Thursday Briefing: From DXY, Gold to Latest FX Headlines; March 23, 2023

US Dollar Index Overview

  • DXY spiked down after U.S. FOMC Interest Rate Decision and slips back below 103.00 mark.
  • It made intraday high at 102.44 and low at 101.91 mark.
  • A day Chart and H1 chart with triple EMA suggest down trend for the time being.
  • Immediate hurdles are seen at 102.71 to 102.06 mark.
  • A sustained close of either side on H1 chart requires for the further directions of the U.S. dollar.

Technical Analysis: XAU/USD (Gold)

  • Gold strengthened sharply as U.S. raised key interest rate to 5.00 pct as per the expectations and remains well supported above $1,970 mark.
  • The pair made intraday high at $1,983 and Low at $1,966 mark.
  • A day chart and H1 chart with triple EMA suggest up trend for the time being.
  • A sustained close above $1,978 on H1 chart requires for the upside rally.
  • Alternatively, a consistent close below $1,968 on H1 chart will test further supports.

Key Headlines for the FX market:

  • Federal Reserve Chair Jerome Powell said banking industry stress could trigger a credit crunch with “significant” implications for an economy that US central bank officials projected will slow even more this year than previously thought. The Fed’s policy-setting committee raised interest rates by another quarter of a percentage point.
  • The Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point, but indicated it was on the verge of pausing further increases in borrowing costs after the recent collapse of two U.S. banks.
  • The end of the Federal Reserve’s bruising rate hiking cycle may be in sight, yet investors are finding plenty to worry about when it comes to the US stock market.
  • The Swiss National Bank raised its benchmark interest rate by 50 basis points and declared that measures to support Credit Suisse had “put a halt to the crisis”. The fall of Credit Suisse has dealt a serious blow to Switzerland’s credentials as the world’s leading wealth management centre, experts warn.
  • U.K. raised key interest rate to 4.25 pct vs 4.00 pct previous release.
  • U.S. unemployment Claims weekly stands at 191K vs 192K previous release (Expected 198K).
  • New York kept the top spot in the latest rankings of global financial centers from Z/Yen Group, with London and Singapore also unchanged in second and third place.
  • Banking shares dropped in Europe on Thursday as the instability that rippled through the global banking system this month is prompting investors to adjust to more challenging economic and lending conditions ahead.
  • Futures for Canada’s main stock index were slightly up on Thursday as bullion advanced but lower crude oil prices kept a lid on gains for the commodity-heavy bourse.
  • Bank of America and UBS trimmed their terminal rate expectations on Thursday after the U.S. Federal Reserve hinted that it might pause its rate-hike campaign due to the turmoil in the banking sector.
  • Cryptocurrency bankruptcies and worries over electric power consumption have failed to dent the industry’s growth in Texas, according to a top trade group, citing the rise in the miners’ power demands.
  • Ukrainian troops, on the defensive for four months, will launch a long-awaited counter-assault “very soon” now that Russia’s huge winter offensive is losing steam without taking Bakhmut, Ukraine’s top ground forces commander said.
  • A court in India found opposition leader Rahul Gandhi guilty of defamation for a speech he made in 2019 in which he referred to thieves as having the surname Modi, and sentenced him to two years in prison.
  • China’s military said it had monitored and driven away a US destroyer that illegally entered waters around the Paracel Islands in the South China Sea. The US Navy disputed the Chinese military statement, saying the destroyer is conducting “routine operations” and was not expelled.
  • Australia took a step towards a historical referendum to give Aboriginal and Torres Strait Islanders recognition in the constitution and, for the first time, a voice on matters that affect their lives. In an emotional address, Prime Minister Anthony Albanese revealed the question the government wants to set for the vote later this year.

Source: Reuters

Keep an eye open for the latest news and fundamentals affecting the FX markets.

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