 32620.00, 34395.00

Support level: 31165.00, 29935.00

CL OIL

Oil prices suffered a massive blow on Wednesday, plunging by over $5 per barrel to their lowest level in over a year. The market downturn was prompted by unease over the health of Credit Suisse, which spooked investors and overshadowed hopes of a Chinese oil demand recovery. Both Brent and WTI experienced significant volatility and entered technically oversold territory. Hedge funds were forced to liquidate risky investments in the face of economic uncertainty, adding to the already heavy pressure on the US stock and oil markets.

Oil prices are trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 33, suggesting the commodity is entering oversold territory.

Resistance level: 73.10, 80.55

Support level: 65.70, 61.80