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22.03.2023 Market Report


EUR/USD is consolidating recent gains below 1.0800 in the early European morning. The pair capitalizes on a subdued US Dollar on a less hawkish Fed outlook. The upside in EUR/USD, however, appears elusive, as traders stay cautious ahead of Lagarde’s speech and the Fed verdict. 


GBP/USD is holding higher ground above 1.2200 in early Europe. The US Dollar is licking its wounds amid a better market mood heading into the Fed policy decision. In the meantime, the pair looks forward to the UK inflation data for fresh hints on the BoE rate hike path. 


USD/JPY hovers around the 132.50 level amid softer US Treasury (UST) bond yields and calmer US futures. On Tuesday, US Treasury Secretary Janet Yellen addressed a group of bankers, suggesting that the federal deposit guarantee could be extended to all small banks in the US. These suggestions come after the Federal Reserve (Fed) made synchronized efforts to inject liquidity into the US market through swap lines and discount windows. Such actions have been reflected in the Fed’s balance sheet as a spike occurred amid ongoing quantitative tightening. These actions have eased some banking concerns, resulting in a risk-on environment on Tuesday.


AUD/USD renews its intraday high near 0.6700, paring the first daily loss in four marked the previous day, as traders brace for the all-important Federal Open Market Committee (FOMC) monetary policy meeting during early Wednesday.


The NZD/USD pair is demonstrating a solid recovery from 0.6170 in the Asian session. The kiwi asset remained weak on Tuesday as fears of poor growth in New Zealand refreshed.


The USD/CAD pair is showing a corrective move after failing to extend its recovery above 1.3740 in the Asian session. On Monday, the Loonie asset showed a solid recovery from 1.3660 after a decline in Canada’s inflation data. Declining Canada’s Consumer Price Index (CPI) data confirmed that the Bank of Canada (BoC) could continue with its unchanged policy stance.


USD/CHF has broken the four-day consolidation range and remains steady, just above the 0.9200 key psychological mark. The broad-based US Dollar weakness emerged after a positive risk appetite spurred by US authorities intervening to rescue the US banking system. US Treasury Secretary, Janet Yellen, expressed willingness on Tuesday to provide deposit guarantees to all small banks.


Oil prices crept lower in early Asian trade on Wednesday as industry data pointed to another week of rising inventories in the world’s largest crude consumer, while an upcoming Federal Reserve interest rate decision spurred cautious plays.


Gold price is looking to attempt a tepid recovery, as sellers take a breather ahead of the all-important US Federal Reserve policy announcement on Wednesday. Following days of massive volatility in the market, the anxiety before the Federal Reserve decision is keeping investors on the edge.

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