A QUIET UPBEAT WEEKLY START, DXY NOT BENEFITING FROM YIELDS

After a quiet beginning of the week, market participants will continue to evaluate the consequences for the economy of the banking crisis. Key economic reports due on Asian hours include Australian Retail Sales, ahead of Wednesday’s CPI and next week’s RBA meeting. 

Markets showed some relief on Monday following the latest banking news, which led to a rebound in bank stocks. The Dow Jones gained 194 points or 0.60%, while the Nasdaq dropped by 0.46%. The VIX continued to trend lower, and Crude Oil jumped by more than 5%. Deutsche shares rebounded and First Citizens Bancshares agreed to buy parts of Silicon Valley Bank (SVB).

The DXY lost ground on Monday and dropped below 103.00 even as US yields rose (the curve remains inverted). The US 10-year Treasury bond yield rose toward 3.55% while the 2-year rate climbed back above 4.00%. The Japanese Yen was among the worst performers hit by the improvement in market sentiment and higher yields in Europe and the US. USD/JPY rose more than a hundred pips, climbing above 131.50. 

EUR/USD is moving with a bullish bias, advancing at a slow pace toward 1.0800. Still, more consolidation seems likely ahead of key inflation data from the Eurozone on Thursday (Preliminary March Consumer Price Index) and from the US on Friday (February Core Personal Consumption Expenditure). 

GBP/USD rose modestly on the back of a weaker US Dollar, approaching 1.2300. USD/CHF dropped from near 0.9200 to 0.9155. 

AUD/USD is moving sideways in a small range near 0.6650. On Tuesday, Australia will report Retail Sales. NZD/USD oscillated under 0.6200, with the Kiwi underperforming. 

The Loonie was the best among commodity currencies. USD/CAD lost more than 50 pips and posted the lowest daily close in three weeks, holding above the critical 1.3645/50 support area. The Federal Budget will be released on Tuesday.

Emerging market currencies were mixed. The Colombian Peso and the Chilean Peso outperformed on Monday. On the contrary, the South African Rand fell across the board, losing 0.85% versus the US Dollar. 

Gold fell more than $20 and settled around $1,950/oz. Bitcoin dropped more than 3%.