Despite regaining some ground in the Asian session, Euro continues to trade as the week's weakest performer alongside Swiss Franc. Today's ECB rate announcement is the primary focus for investors, as uncertainty looms over the extent of the anticipated rate hike. The SNB's efforts to stabilize the markets in response to Credit Suisse's problems may have temporarily curbed negative sentiment, but the potential trigger for a crisis remains unknown. In its February statement, ECB unambiguously signaled its intention to increase rates by 50bps at today's meeting, a message reiterated repeatedly by officials, including President Christine Lagarde. However, following recent market turmoil, investors are now pricing in only a 30% chance of the 50bps hike, with a more modest 25bps increase seeming increasingly plausible. In addition to the rate decision, market participants will be closely monitoring ECB's updated economic projections, adding further complexity to the day's proceedings. Elsewhere in the currency markets, Yen has emerged as the week's strongest performer so far, due to rally resumption yesterday. Surprisingly, commodity currencies such as Australian Dollar, New Zealand Dollar, and Canadian Dollar have also demonstrated resilience, albeit with limited gains. As these currencies are not at the epicenter of the market selloff, their performance has been relatively stable. Meanwhile, Dollar remains mixed as traders grapple with ongoing volatility in both treasury yields and stocks, leaving them hesitant to fully commit to a particular direction. Technically, EUR/CHF has exhibited a robust rebound from 0.9704 (yesterday's low), but that could be attributed more to Swiss Franc's own problems. Despite this recovery, downside risk remains as long as it trades below 55 day EMA (now at 0.9901). The prevailing decline from 1.0095 peak is expected to persist, potentially extending towards the 61.8% retracement level of 0.9407 to 1.0095 at 0.9670. A further decline may even prompt a retest of the 0.9407 low. However, sustained break above the 55-day EMA would invalidate near-term bearishness and could trigger a more substantial rally towards the 1.0095 resistance level. In Asia, at the time of writing, Nikkei is down -0.97%. Hong Kong HSI is down -1.25%. China Shanghai SSE is down -0.49%. Singapore Strait Times is down -0.78%. Japan 10-year JGB yield is down -0.0161 at 0.300. Overnight, DOW dropped -0.87%. S&P 500 dropped -0.70%. NASDAQ rose 0.05%. 10-year yield dropped -0.146 to 3.492, after hitting as low as 3.388. |
