Fed Faces Dilemma, Hit Pause or Keep Raising Rates?

One of the most important Fed decisions in recent history lies ahead on Wednesday. Markets think the banking episode could prevent the Fed from raising rates and are pricing in rate cuts by the summer. This speculation seems overblown. Banks have already been supported and inflation is still raging. That sets the stage for a rate increase and elevated rate projections, which could revive the dollar.

Bitcoin Cools Down ahead of Fed

Bitcoin selling intensifies as it touches the $28K level. The leading cryptocurrency has lost 2.2% over the past 24 hours, but this is a minor pullback after a more than 40% gain since 10 March. This pause will allow Bitcoin to “cool down” and create opportunities for another leg up. Nevertheless, the risks of a deeper correction remain elevated, with the first significant line of defence likely to be the $26K (76.4% of the last rally) and the second at $25K (61.8% of the rally).

Euro Extends Rally, Market Turmoil Eases

The euro has put together a 3-day rally and is up again on Tuesday. In the European session, EUR/USD is trading quietly at 1.0756, up 0.30%.

USD/CHF – Swiss Franc Climbs Higher, SNB Meeting Eyed

The Swiss franc is showing some strength on Tuesday. In the European session, USD/CHF is trading at 0.9238, down 0.58%.

Canada: Inflation Cools Further in February 

Inflation in Canada continues to cool from it's peak pace last year. However, with the core measures just below 5% y/y, they still have a way to go before they are comfortably within the Bank of Canada's target 1-3% range. As outlined in our recent forecast, we expect that to be achieved in the second half of the year.

UK Labour Market Remains Strong

Unemployment claims in the UK fell by 11.2k in February, against analysts’ average forecast of a rise of 12.5K. Jobless claims have fallen by nearly 50K over the past three months after a sustained period of stabilisation, a sure sign that the economy is firmer than previously thought. Unemployment remained at 3.7% in the three […]

ECB Meeting: Is a 50bps Hike Still a Done Deal?

Following the sudden collapse of the Silicon Valley Bank (SVB) in the US, investors have become increasingly concerned about the health of the banking system as borrowing costs continue to rise. While they have dramatically scaled back their bets with regards to the Fed’s future course of action, they are also doubting whether the ECB […]

US: Inflation Shows Greater Staying Power in February 

The Consumer Price Index increased 0.4% month-on-month (m/m) in February, in line with the consensus forecast. The 12-month change continued to edge lower, falling to 6.0% (down from 6.4% the month prior). Energy prices fell 0.6% m/m, as energy services (-1.7% m/m) were lower on the month – largely due to a sharp 8.0% m/m […]

US Banks Collapse: FBS Explains

On Friday, March 10, the 16th largest US bank suddenly burst. The bankruptcy became the second largest in history among American commercial banks. In this article, we look at what happened and how it could affect all of us. History of the bank Forty years ago (in 1983), a bank appeared in California. It decided […]

Inflation Pressures Continued to Moderate in the U.S. in February

Headline and “core” ex-food and energy CPI both lower, at 6% and 5.5% Details firmer: price pressures broadened, and Powell’s preferred measure ticked higher Firm inflation print confronts gathering concerns over financial instability as the Fed draws closer to ending the hiking cycle February’s inflation report came slightly above consensus expectations, with headline CPI growth […]