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FDIC and Fed Step in Amidst SVB Collapse

calendar 13/03/2023 - 18:36 UTC

While the U.S. dollar continued to devaluate against other major currencies, among emerging markets the sentiment was somewhat mixed. The USD/ZAR rate indeed turned lower and touched the low from last week, however other pairs like the USD/MXN and USD/INR essentially traded side-ways against a weakened dollar.

Cryptos started to recover during the weekend after reaching a low on Friday when Bitcoin traded at times in the $19k range and Ethereum dipped below $1,400. Over the past 24 hours both coins traded up by around nine per cent and the total crypto market cap recovered well above the one trillion dollar mark. Some stablecoins also managed to recover closer to par-value. In particular the USD Coin (USDC) traded by Monday morning in the $0.98-range after dipping earlier to levels even below $0.90 over concerns what implications the collapse of SVB might have.

Non-farm payrolls (NFP) published on Friday were at 311 thousand jobs added not as good as in the previous month, though still clearly better compared to expectations. Average hourly earnings however also grew slower than in the previous month at 0.2% on a monthly basis compared to expectations of a steady 0.3% growth.

While major U.S. stock market indices like the US Tech 100 and US 500 were trading by Monday morning up by around one per cent, the sentiment in other regions was quite different. Chinese markets like the China A50 and Hong Kong 50 also traded higher, though after the steep losses during the last week, the upside move seemed to be rather insignificant. European markets on the other hand like Germany 40 and Europe 50 were under pressure and the India 50 USD index declined by more than one per cent to a new low since October.


The EUR/USD rate continues to head higher just as the dollar is seen devaluating, especially after the Federal Reserve stepped in to rescue the defunct Silicon Valley Bank (SVB). At a level above 1.07-the EUR/USD rate reached a new three weeks high.

The performance of the euro itself against other major currencies however was somewhat mixed with rates like the EUR/AUD, EUR/NZD and EUR/CAD coming down from their recent record, while others like the EUR/CHF and EUR/GBP stabilised following the downside move during the previous week.

Potentially important fundamental data releases can be expected in the second half of the week when for example France publishes its consumer price index (CPI) statistic on Wednesday, followed by Italy on Thursday.



After recovering the losses from earlier last week, gold prices continued heading higher and were by Monday morning at times trading close to the $1,900-level, a new five-weeks high. The market could be attributed at least in part to the actions by the Federal Reserve, which was under pressure to act in the collapse of the Silicon Valley Bank. The support for depositors of the bank announced also spurred speculations that the tightening cycle might after all not continue for that long and yields collapsed at a fast pace with the ten year U.S. T-Note benchmark yield dropping below 3.7%. The dollar also significantly weakened. As a result for example the Gold (EUR) CFD was by Monday morning even turning lower, though still significant gains compared to a week ago remained given the strongly bullish move on Friday.

Other precious metals were also traded at higher prices with silver recovering towards the upper 20.8-range after trading last week at times even below $20.



Oil prices started to recover on Friday after reaching intraday a new two weeks low as a barrel of WTI crude oil was traded at times below $75. On a weekly basis oil prices still closed deep in the red, undoing practically all the progress made during the previous week. However, after the weekend break oil prices also turned higher in line with the generally bullish market sentiment.

The U.S. Baker Hughes Oil Rig Count further declined according to the data release on Friday, with now only 590 oil rigs reported in operation, which is once again a new low since the autumn of last year.

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.


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Bad news apparently turned once again into good news for equities as indices rallied after the weekend break following the collapse of the Silicon Valley Bank (SVB). On Sunday it was reported that the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) are planning to make sure that all depositors at the bank are made whole, not just those covered by the mandatory $250,000 insurance limit. Previously it was reported that a lot of especially start up companies were affected by the collapse of SVB. It was reported that companies including Roku, Etsy, BlockFi and Roblox operate accounts at the SVB and could have been adversely impacted by the collapse of the bank.

DocuSign (-22.94%) was one of the worst-performing stocks on Friday, after the stock price realised the losses from the previous late session when the company released its quarterly results. The earnings in themselves were fairly positive with net income turning positive to the tune of $0.02 per share and adjusted earnings per share rising to $0.65, while revenue rose by 17% compared to the same quarter a year ago. However, the company also announced that the CFO of the company is stepping down, which was explained as a “planned departure” and not a result of any disagreement.

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The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.

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