Following the previous week’s highly volatile action, financial markets seem to have started the new week on an upbeat tone with US stock index futures trading in positive territory and Euro Stoxx 50 opening more than 1% higher. IFO will release business sentiment data for Germany and the US economic docket will feature Dallas Fed Manufacturing Business Index. Central bank speak will be watched closely by investors.
Following Friday’s rebound, the US Dollar Index fluctuates in a tight channel slightly above 103.00 early Monday and the 10-year US Treasury bond yield clings to modest gains at around 3.4%. Several Fed policymakers spoke ahead of the weekend but their comments don’t seem to be having a significant impact on rate expectations. According to the CME Group FedWatch Tool, markets are currently pricing in a nearly 70% chance that the FOMC will keep the policy rate unchanged after the next meeting in early May.
Over the weekend, the FDIC issued a statement announcing First Citizens BancShares Inc bought all the loans and deposits of SVB and gave the Federal Deposit Insurance Corp equity rights in its stock worth as much as $500 million in return, as reported by Reuters. This development seems to be helping the risk sentiment improve early Monday.
Despite having closed deep in negative territory on Friday, EUR/USD managed to register gains last week. The pair stays in a consolidation phase below 1.0800 in the European morning. IFO’s Current Assessment Index for Germany is forecast to edge higher to 94.1 from 93.9 in February.
Following Friday’s deep correction, GBP/USD managed to stabilize above 1.2200. At the time of press, the pair was trading modestly higher on the day at around 1.2250. Bank of England Governor Andrew Bailey is scheduled to deliver a speech at 1700 GMT.
USD/JPY benefited from improving market mood at the beginning of the week and climbed above 131.00. Earlier in the day, the data from Japan showed that the Coincident Index improved to 96.4 in January from 96.1 and the Leading Economic Index inched higher to 96.6 from 96.5.
Gold tested $2,000 early Friday but fell sharply after having failed to stabilize above that level. Early Monday, XAU/USD remains under pressure amid recovering US yields and was last seen losing 0.5% on the day slightly below $1,970.
Bitcoin stayed directionless over the weekend but ended up gaining more than 25% on a weekly basis. BTC/USD trades in a narrow range below $28,000 on Monday. Ethereum rose toward $1,800 on Sunday but lost its traction. As of writing, ETH/USD was down more than 1% on the day at $1,750.