Another day, another US bank in trouble!
Could liquidity issues send USD/JPY down too much before the NFP issuance?
Before moving on to ICYMI, yesterday’s watchlist looked at USD/CAD testing range levels ahead of Governor BOC Macklem’s speech. Be sure to check if it’s still a good game!
And now for the main headlines that rocked the markets in the last trading sessions:
Headlines and recent economic data for the market:
The European Central Bank raised interest rates from 3.50% to 3.75% as expected, with committee chair Lagarde noting that inflation has been too high for too long
Lagarde: The central bank does not stop tightening, as conservatives are determined to fight inflation
UBS is considering selling Credit Suisse After the acquisition of the troubled bank a few weeks ago, perhaps the investment arm will be held while the rest is unloaded
Western Alliance Bancorp Reportedly exploring potential sell-off According to Financial Times, company shares plunge 30% and halt trading
Initial unemployment claims in the United States 229K to 242K, beating consensus of 239K to reflect faster increase in unemployment
Canadian Ivy PMI It decreased from 58.2 to 56.8 against an estimated figure of 59.0, reflecting slower expansion rather than the expected faster pace of growth.
BOC Governor Macklem They say they’re not done raising interest rates, especially if inflation rises back above 2%.
Russian Deputy Oil Minister Novak He says they will stick to the production pledge to cut production by 500,000 barrels per day
Caixin China PMI Services It fell from 57.8 to 56.4 versus 57.1 expected in April, as activity and new work reversed slower gains while input cost inflation rose to a one-year high.
Reserve Bank of Australia statement on monetary policy: Further price hikes may be required in order for inflation to reach the target in a reasonable time frame, thus reducing the risk of a wage spiral
Price action news
Comdolls against the US dollar and the Japanese yen 15 minutes Graphics by TV
The prospect of yet another US bank collapse sent the greenback into another bearish wave across the board.
Interestingly, higher-yielding commodity currencies were able to take advantage of the dollar sell-off (and yen!) that took place, even as risky assets like stocks took a beating.
The Canadian dollar, in particular, has been able to outperform most of its peers thanks to relatively hawkish comments from Bank of Canada Governor McClim. He indicated that the central bank is open to resuming raising interest rates if inflation rises again above the 2% threshold.
Possible catalysts coming in the economic calendar:
Swiss CPI at 6:30am GMT
French Industrial Production at 6:45 AM GMT
SNB FX Reserves at 7:00 am GMT
SNB President Jordan Speech at 9:00am GMT
Canadian employment change at 12:30 am GMT
US Nonfarm Payrolls at 12:30 AM GMT
Use our new profile Currency heat map To quickly see a visual overview of the forex market price movement! 🔥 🗺️
USD/JPY 15-minute forex Planned by TV
Thanks to rumors about a possible sale of Western Alliance Bancorp, the dollar has fallen yet again significantly against its forex rivals.
USD/JPY closed down nearly 150 pips on the day, before rallying to a short-term downtrend line that has been holding for the past few days.
If the resistance at the pivot point (134.21) holds again, the pair may drop to the previous day’s lows near 133.50, the minor psychological sign and S1 (133.55).
Strong selling pressure due to more banking sector problems or perhaps the pessimistic NFP report could send USD/JPY to S2 (132.83) or lower.
On the other hand, profit-taking activity or another strong bullish surprise from the US jobs report could trigger a push above the trend line and test the next resistance levels at R1 (134.93) or R2 (135.60).
Just be sure to account Average daily fluctuations for the USD/JPY pair 127.5 points when determining the entrances and exits!