The First Republic deal rallied the markets

Tech stocks rallied strongly as the 11 biggest US banks provided First Republic Bank with deposits of $30 billion to stem the recent bank runs. Institutional buying started after the WSJ reported that JPMorgan Chase, Citigroup, Bank of America, Wells Fargo and several other banks were planning to deposit billions of dollars to save the First Republic Bank. The deal to rescue the bank lender was confirmed by the government just before the close of the New York cash session.

The deal came soon after the SNB had promised tens of billions to support Credit Suisse. Together these rescue packages helped the bank stocks to rally on both sides of the Atlantic and restored investor and depositor confidence in the banking system. Risky assets rallied on a wide front. Today’s key risk events are the releases of UoM preliminary consumer sentiment and preliminary Inflation Expectations. Please note: Next week we’ll have a break with the analysis reports from Monday to Wednesday. The first daily analysis report will come out on Thursday next week.

Higher low in DJ

DJ created a higher reactionary low in the 8h chart yesterday. This together with the strength in Nasdaq improves the chances of the market breaking above the 32 280 – 32 420 range. A decisive rally above the range would probably allow the market to trade to the 32 650 or so. A failure to penetrate the level would probably result in a retracement at first to 32 000 and then possibly to 31 800 or so in extension.

Nasdaq rallied through key resistance levels

NAS rallied strongly through the 12 340 – 12 370 range and the 12 450 level. The market has almost reached the 12 700 we focused on yesterday. The next key resistance levels are at 12 746 and 12 894. Below the current market price, the nearest key daily level is at 12 338.

Gold trades near to a resistance area

Gold is trending higher with the nearest key support at 1913. If the level isn’t violated it’s likely the market will trade to 1940 or so. Please note though that the market is approaching a resistance area. In this context (with a recent minor market top nearby) it makes sense to keep target levels close and keep an eye on how the yields and USDJPY move. Strength in yields tends to lead to strength in the USDJPY pair and softer bids in XAUUSD. Below 1913, the market probably trades to 1908 or so.

USDJPY is trending lower but trades near to support

USDJPY is trending lower in the 4h chart but the market is relatively near to a key support level (131.11). The downtrend is in force below 133.82. If the level is penetrated decisively the market probably moves to 134.60 or so.

The Next Main Risk Events

• USD Prelim UoM Consumer Sentiment
• USD Prelim UoM Inflation Expectations
• AUD Monetary Policy Meeting Minutes
• EUR German ZEW Economic Sentiment
• CAD CPI m/m
• CAD Median CPI y/y
• CAD Trimmed CPI y/y
• CAD Common CPI y/y
• EUR ECB President Lagarde Speaks
• USD Existing Home Sales
• GBP CPI y/y
• EUR ECB President Lagarde Speaks
• USD FOMC Economic Projections
• USD FOMC Statement
• USD Federal Funds Rate
• USD FOMC Press Conference
• CHF SNB Monetary Policy Assessment
• CHF SNB Policy Rate
• CHF SNB Press Conference
• GBP MPC Official Bank Rate Votes
• GBP Monetary Policy Summary
• GBP Official Bank Rate

For more information and details see the TIOmarkets economic calendar.  

Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets

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