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  • Writer's pictureMike Paterson

Bring on the ECB amid banking sector concerns

Thursday 16 March 2023

Yesterday saw further banking sector meltdown creating a rush for the exits across all markets with Credit Suisse back in focus. They've been in trouble for a while but with attention returning it's needed a promise of a $54bln bailout from the SNB overnight to help calm things down a litle. Sticking plaster over a far bigger wound ? The jury remains out.

ECB the next CB up the ramp today. Conjecture that they might indeed still stick with a 50bps hike given that the SNB might have provided some time but the jury remains out and we've seen that reflected in both the Euro and EU banking stocks. Not long to find out now. The dlemma for CBs remains the inflation/rate hike/fragile banking sector trade off. JPY demand was notable yesterday pushing down core pairs too but a pause for thought since.

Equities in retreat again this morning after another down then up day yesterday as the rollercoaster ride continues amid the uncertainty while WTI is off its $66.00 extended lows but with the rally capped into $69.00 as the fragile risk tones remain. Gold rallied initially on the fall out but found $1940 a step too far with longs taking a bit more profit but support coming in now between $1900-10. Ukraine/Russia war continues to be the main geo-political elephant in the room with ongoing US/China tensions in the mix too.

Remember, focus on the price action and let the algos do the heavy lifting/dropping. The important thing is to identify your preferred risk/reward entry/exit levels prior and be poised to execute.

GBPUSD: Showing how fickle these markets are right now with a retreat below 1.2020 after capping around 1.2150 yesterday helped by the GBPJPY selling but tempered by the EURGBP selling too and some pips banked in the retreat. EURGBP: A solid fall to 0.8720 yesterday amid the EU bank concerns but support/bids building now at 0.8760 as some EUR demand returns ahead of ECB and after the SNB bailout of CS. Expect some more two-way trading as core pairs fluctuate. GBPJPY: A support line at 159.00 finally found yesterday after the retreat from 164.00 but subsequent rallies capping at 161.50. Sellers will remain poised as the uncertainty/fickle sentiment continues.

EURUSD: Holding 1.0500-15 after the drop from 1.0700 and pips banked along the way but capping above 1.0630 as we wait on the ECB. USDJPY: Finally coming to a halt at 132.20 in the extended retreat helped by the risk off JPY demand and some pips gratefully banked along the way per ongoing strategy. I continue to favour rally sells and being long JPY on the crosses too overall so I hope the steer continues to help.

More detailed analysis across many pairs from

Interbank rates: 08.45 GMT

GBPUSD 1.2075

EURUSD 1.0615

EURGBP 0.8788

GBPEUR 1.1376

USDJPY 132.72

GBPJPY 160.28

GBPCAD 1.6584

GBPCHF 1.1194

GBPZAR 22.1677

GBPHKD 9.4025

EURCHF 0.9826

EURHKD 8.2652

AUDUSD 0.6653

NZDUSD 0.6172

USDCAD 1.3740

USDCHF 0.9256

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