Hey Valutraders! Did you see the huge drop in USD?
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I’m Brad Alexander and in this week’s Market Blast Fundamentals let’s take a look at the S&P 500 (US500), Gold (XAUUSD), EURUSD, CHFJPY, USDCHF, and USDJPY.
Every once in a while, an event happens that completely upends the markets.
The collapse of the Silicon Valley Bank has done just that for two reasons.
Firstly, the idea that more banks may fail has driven investors to safe havens like JPY and we see the results.
We can also see the renewed strength in CHF which is also a traditional safe haven with USDCHF falling to 0.916 at this key level of support.
So, if we have 2 traditional safe havens it is not unusual for traders to see which one is winning.
Therefore, if we look at CHFJPY, we see the Swiss Franc clearly ahead since the middle of January.
Secondly, the collapse of SVB and other banking issues has had the US Federal Reserve rethinking the next rise in Interest Rates, thereby making USD weaker.
You know where I am going with this!
Gold is now higher, both as a safe haven and as a reaction to the weaker USD.
EURUSD is behaving like all USD pairs but be aware that we have some very important economic news this week as we expect the ECB to raise Interest Rates by 0.5%.
Expect volatility.
Looking at the US Indices, it seems that some investors were less worried about the collapse of a bank or two, and more impressed by the concept of lower interest rates.
All US Indices are higher today on a “Risk-on” mood.
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