Safe-haven currencies recover from early declines as optimism ebbs on global banking crisis

Safe-haven currencies the yen and U.S. dollar recovered from early steep declines and the risk-sensitive Australian and New Zealand dollars flipped to losses as early optimism ebbed over efforts by global authorities to contain a banking crisis.

Japan's currency, which is particularly sensitive to long-term Treasury yields, rebounded from losses as steep as 0.6% to last be flat against the dollar as the U.S. 10-year yield pared an early decline in Tokyo trading and headed back toward a nearly two-month low.

The Aussie, which at one point had been up by 0.7% to a nearly two-week top of $0.6743, was last 0.2% lower at $0.6683, sliding back below the closely watched $0.67 mark. New Zealand's kiwi was 0.3% lower at $0.6250, giving up an earlier gain of as much as 0.7%.

Over the weekend, the Federal Reserve, European Central Bank, Bank of England, Swiss National Bank, Bank of Canada and Bank of Japan announced joint action to enhance market liquidity. That followed Swiss authorities' negotiation of a buyout of Credit Suisse CSGN by UBS UBSG, but at a huge discount and with a $17 billion debt write down.

A Fed rate decision on Wednesday adds an additional layer of uncertainty. Traders are still of the view that a quarter point rise is likely but are now positioned for a peak in rates in May at around 4.8%, and then 76 basis points of declines until the end of the year. (FEDWATCH)

At least within this week, I expect the yen will stay strong overall. The yen last traded at 131.79 per dollar USDJPY, keeping intact a 2.5% gain from last week. The euro EURUSD was also about flat at $1.0668 and sterling GBPUSD was little changed at $1.21775, both erasing earlier small gains. In cryptocurrencies, bitcoin took a breather after its surge to a nine-month high of $28,474 on Sunday, last trading 1.8% weaker at around $27,552.

Economic calendar for March 20th, 2023: Key events to watch out for

Another week in the financial world, and the economic calendar is loaded with potential market movers. Let's take a closer look at some of the key events scheduled for today, March 20th, 2023.

First up, we have the German PPI (MoM) report. After seeing a decline of 1.0% in the previous month, experts are forecasting a decrease of 0.5% in producer prices for the month of March. This report is critical for the market, as it gives us an indication of the inflation rate in Germany. If the actual number is lower than expected, this could indicate deflation, which could lead to a dip in the stock market.

Next, we have the Trade Balance report for the Eurozone. The forecast is at -12.5B, which is higher than the previous month's report of -8.8B. This could potentially cause a decrease in the value of the euro, as investors might perceive this as a sign of a weak economy in the region.

Moving on, the Brazilian Central Bank is set to release its Focus Market Readout, with the previous number sitting at 13.8. This report is important for the Brazilian real, as it gives investors an idea of the direction of the monetary policy in the country.

Later in the day, we have the Reserve Balances with Federal Reserve Banks report for the United States, with the previous number sitting at 3.004T. This report is important for the US dollar, as it gives us an indication of the liquidity of the financial system.

Lastly, we have the Trade Balance report for New Zealand, with the forecast at -1,450M, compared to the previous report of -1,954M. This report is important for the New Zealand dollar, as it gives us an indication of the country's export and import levels.

Overall, today's economic calendar is jam-packed with market-moving events, and investors will be keeping a close eye on the numbers. Stay tuned, as we could potentially see some significant moves in the financial markets.