USD

There has been a calmer and more positive backdrop to markets over the past 24 hours, with bank stocks probing higher. Helping to underpin the move have been strong rumors that Joe Biden, his administration, and the FDIC are looking at ways of protecting all deposits for everyone, even if only temporarily, a move which could go some way to help put a line under the recent bank crisis. Janet Yellen also confirmed that the US will intervene if needed on banks, further helping to calm jittery investor sentiment. First Republic’s share price continues to shift, bouncing by around 25% on the latest headlines today. Today also sees the beginning of the two-day FOMC meeting, with a 25bps rate hike the most ‘likely’ outcome as we stand. As for the dollar, the broad dollar index (DXY) continues to drive lower, albeit at a fairly measured pace.

EUR

The fallout from the UBS takeover of Credit Suisse continues to reverberate around markets, with bondholders still assessing their next move after the decision to grant them nothing, wiping out roughly $17bn worth of holdings. In comparison, equity holders will likely receive around $3.2bn as part of the takeover. The single currency has increased daily since the ECB’s last meeting, during which the ECB raised rates by 0.5%. EUR/USD rallied by around 0.35% this morning, reflecting a more robust backdrop. The move came despite weakness in the latest German ZEW survey, with both the Current Situation (at -46.5, vs. -45.1) and Economic Sentiment (at 13, vs. 28.) missing estimates. However, markets are still treating key data releases with only a fleeting observation at this moment in time. 

GBP

There was a surprising 0.8% increase in UK house prices over the past month, according to Rightmove. In other news, the latest data has confirmed that UK public sector borrowing increased by more than had been expected during February, with a surge in assistance from the government in relation to their energy support schemes. Public sector net borrowing was at £16.7bn last month, higher than the £11.4bn forecast. However, the data is still on track to come in under the official estimates for the fiscal year. The pound continues to drive higher, with GBP/USD up by another 0.5% so far this week. 

JPY

The broad positive risk environment has helped to take some of the shine away from the recent Yen gains, helping to underpin the rally in USD and EUR/JPY. USD/JPY is up a cool 0.75% so far today, with EUR/JPY marking an even stronger rally and gaining by around 1.2%. 

CAD

On paper, it should be a big day for Canadian data, with the latest inflation report due later this morning. The latest estimates predict a decline in key ‘core’ inflation from 5% to around 4.6% on a yearly basis through February. However, the impact on the Loonie will likely be marginal unless the data deviates strongly from the expected outcome. USD/CAD has now moved around 1% lower from Friday’s five-month high, driven as much by broader greenback weakness as anything. 

MXN

The Peso is once again attempting to claw back some of the recent losses against the dollar, with USD/MXN slipping by around 0.7% on the session so far, which follows on from the slight decline overall for the pair yesterday, even if the overall range implies an altogether busier day yesterday, despite a thinner market due to the Mexican national holiday. 

BRL

USD/BRL dropped over 0.5% through yesterday, aided by the broader positive risk sentiment. Still, the pair remains almost precisely where it was this time last week, despite heightened volatility and some big intra-day swings. In other news, Brazil’s finance ministry has cut this year’s GDP forecast from 2.1% in November to 1.61%, given higher interest rates, which currently stand at an eyewatering 13.75%.