March 28, 2023

“The US Dollar is facing low demand this morning amid a positive market mood and reduced global banking crisis fears. The day’s US economic docket includes the February Goods Trade Balance and the Conference Board’s Consumer Confidence Index for March. BOE Governor Andrew Bailey and ECB President Christine Lagarde will also deliver speeches.”

Sam Cornford, Partner – Head of Trading

Main Headlines

Jeffrey Gundlach, CEO of DoubleLine Capital, believes that the US will experience a recession within months, adding that the central bank will probably reduce rates a couple of times this year. However, Goldman Sachs and BlackRock have different perspectives on the situation. Goldman raised its prediction of a US recession within the next 12 months from 25% to 35%, but it doesn’t anticipate a slump significant enough to trigger an aggressive rate cut.

British consumers may have to face shortages of fresh vegetables as costs and unpredictable weather affect domestic production, exacerbating inflation-related issues for shoppers. In recent weeks, the UK has experienced a shortage of tomatoes, cucumbers and peppers due to disrupted harvests in North Africa, forcing industry buyers to pay more for less from key markets such as Spain. The country also imported the smallest amount of vegetables for any January since 2010.

GBP

Sterling is stronger against the dollar and weaker against euro this morning. Bank of England Governor Andrew Bailey reassured investors that interest rate-setters would focus on combating inflation rather than being overly concerned about global banking issues. Some investors suggested that central banks should consider banking turmoil when determining interest rates, but Bailey opposed this view in his speech at the London School of Economics.

EUR

Euro is well bid against most major currencies overnight. European car manufacturers are resisting new emission regulations that they deem excessively expensive, rushed, and unnecessary. The proposed “Euro 7” rules would restrict harmful emissions and avoid another Dieselgate scandal. Negotiations among European Union countries and lawmakers would begin this year, focusing on tighter emission limits for diesel cars, heavy-duty trucks, and buses.

USD

The dollar is weaker than most major currencies in the early morning trade. First Citizens Bancshares Inc. experienced a significant boost in its stock prices after agreeing to acquire Silicon Valley Bridge Bank’s loans and deposits from the Federal Deposit Insurance Corp. yesterday. The stock prices climbed 54%, reaching a 52-week high of $910. The FDIC stated that the 17 branches of Silicon Valley Bank would now operate as First Citizens branches.

Markets

European stock markets remained optimistic, continuing their positive momentum as investors anticipate an end to recent market volatility. The pan-European Stoxx 600 index rose 0.3% in morning trade, with most sectors experiencing gains. Banks, in particular, were up 1%, with Credit Suisse rising 1.4% and UBS climbing 1.5%. Deutsche Bank experienced a slight decline, dipping 0.5%. US stock futures also saw a marginal increase in overnight trading, with the S&P 500 posting its third consecutive positive session.

Main Economic Data/Central Banks/Government (All Times CET)

8:45 a.m.: France March. Business and Manufacturing Confidence
8:20 a.m.: ECB’s Rehn speaks
10:00 a.m.: Italy March Manufacturing Confidence, Economic Sentiment
10:00 a.m.: ECB’s Muller and Vasle speak
10:45 a.m.: BOE’s Bailey testifies on SVB UK
2:00 p.m.: Hungary central bank rate decision
2:30 p.m.: US Feb. Wholesale Inventories
3:00 p.m.: ECB’s Lagarde and Nagel speak at BIS Innovation Hub
3:00 p.m.: ECB’s Makhlouf and De Cos speak on crypto
3:00 p.m.: US Jan. FHFA House Price Index
4:00 p.m.: US March Conf. Board Consumer Confidence
4:00 p.m.: Fed’s Barr speaks

Corporate Events

Earnings include Walgreens Boots, Micron, McCormick, Lululemon

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