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Mon, Apr 15, 2024

US to Release GDP Data Amid Banking Crisis
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GBPUSD is moving in the Rising wedge pattern and the market has rebounded from the higher low area of the pattern.

The US is all set to release their GDP data and economists believe that the numbers are going to be lower than expected considering the Feds rate hike situation and the ongoing banking crisis impacting the nation. Here is all you need to know about it:

US Banking Crisis

There have been several reports in the media about emergency meetings, central banks providing lending lifelines, and falling bank share prices. Credit Suisse is being bought up by UBS. Both are enormous financial institutions based in Switzerland, but their investment banking divisions are active around the globe. Silicon Valley Bank and Signature Bank, two banks in the United States that catered mostly to the technology industry, had both failed by the beginning of this month. Although these are the most significant bank failures that have occurred in the United States since 2008, none of them comes close to the scale of Credit Suisse.

XAUUSD H1 TF analysis Market is moving in the Symmetrical triangle pattern and the market has rebounded from the bottom area of the pattern

XAUUSD is moving in the Symmetrical triangle pattern and the market has rebounded from the bottom area of the pattern.

Even though no other banks have failed, the central banks have become concerned enough to announce new steps that will make more cash accessible in order to guarantee that normal financial activities will continue. The Bank of England acknowledged that it had been paying close attention to the marathon meeting that took place over the weekend to decide what would happen to Credit Suisse, but it stated that there was no reason to be concerned about a knock-on effect on UK banks.

USDJPY H1 TF analysis Market has broken the Descending channel in upside.

USDJPY has broken the Descending channel in upside.

Both UBS and Credit Suisse have operations in London, managing money for wealthy clients and providing advice on mergers and investments. It is possible that some job losses will occur in areas where the two banks’ respective lines of business overlap. Yet there is no reason to anticipate any more direct impact on UK banks, either from the failure of Credit Suisse or the failure of the smaller American bankers. Both of these events occurred in the United States.

Swiss Franc makes higher as the Swiss economic zone posted moderate domestic data readings

Credit Suisse had its own unique set of issues, such as failures in risk management that dated back years, involvement in scandals that included instances of money laundering, and a significant loss that was recorded just the year before. In spite of the fact that the Swiss National Bank had provided it with a $50 billion emergency lifeline, it suddenly found itself in a downward spiral last week, and its customers began moving their money to other banks. Even if there isn’t a complete collapse in trust like the one that occurred during the financial crisis, we may still see regulators making the regulations even stricter and banks reducing the amount of money they are ready to lend. Both of these trends are likely.

US-China Tensions

Relations between the U.S. and China are on a dangerous path, with little trust on either side. The United States and China have been engaged in a growing number of contentious issues over the past several years, ranging from competition in the technology sector to allegations of espionage. Things came to a head again not long ago when the United States shot down what was believed to be a Chinese surveillance balloon. Because of this, Secretary of State Antony Blinken had to call off his trip to Beijing over the incident that occurred a month ago.

EURUSD H4 TF analysis Market has broken the Descending triangle pattern in Upside

EURUSD has broken the Descending triangle pattern in Upside.

Washington was particularly concerned that China’s considering offering military help to Moscow in its fight against Ukraine. Problems over Taiwan have also aroused China’s fury, with Beijing regularly emphasizing that Taiwan is the first red line that must not be crossed. The CEO of the social media app Tik Tok, which is owned by China, was called to appear in front of legislators in the United States last week. These senators were interested in finding out whether or not data from the United States may end up in the hands of the Chinese government.

US-China Tensions

There is potential for tensions to flare up again when Taiwan’s office of the president stated last week that Tsai Ing-wen is slated to transit via New York and Los Angeles at the end of March on her journey to Guatemala and Belize. The office was unable to provide specifics regarding her itinerary while she was in the United States. On Taiwan, China has repeatedly said the issue is an internal affair. Beijing asserts that the island should not have the authority to conduct its own foreign policy since the island should be considered part of China’s territory and should be subject to Beijing’s jurisdiction.

Feds Rate Hike

On Wednesday, the Federal Reserve raised interest rates by a quarter of a percentage point, signaling that further rate increases are drawing to a close and expressing concern about the recent crisis in the banking industry. Along with its ninth rise in rates since March 2022, the Federal Open Market Committee, which is responsible for determining rates, stated that future increases are not certain and will primarily rely on incoming data.

AUDUSD H1 TF analysis Market is moving in an Ascending channel and the market has rebounded from the higher low area of the channel

AUDUSD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel.

The statements that Federal Reserve Chair Jerome Powell made during a press conference were taken to suggest that the central bank may be getting close to the conclusion of its cycle of rate-hiking. Still, he tempered that statement by saying that the fight against inflation isn’t done yet. Additionally, Powell admitted that the recent events in the banking system were likely to result in tighter credit conditions and that this was likely the reason why the central bank’s tone had softened. The credit conditions are expected to tighten as a result of the recent events in the banking system.

During the news conference, Chairman Powell stated that the Federal Open Market Committee (FOMC) debated pausing rate hikes in light of the ongoing banking crisis; however, the FOMC ultimately decided to raise rates due to the strong labor market and intermediate data on inflation. This decision was approved by a unanimous vote.

Federal Reserve raised interest rates

According to the data that was presented alongside the announcement, seven of the 18 members of the Fed believe that interest rates will rise over the terminal rate of 5.1%. Powell had hinted earlier in the month that the Federal Reserve may have to adopt a more aggressive course in order to get inflation under control. Yet, a financial crisis that was unfolding rapidly rendered any thought of a more hawkish move impossible. This led to the widespread belief among market participants that the Federal Reserve would reduce interest rates before the end of the year.


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