FDIC and Fed Step in Amidst SVB Collapse

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.

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.