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Banking Contagion Contained For Now

Asian markets remain rattled by the ongoing concerns stateside regarding the potential for contagion risk amongst regional US banks, investors fled the sector en masse in a shoot-first ask-questions-later type trade, US regulators FDIC have confirmed that all bank deposits will be secured via the Bank Term Funding Program. While Wall Street closed near the flatline with the Nasdaq the standout performer notching up a 0.79% gain on the day, Asian investors hammered the Nikkei banking stocks overnight with the banking index slumping more than 7% posting its largest losses in the past six months. 

Investor focus now shifts to US inflation data due later today, however, many market watchers now believe that this data will take on less significance given the Feds' focus on firefighting in the banking sector as they seek to reassure markets that the current crisis will not cause systemic risk, that said, FOMC Chair Powell remarked overnight that a full and transparent investigation into the cause of the crisis must be undertaken, suggesting this risk wasn't on their radar. Inflation data is expected to confirm a steady rise in consumer prices, as US home rental prices remain stubbornly elevated, coupled with an uptick in goods prices predominantly driven by the ongoing rise in used car prices, net-net, markets expect core `CPI ex-food and energy to print a 0.4% handle for the third consecutive month, this would mean the core CPI will have gained an annualized 5.5% in February versus a 5.6% level in January, representing the lowest levels seen in the last 12 months. The conundrum for the Fed is clear which do they feel is the biggest threat to economic stability, has the banking crisis been addressed if so the committee should remain on its set course and continue to raise rates, or is the market turmoil sufficient for the long-awaited Fed pause to materialize, the argument is that the Fed usually embarks on a rate cycle until ‘something break’ SBV & Signature being the prime candidates for confirming a break, hence, most major investment banks now believe that the Fed will be forced to pause at the March meeting delivering one of the biggest turnarounds in recent financial history given just a week ago markets were heavily pricing a 50bps rise and 6%+ terminal rate, it appears that a week is a long time in economics and not just politics!
 

FX Options For 10am New York Cut 

• EUR/USD: 1.0745 (EU1.05b), 1.0800 (EU1.04b), 1.0650 (EU950.5m)
• USD/JPY: 125.00 ($1.34b), 139.50 ($820.4m), 130.00 ($720m)
• USD/CNY: 7.2235 ($400m), 7.0000 ($388.6m), 6.6000 ($309m)
• AUD/USD: 0.6781 (AUD362.8m), 0.6800 (AUD330.9m), 0.6980 (AUD318.1m)
• USD/CAD: 1.3550 ($311.7m)
• GBP/USD: 1.2275 (£351.1m)
• EUR/GBP: 0.8850 (EU571.7m)
• Overnight option expiry first captured Tuesday's U.S. CPI from Monday
• Huge jump in related implied volatility flags extreme actual volatility risk
• Overnight implied volatility is double that seen on a regular trading day
• Current levels exceed NFP risk premium and last seen before Feb 14 U.S. CPI
• Implied volatility on 1-month expiry rallies to new 2023 highs this week
• Flags contagion fear from SVB collapse and knock-on effect to U.S. policy
• In respect of the latter - Tuesday's CPI data could be key

  (Source Reuters)
 

Overnight News of Note

• Asian Stock Benchmark Erases 2023 Gains As Bank Rout Extends
• The Great Hiking Cycle Is Seen As Done As Yields Drop Below Cash
• Nomura Predicts Rate Cut And QT Halt At Upcoming Fed Meeting
• Fed To Publish New Emergency Loan Totals This Week, No Names
• US Expected To Report Strong Consumer Price Increases In February
• Biden Expected To Have Call With China’s Xi Jinping But No Date Set
• Australia’s Weak Consumer Confidence Boosts Case For Rate Pause
• Bond Market’s RBA Halt Call Draws Scepticism Amid High Inflation
• Dollar Sags As US Banks' Collapse Has Markets Wagering On No Hike
• Japan Yield Falls Past Previous BOJ Ceiling As US Hike Bets Ease
• Oil Extends Decline As Fed Watchers Wait For US Inflation Data
• Global Financial Stocks Lose $465 Billion On SVB Impact Worry
• Large US Banks Inundated With Depositors As Smaller Lenders Face Turmoil

(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
 

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 3940

• Primary support is 3800
• Primary objective is 3950
• Below 3840 opens 3790
• 20 Day VWAP bearish, 5 Day VWAP bearish

(Click on image to enlarge)

EURUSD Bias: Intraday Bullish Above Bearish below 1.0620

• Primary resistance is 1.0805
• Primary objective is 1.0430
• Above 1.0805 opens 1.0925
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

GBPUSD Bias: Intraday Bullish Above Bearish below 1.20

• Primary resistance  is 1.2265
• Primary objective 1.1785
• Above 1.2265 opens 1.2337
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

USDJPY Bias: Intraday Bullish above Bearish Below 135.50

• Primary resistance  is 135.50
• Primary objective is 130.00
• Above 136 opens 137.90
• 20 Day VWAP bearish, 5 Day VWAP bearish

(Click on image to enlarge)

AUDUSD Bias: Intraday Bullish Above Bearish below .6696 

• Primary resistance is .6740
• Primary objective is .6950
• Below .6560 opens .6450
• 20 Day VWAP bearish, 5 Day VWAP bullish

(Click on image to enlarge)

BTCUSD Intraday Bias: Bullish Above Bearish below 23000

• Primary resistance 25200
• Primary objective is 26750
• Below 23000 opens 22400
• 20 Day VWAP bullish, 5 Day VWAP bullish

(Click on image to enlarge)

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