Daily Market Analysis

Tepid Start to Trading Week with Banking Woes Still in Focus

March 27, 2023

Looks like we had a slow start to the trading week on the major Asian bourses today. Traders are still trying to figure out what is up with the credit sturdiness of the global banking system. Deutsche Bank gave the market the jitters with sharp price action in its credit default swaps that rang alarm bells. This pressures financial stocks, with traders on the lookout for potential trouble in the financial system. However, despite recent gains in global equities, traders are still putting on a brave front as there is no guarantee we have seen the end of the banking sector woes.

In this week's economic calendar, the US Core PCE data due Friday in the US is the key event risk. The Fed is fighting inflation and trying to restore confidence in the banking system. As a result, investors will be watching the US price pressure like hawks, trying to assess whether the Fed has reached the current rate-hike cycle's peak.

Moving on to currency market flows, the USD is finding buyers on safe-haven flows while the Euro and Sterling are struggling due to concerns about the EU banks' fragility. On the other hand, the AUD is struggling to attract buyers, with risk aversion still prevailing. During Asian trading hours on Monday, the AUDUSD rate was trading around the 0.6650 level and below. As such, traders are watching the upcoming Australian retail sales data on Wednesday for further directional cues for the Aussie Dollar.

In other news, gold has eased from its recent highs, but it's still finding buyers on price dips amid the global banking troubles. However, the solid USD performance is keeping a lid on the gold price upside. Gold futures were last seen trading at US$1976 during Asian trading hours on Monday.

Finally, let's talk about oil. It's struggling to gain traction while the banking sector woes continue to dominate the headlines. In addition, the global growth and demand picture looks uncertain, and WTI futures are having difficulty getting past the US$70 level. They were last seen trading at US$69.25 during the Asian session. So, let's keep an eye on these trends and see where the market takes us!

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