FOREX
The US dollar hedged up in relation to other major currencies during early Monday trading. The greenback regained some traction on the markets following the multi-week low touched last Thursday, when the Fed announced a 25 basis points rate hike, using a tone that was dovish compared with the one used until the collapse of SVB. This change in stance has been motivated by the crisis in the banking sector and fears that it could spread to the wider financial system. This shift saw investors adjusting expectations to accommodate a rate hiking pause in May, when the FOMC next meets, and even a cut in the summer, generating a dynamic that saw the dollar dropping 3.8% in relation to the years’ maximum. This Monday is seeing the return of some optimism that the crisis in the banking system can be contained, a development that is offering some support to the greenback.
EUROPEAN SHARES
European shares rose on Monday, alongside US futures, as the lack of any negative macro development over the weekend contributed to easing worries many investors have had over the last week.
However, markets remain volatile everywhere on the old continent, with the risk-off trading stance still alive, as highlighted by lower bonds and a higher EUR currency. Investor are bracing for another intense week ahead with a busy agenda on the macro front including speeches from several Fed officials, the crucial US CPI print, rising geopolitical tensions with Russia while a close attention is likely to be maintained towards the financial sector. We however expect market sentiment to strengthen this week, as efforts by central banks to ensure market stability through monetary support should start lifting risk appetite in the short to mid-term. All benchmarks traded higher this morning, with top movers found among healthcare, industrials and financial stocks. The DAX-40 index trades well above the 15,000.0 pts mark at 15,080.0pts, with the first resistances located towards 15,130.0pts and 15,230.0pts by extension.
