Market Mood Improves As Banking Fears Ease

European markets flashed green on Tuesday along with Asian equities as fears over a looming banking crisis eased.

AUD/USD – Aussie Rises as Risk Appetite Improves, CPI Next

The Australian dollar is trading at 0.6672 in Europe, up 0.39%. Australian retail sales posted a weak gain of 0.2% and the quarterly CPI release is next. The banking crisis has eased a bit and risk currencies like the Aussie are in positive territory today.

Gold's Step Back Before Breaking $2000

Gold stormed $2000 twice last week, but both attempts failed to consolidate above this significant round level. The double correction since the previous week clears the way to the upside but does not signal that gold is in trouble.

Sunset Market Commentary

Markets today initially continued building on yesterday’s positive momentum as stress in the banking sector/financial stability subsided further. Trading was mainly sentiment/order driven with again hardly any data with market moving potential scheduled for release.

Will PCE Inflation Numbers Add Credence to Fed Pivot Bets?

Following last week’s FOMC decision, market participants are assigning a decent chance for the Committee to take the sidelines at its upcoming gathering. More importantly, they anticipate a series of rate reductions for the remainder of the year, despite the new dot plot and Fed Chair Powell indicating otherwise. Now, dollar traders may closely watch upcoming economic numbers, especially the PCE inflation figures due out on Friday as they are the Fed’s favorite inflation gauge.

Australia February Monthly CPI Indicator

The Monthly CPI Indicator rose 6.8% in the year to February compared to Westpac’s 7.4%yr forecast and the market’s 7.2%yr. This represents a meaningful downside risk to our March CPI forecast of 1.5%qtr.

US Consumer Confidence Surprising Positively

Yesterday's release of the Conference Board's consumer confidence index revealed a surprise rise in the main index from 103.4 to 104.2. Following recent market jitters and renewed focus on the risk of a US recession consumer confidence was widely expected to drop considerably.

Inflation in Australia Slows More than Expected

Inflation in Australia fell more than expected in February, from 7.4% to 6.8%, versus 7.1% expected by analysts. The AUDUSD fell on the back of a broadly stronger US dollar and a softer-than-expected CPI read that fueled dovish Reserve Bank of Australia (RBA) expectations.

Markets Didn't Respond to the Numbers

The interesting part of the consumer confidence was that the survey date was March 20, in the midst of the regional banking crisis. The stronger number suggests that the strong labour market trumps any worries about potential consequences of the collapse of SVB and some others.

Cryptocurrencies Dispel Fears

After spending most of Tuesday below $27.0K, bitcoin began to gain strength towards the end of the day, trading at $27.5K on Wednesday morning, up 2.3%. Total crypto market capitalisation rose 3% to $1.16 trillion, driven by general demands for risky assets following optimism around Alibaba and continued confidence in an imminent Federal Reserve rate cut.