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Cryptos, Bonds Rally, European Markets Face Pressure

calendar 14/03/2023 - 09:50 UTC

While the dollar remains in a relatively weak position against other major currencies, against some emerging market currencies the dollar is actually in a position of strength these days. Especially the USD/MXN pair traded higher at a rapid pace with the pair reaching levels above 19.0, meaning that it increased by more than five per cent over the past seven days. Before this move the Mexican peso (MXN) was one of the strongest currencies in 2023.

Besides precious metals and bonds, cryptos also traded clearly bullish following the announcement that the Federal Reserve and FDIC would step in to make deposit holders of collapsing banks like the SVB whole. Bitcoin rapidly recovered back towards the $24k-range and Ethereum traded close to the $1,700-level. While cryptos themselves are not held in banks, the so-called stablecoins are seen as an important pillar of the current crypto financial system and the risk that some of the deposits held by the organisations administrating stablecoins like USDC adversely affected some of them during the previous weekend. By Tuesday morning USDC almost completely recovered back to par-value to the dollar after trading at times even below $0.90 on Saturday.

While U.S. stock market indices like the US 500 and US Tech 100 remained overall fairly steady following the intervention, other regions’ markets like the Germany 40, Europe 50 and Japan 225 Yen were under pressure, falling to new lows since January.

On Tuesday in the U.S. consumer price index (CPI) data for February will be published and in Canada manufacturing sales statistics can be expected.


Despite the serious weakness of the dollar as the Federal Reserve has to step in against collapses in the banking systems which in turn significantly reduced also rate hike expectations, the EUR/USD rate retraced again below the 1.07-threshold as the common European currency was after the greenback the second-worst performing major currency so far during this week with pairs like the EUR/CHF, EUR/JPY and EUR/GBP all heading lower.

On Tuesday Italian industrial production data will be published. This data will also be available for the eurozone the next day. Other data releases on Wednesday will include also the French consumer price index (CPI) and the German wholesale price index and current account balance.



Gold prices rose to a new five-weeks high as gold traded in the spot markets almost $100 higher compared to a week ago, which is a price increase of more than five per cent. A factor could be the intervention of the Federal Reserve in order to save depositors of the defunct Silicon Valley Bank, which also significantly lowered expectations for future rate hikes. The 10-year U.S. T-Note benchmark for example rapidly declined from levels around four per cent just a week ago to a yield of just around 3.5%. Lower yields in turn reduce the opportunity costs of holding non-yielding assets like precious metals.

Other precious metals were also appreciating with platinum surpassing again the $1,000-threshold and silver prices increasing by more than eight per cent over the past week.



After a short period of consolidation by the end of last week, the downside move in oil prices intensified on Monday with the price of a barrel of WTI crude oil at times declining towards the $72-range, and getting support only around the low from the previous month.

A factor in this move could be also concerns about the U.S. banking system, after the SVB and Signature Bank collapse were the biggest bank failures since the financial crisis almost fifteen years ago.

As usual on Tuesday the American Petroleum Institute (API) publishes its Weekly Statistical Bulletin that increase also data on crude oil, gasoline and distillate stockpiles in the U.S. Then on Wednesday the Energy Information Administration (EIA) follows up with a similar dataset in its Weekly Petroleum Status Report.


US 500

Stock market indices were still under pressure with indices like the US 500 again subject to significant intraday volatility. Initially it did look like the intervention of the Federal Reserve to announce that SVB deposit holders will be made whole did help the market, though at the end of the day the index closed almost unchanged compared to market close levels on Friday, despite this intervention and rapidly declining yields and rate hike expectations. The latter stem from concerns about further contagion of the banking crisis and the possibility that the economy could enter a recession.

Bank stocks (US Banks ETF -10.16%) were still under pressure with other banks like First Republic Bank, Zions Bancorporation and others losing well over ten per cent of their value during the session on Monday.

Stemming against the bearish market sentiment, Illumina (+16.97%) rose to a new year-to-date high. This move occurred after activist investor Carl Icahn criticised the acquisition of cancer screening company Grail and intends to nominate three people for Illumina’s board of directors.

US 500

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