Daily Market Outlook, March 17, 2023

Banks Bailing Out Banks

Asian stocks trade in the green heading into the weekend as the Credit Suisse backstop provided by the SNB and the US bank bailout of First Republic, with a team of the tier one investment banks in New York stepping up up to deposit USD 30bln into the beleaguered lender, reminiscent of the original namesake J.P.Morgan's move in the 1900’s. The Nikkei 225 nudged above 27,000 as the Hang Seng and Shanghai Comp, both traded 1%+ into the weekend with Baidu notching up double digit returns coupled with another round of liquidity provision from the PBoC the market mood ends the week on a buoyant tone after the earlier turbulence witnessed at the start of the week. Noteworthy as we head into the European session the ECB has convened an ad-hoc supervisory board meeting today to review developments in the banking sector following market turmoil according to Reuters.Today’s US data docket is headlined by  industrial production with the undercard of University of Michigan consumer sentiment survey, market watchers expect a 0.5% for February industrial production print, with a mild retreat in consumer sentiment in March as the recent spending appetite wanes.

FX Options For 10am New York Cut

  • EUR/USD: 1.0700 (EU4.06B), 1.0775 (EU1.39B), 1.0500 (EU1.23B)

  • USD/JPY: 130.00 ($3.28B), 118.00 ($2.29B), 132.00 ($2.05B)

  • USD/CNY: 6.8500 ($1.51B), 6.6400 ($830M), 6.5000 ($830M)

  • AUD/USD: 0.6650 (AUD1.19B), 0.6580 (AUD830.7M), 0.6700 (AUD610.6M)

  • USD/CAD: 1.3940 ($351.5M), 1.3000 ($340M), 1.3670 ($335.7M)

  • GBP/USD: 1.2000 (GBP780M), 1.1800 (GBP441.4M), 1.0774 (GBP417.7M)

  • USD/MXN: 18.20 ($376M), 18.55 ($346.6M)

  • USD/KRW: 1325.00 ($761.7M), 1310.00 ($429.3M)

  • EUR/GBP: 0.9050 (EU431.9M)

  • Option risk reversal contracts increased their implied volatility premiums for USD calls versus EUR, GBP and AUD, while USD/JPY risk reversals increased their JPY call/USD put premium to flag the most vulnerable FX directions.(RTRS)

Overnight News of Note

  • Asia Stocks Gain On Bank Rescue And Bond Yields Climb

  • First Republic Secures $30 Billion Rescue From Large Banks

  • S&P Affirms US 'AA+/A-1+' Sovereign Ratings; Outlook Remains Stable

  • Banks Borrow $164.8 Billion From Fed In Rush To Backstop Liquidity

  • Goldman Sachs Lowers ECB May Rate Hike Estimate To 25 Bps

  • Westpac Sees RBA Pausing Rate Hikes In April, Lower Peak

  • China Does U-Turn On Bond Feeds After Sudden Halt Roiled Market

  • Relief Rally On Banks Rescue Lifts Riskier Currencies; Dollar Slips

  • Oil Set For Worst Week This Year As Traders Watch For OPEC+ Move

  • FedEx Raises Fiscal 2023 Earnings Forecast, Shares Soar

  • First Republic Secures $30 Billion Rescue From Large Banks

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

Technical & Trade Views

SP500 Bias: Intraday Bullish Above Bearish Below 3935

  • Primary support is 3800

  • Primary objective is 4000

  • Below 3840 opens 3790

  • 20 Day VWAP bearish, 5 Day VWAP bullish

EURUSD Bias: Intraday Bullish Above Bearish below 1.0650

  • Primary resistance is 1.0805

  • Primary objective is 1.0430

  • Above 1.0805 opens 1.0925

  • 20 Day VWAP bearish, 5 Day VWAP bearish

GBPUSD Bias: Intraday Bullish Above Bearish below 1.21

  • Primary resistance  is 1.2265

  • Primary objective 1.1785

  • Above 1.2265 opens 1.2337

  • 20 Day VWAP bullish, 5 Day VWAP bullish

USDJPY Bias: Intraday Bullish above Bearish Below 133.50

  • Primary resistance  is 135.50

  • Primary objective is 130.00

  • Above 136 opens 137.90

  • 20 Day VWAP bearish, 5 Day VWAP bearish

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

BTCUSD Intraday Bias: Bullish Above Bearish below 25000

  • Primary support 23000

  • Primary objective is 26750

  • Below 23000 opens 22400

  • 20 Day VWAP bullish, 5 Day VWAP bullish