NAGA’s Weekly Recap | March 6 — March 10 — 2023

Dear Trader 👋🏼

The announcement from the Federal Reserve has sent shockwaves throughout the market, leaving investors on edge as they try to determine what this means for their investments.

Furthermore, the oil industry has also been affected, with oil prices experiencing a significant sell-off due to concerns about economic growth and oil demand.

So all eyes are now on the market as investors brace for what's to come 👀

Want more? Join us as we explore the latest market insights 🚀

US Dollar surges and Stocks tumble on the Fed's hawkish tone

The Federal Reserve rattles the market advising interest rates will go further than expected for longer than expected. The Chairmen of the Federal Reserve confirmed that the Federal Open Market Committee is indeed considering accelerating interest rate hikes. Most economists are now leaning towards a minimum 50 basis point hike.

Markets have expected the Fed to increase the terminal rate, and in response, the Dollar has increased over the past 4-weeks. But how will stocks and the US currency behave going forward? Especially after Friday’s NFP release? Read more in our analysis.

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Trading involves significant risk of loss.

Shares of major US banks plummeted amid the SVB scandal

The S&P 500 bank index tumbled nearly 6% in its biggest one-day drop in over two years as investors fled the industry following SVB Financial Group's share sale announcement and crypto bank Silvergate's decision to wind down operations.

Specifically, major US banks were hit, with JPMorgan and Bank of America both down more than 5%. At the same time, shares of SVB, whose operating segments include Silicon Valley Bank, slumped over 50% in their deepest one-day drop on record.

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Oil extends losses as rate hike concerns spur sell-off

Oil prices fell as fears that more aggressive US interest rate hikes would pressure economic growth and oil demand outweighed a larger-than-expected draw in US crude stocks.

“Oil prices are still seeing downward pressure due to the hawkish comments coming out of the Fed indicating higher interest rates for a longer period,” said Andrew Lipow, president of consultants Lipow Oil Associates.

A stronger dollar also capped oil prices. Powell’s comments had propelled the US Dollar, which typically trades inversely with oil, to hit a three-month high against a basket of currencies.

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EUR/USD bulls attacks

A larger-than-expected rise in the US Weekly Jobless Claims was seen as the first sign of a softening labour market and forced investors to reassess the possibility of a  50 bps lift-off at the upcoming FOMC meeting on March 21-22. This leads to a sharp downfall in the US Treasury bond yields and is seen weighing on the Greenback.

So this week's rebound from the vicinity of the 100-day Simple Moving Average (SMA) and the subsequent strength favours bullish traders. That said, any further positive move is likely to confront resistance near the 1.0665-1.0675 horizontal zone.

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This concludes our weekly recap. Have a great weekend, and see you next week! 👋