Hi, everyone! It’s me, Kate Stikhina. You are watching a recap of the Asian session. Antipodean stocks kicked off the new week at their lowest levels in more than two months. The equity market in Japan also fell sharply, extending losses from the previous session. The financial and technology sectors were the hardest hit.
The money bubble, inflated by global central banks over the past two years, seems to have finally burst, thus dragging the US dollar down. On Friday, US banking regulators took control of Silicon Valley Bank (SVB). Signature Bank was also closed on Sunday by regulators, the second to fail in a week.
The sudden collapse of US tech-heavy lender SVB Financial Group fueled a broad market sell-off at the end of last week. As a result, shares plunged by 60% in trading before being halted. The company took this step to strengthen its balance sheet against the backdrop of losses from the sale of bonds.
In other words, Silicon Valley Bank, which lends primarily to IT startups, has failed to raise additional capital. Silvergate, another bank from Silicon Valley, has also faced a shortage of funds and needs urgent support.
This second-largest US financial conglomerate works with crypto assets and acts as one of the main bridges between cryptocurrencies and fiat money. It seems that the problems of the crypto world after the collapse of the FTX crypto exchange are beginning to affect the banking system. In this situation, investors fear that banks will limit lending sharply.
To stem the panic, the Federal Reserve, Treasury Department, and Federal Deposit Insurance Corporation (FDIC) published a joint statement yesterday in which they said that the Fed would make additional funding available for eligible financial institutions to help banks meet the needs of all their depositors.
Moreover, the Ministry of Finance admitted that other banks in the country faced difficulties along with SVB and Signature Bank. In light of recent events, important data on nonfarm payrolls for February took a back seat.
The report turned out to be quite controversial and caused confusion in markets on Friday. The US Department of Labor said that the employers added 311,000 jobs in February. The figure exceeded forecasts, indicating a robust labor market. The unemployment rate rose unexpectedly to 3.6%, while monthly wage growth slowed.
That is, statistics further complicated the Fed’s decision on interest rates. At the same time, recent data eased fears that labor market tightness would lead to more aggressive steps by the regulator.
However, the situation around American banks has ruined all plans. According to the FedWatch Tool, almost 96% of speculators now expect the Fed to lift the key interest rate by a quarter of a percentage point. Thus, the aftermath of the Silicon Valley Bank collapse and Signature Bank has marked instability in this sector, casting doubt on hopes for further increase rate hikes by the US central bank.
A further complication is that the Fed is not going to provide any public comments until the end of the meeting scheduled for March 22. Nevertheless, traders may take notice of a speech by US President Joe Biden today. In addition, his administration will hold a briefing in Congress.
While US regulators have announced plans to support depositors and provide a new lending program to financial institutions, investors are anxious as their losses will not be offset.

Therefore, the US stock market is not the only one suffering a sell-off. The US currency is also posting losses. Amid assessments of further systemic risks, the US dollar index fell to 103.9 in the Asian session. The greenback has been declining for the third session in a row. Moreover, the outlook for the index measuring the value of the dollar against a basket of six foreign currencies is rather gloomy.

The US dollar index kicked off the new week by trading sideways in the range of 103.6–104.4. Most likely, the greenback will remain at risk until US President Joe Biden delivers a speech.

00:00 Introduction
00:24 Is the money bubble bursting?
02:00 Joint statement by the Treasury, the Fed and the US Federal Deposit Insurance Corporation
03:12 CME FedWatch tool on the FOMC rate
04:23 USDX
05:28 What about Japan?
06:17 USD/JPY
07:07 AUD/USD
08:14 NZD/USD
08:36 Total

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