In the midst of a turbulent week for financial markets, it is reassuring to witness the swift and collaborative efforts of regulators and major financial institutions working together to stabilize the situation. The magnitude of these measures, which include full deposit guarantees at strained US banks, a new Federal Reserve facility to counteract deposit flight and forced liquidation of impaired securities portfolios. Heightened margin requirements when borrowing from the Fed’s discount window, and liquidity support to institutions such as US banks and Credit Suisse, demonstrates the commitment of these entities to ensuring financial stability for both large and small institutions.
While it is important to acknowledge that some of these interventions may lead to challenging moral hazard issues and adverse incentives in the long run, the immediate necessity of restoring calm and confidence to the market cannot be underestimated. As we continue to find our footing in these uncertain times, it is crucial that we acknowledge and appreciate the formidable efforts of regulators and financial institutions in working collectively to safeguard our financial stability.
Projections in fx markets for the week
EURUSD is holding buyers above 1,0650 and it is expected to continue its buy pressure next week. Above 1,0660 we expect the 1,08 levels and possibly extended to 1,0850. Price action will measure the FED rates decisions between Tuesday and Wednesday. Market will speculate that FED’s decision will not be well received and markets will take profits on dolar based crosses giving more opportunity for other majors.
GBPUSD is holding buyers above 1,2170 and will continue its pressure to 1,22 levels to test. Above 1,22 our preference is for buyers to 1,2220 and 1,2230 levels. By Wednesday if markets are holding above 1,22 we prefer to keep a buy strategy and bet on negative impact with rates on Wednesday for the dollar. Between 1,2220 and 1,2230 market is testing highs but it can also hold buy pressure to 1,2250 and 1,2260. It will depend on activity of Monday and Tuesday.
USDCAD it is losing buy power below 1,38. Our preference is for sellers below 1,3750 and 1,3730 to 1,37 levels. Below 1,37 sellers are expected down to 1,3650 and 1,36. Don´t forget inflation of Canada on Tuesday and it may help to work on sell pressure at this major.
XAUUSD is holding long here. Next level is 2000.0 and 2005.0. If the FED changes the forecast to higher rate hikes we can expect the market to take profits out of gold and move to the dollar again.
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