March 21st Financial News

Daily News

Summary:

The Canadian prime minister may dissolve parliament on the 23rd and call for an early election. The Swiss National Bank (SNB) cuts rates by 25 basis points. Lagarde: Europe must be prepared for Trump's "Extortion"…

[Quick Facts]

1. Summers: Fed's Decision to Slow QT Raises Alarms, Reveals Bond Market Fragility.

2. Canadian Prime Minister may dissolve Parliament on the 23rd and call for an early election.

3. Weak growth and inflationary pressures coexist, prompting the Bank of England to act cautiously.

4. Israeli military expands ground operations in Southern Gaza.

5. Japanese inflation slows for the first time in four months, influenced by energy subsidies.

6. SNB cuts rates by 25 basis points.

7. Knot: Keeps open mind on April rate cuts.

8. Lagarde: Europe must be prepared for Trump's "Extortion".

9. Muller: Tariffs may bring upside risks to inflation.

[News Details]

Summers: Fed's decision to slow QT raises alarms, reveals bond market fragility

Former U.S. Treasury Secretary Lawrence Summers expressed concerns that the Federal Reserve's decision to slow its balance sheet reduction pace significantly sends a worrying signal regarding the market's demand for long-term federal debt. "This should be a cause for alarm and a troubling trend," Summers said in an interview, noting that the move indicates policymakers believe "the market's capacity to absorb long-term bonds is limited" On Wednesday, Fed officials announced they would lower the cap on Treasury securities not reinvested upon maturity from 25 billion to 5 billion. While Chair Jerome Powell linked the decision to the complexities of the federal debt ceiling debate, the move also reflects broader discussions on the appropriate pace of quantitative tightening (QT).

Canadian Prime Minister may dissolve Parliament on the 23rd and call for an early election

Canadian Prime Minister Justin Trudeau is expected to dissolve Parliament and announce an early general election on the 23rd, according to market rumors. March 23rd marks the day before Parliament's scheduled reopening on the 24th. Campaign activities are anticipated to last between 36 to 50 days, with the election date yet to be confirmed. However, sources suggest voters may head to the polls on April 28th or May 5th. Trudeau's decision comes amid polls showing the Liberal Party holds a leading position in the upcoming election.

Weak growth and inflationary pressures coexist, prompting the Bank of England to act cautiously

On Thursday, the Bank of England's Monetary Policy Committee (MPC) voted 8-1 to maintain the benchmark interest rate at 4.5%, with member Swati Dhingra supporting a 25-basis-point cut. Meanwhile, Mann shifted her stance from advocating a 50-basis-point cut last month to supporting the rate hike freeze this month.

The policy statement highlighted that global trade policy uncertainty has intensified since the last meeting, driven by a series of U.S. tariff measures and retaliatory responses from other countries. "Geopolitical uncertainties have also risen, alongside increased volatility in global financial markets," it noted. The MPC deemed a gradual and cautious approach to easing restrictive monetary policy as appropriate.

In the UK, price and wage pressures are easing but remain elevated. Although global energy prices have recently fallen, they remain above last year's levels, with CPI inflation expected to rise to around 3.75% by the third quarter of 2025.

While inflation is projected to decline afterward, the BoE will closely monitor signs of more persistent inflationary pressures. Future policy adjustments will be based on assessments of medium-term inflation prospects and supply-demand balances, maintaining a gradual and prudent approach to policy easing.

Israeli military expands ground operations in Southern Gaza

The Israeli military stated on the evening of the 20th that it has expanded ground operations in the southern Gaza Strip, conducting raids near the Shabra Refugee Camp in Rafah and dismantling multiple infrastructure facilities belonging to Hamas. The statement confirmed that IDF operations in the northern and central regions of Gaza are also ongoing. Separately, the IDF carried out an airstrike on a hospital in the northern Gaza Strip on Thursday, targeting infrastructure linked to Hamas. The military claimed that Hamas had established a command-and-control center at the facility over recent months to plan and execute attacks against Israeli forces.

Japanese inflation slows for the first time in four months, influenced by energy subsidies

Japan's core consumer price inflation (excluding fresh food) rose 3.0% year-on-year in February, down from 3.2% in January but above market expectations of 2.9%. Overall inflation also eased, falling to 3.7% from 4.0% in the previous month. However, underlying inflation (excluding both energy and fresh food) accelerated to 2.6%, the fastest pace in nearly a year. This marked the first four-month slowdown in inflation since October, driven by the government's resumption of energy subsidies that reduced utility costs.

Overall inflation eased, falling to 3.7% from 4.0%, in line with the Tokyo inflation report, which indicated energy subsidies contributed to the moderation. Key price indicators remained at or above the Bank of Japan's (BoJ) 2% target for the 35th consecutive month.

This outcome bolstered the case for the BoJ to continue its gradual rate hikes. Markets still expect the central bank to raise rates again in June or July, maintaining a pace of approximately every six months until the end of the tightening cycle.

SNB cuts rates by 25 basis points

On March 20th local time, the Swiss National Bank (SNB) cut its policy rate by 25 basis points to 0.25%, the lowest since September 2022 and the fifth consecutive rate reduction, in line with market expectations.

The monetary policy statement indicated that Switzerland's economy grew robustly in the fourth quarter of 2024, driven by the service sector and select manufacturing industries, though unemployment edged up slightly and capacity utilization remained normal. The SNB forecasts GDP growth of 1%-1.5% in 2025 and about 1.5% in 2026. Domestic demand is expected to benefit from rising real wages and accommodative monetary policy, while muted international economic activity may dampen exports, potentially leading to further modest unemployment increases.

Given low inflationary pressures and heightened downside risks, the SNB will continue to closely monitor the situation and adjust policy as needed to ensure medium-term inflation remains consistent with price stability. SNB President Schlegel noted that further policy easing is now less likely, as the rate cut implies inflation will rise over the medium term.

Knot: Keeps open mind on April rate cuts

Klaas Knot, a member of the ECB's Governing Council and governor of the Dutch central bank, stated in his Thursday remarks that the ECB's interest rates have nearly reached the neutral interest rate level, and inflation is almost under control. U.S. policies may drive inflation higher, but they do not necessarily have a direct impact on the EU. However, there are also concerns that economic growth may weaken. Predicting interest rate trends is extremely challenging.

There are many factors driving inflation, including the budget expansion of the largest member state, which is currently being calculated by the market. We do not know if the market is correct. As for whether to cut rates in April, I personally remain open-minded, but we must think carefully, as there are still too many uncertainties.

Lagarde: Europe must be prepared for Trump's "Extortion"

ECB President Christine Lagarde warned on Thursday that the eurozone must "be prepared for all scenarios" amid President Donald Trump's potential return to office, including risks of U.S. "extortion" through tariffs. She noted that uncertainty over future U.S. trade policies has "soared to unprecedented levels," with the eurozone—deeply integrated into global supply chains, particularly with the U.S.—being especially vulnerable.

The ECB's analysis revealed that tariffs of 25% on European imports from the U.S. could reduce eurozone GDP growth by about 0.3 percentage points in the first year. A retaliatory EU tariff hike would escalate the impact to roughly 0.5 percentage points.

The effects would be most acute in the short term, with eurozone inflation potentially rising by 0.5 percentage points due to countermeasures and a weaker euro. Over time, however, reduced economic activity would ease inflationary pressures. Long-term consequences include sustained damage to eurozone output, the ECB cautioned.

Muller: Tariffs may bring upside risks to inflation

ECB Governing Council member and Estonian Central Bank Governor Muller warned on Thursday that U.S. President Donald Trump's implementation of trade tariffs could push up inflation. "Markets still expect a slight rate cut, but we must also be cautious," he said, noting that both tariffs and potential EU retaliatory measures against U.S. goods could weaken the economies of Europe and the U.S., "logically driving prices higher and thus creating some upward inflation risks."

Regarding public investment debates, particularly defense spending, Muller added that increased government expenditure could also contribute to rising inflation rates.

[Today's Focus]

UTC+8 16:15 ECB Governing Council member Escriva speaks

UTC+8 16:45 ECB Governing Council member Holzmann speaks

UTC+8 20:30 Canada January Retail Sales MoM

UTC+8 21:05 New York Fed President Williams speaks

Risk Warnings and Disclaimers

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Blue River

Technical Analysis

USDCHF: What Do the Fed and the SNB Say?

The USDCHF has been at the centre of attention following the monetary policy decisions of the Federal Reserve (Fed) and the Swiss National Bank (SNB). What can we expect now?

The Fed Holds Rates, but the Dot Plot Gives Clues…

Yesterday, the Fed kept rates unchanged at 4.25%-4.5%, citing economic uncertainty and inflation risks. Powell mentioned concerns about tariffs and immigration restrictions.

The Dot Plot showed that most FOMC members expect only two rate cuts in 2025. This suggests that the Fed intends to maintain control over inflation and avoid loosening too quickly.

The SNB Cuts Rates… and Could Keep Going

Meanwhile, the SNB surprised the market by reducing its interest rate by 25 basis points, bringing it to 0.25%, its lowest level since 2022. This is the fifth rate cut since 2024, signalling concerns over low inflation and economic risks.

Additionally, the SNB clarified that it is still ready to intervene in the forex market if necessary.

What Happens Next with USDCHF?

The divergence is clear: the Fed remains cautious with rate cuts, while the SNB continues to loosen its monetary policy. This could support USDCHF in the short term, although volatility will depend on upcoming macroeconomic data and market sentiment.

Will the dollar rebound, or will the Swiss franc resist? Stay tuned for the next moves!

Technical Analysis – USDCHF, H4

Supply Zones (Sell): 0.8842 // 0.89
Demand Zones (Buy): 0.8765

The recent SNB rate cut was the main driver of the price rally during the European morning, causing a breakout of the key H4 resistance at 0.8809, leaving a wide-range bullish candle with inefficiency (volume void) that the market typically corrects.

In this context, a pullback is expected to cover that area, seeking liquidity at the daily open (D1:O) 0.8776 and the Asian POC at 0.8765, demand zones (buy) that will likely be defended by bulls to trigger a new price rally towards the next supply zone at 0.8842, confirming the intraday bullish reversal. Only after breaking this level can we consider extending buys towards 0.89 and the next daily key resistance at 0.8926.

On the other hand, if the demand zone between 0.8776 and 0.8765 is decisively broken, the bullish trend will continue, as an increase in sell orders will likely lead to a break below December’s support at 0.8735, extending the decline towards the psychological level at 0.87.

Technical Summary

Bearish Scenario: Sell below 0.8809 with targets at 0.8777 and 0.8765, where we could return to buy if an intraday bullish reversal pattern forms on M5. If this doesn’t occur, sales will continue towards 0.8735 and 0.87 in extension.
Bullish Scenario: Buy above 0.870 (waiting to form and confirm a reversal pattern on M5) with targets at 0.8842, 0.8864, and 0.89 in extension.

Source: ACTIONFOREX

Risk Warnings and Disclaimers

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Glendon

Cryptocurrency

According to Santiment, the Federal Open Market Committee (FOMC) has left interest rates unchanged, sparking positive sentiment in cryptocurrency and equity markets. Jerome Powell confirmed expectations of two rate cuts later this year.

However, economic growth projections have dropped from 2.1% to 1.7%, reflecting ongoing inflationary pressures. Additionally, Powell stated that tariffs could delay inflation reduction efforts. While the Fed acknowledged a slightly higher recession probability, investors have responded with renewed confidence.

Source: Santiment

Market Momentum Builds After Key Announcement

Following Powell’s statements, the cryptocurrency market, excluding Bitcoin and Ethereum, showed signs of strength. A recent TradingView analysis highlights a descending channel pattern. The market has consistently formed lower highs and lower lows, reflecting an extended downtrend. However, a bounce from the lower trendline suggests increasing buying pressure.

The total market cap stands at $823.7 billion, steadily approaching upper resistance. A breakout above this level could signal a bullish trend reversal. Analysts project a potential 41.05% gain, adding $349.9 billion in market value.

Technical Indicators Suggest Possible Breakout

Analyst Captain Faibik illustrates a clear descending channel, with parallel trendlines guiding price action. The market has respected both resistance and support levels throughout this cycle. Moreover, multiple breakout attempts indicate mounting buying momentum. If the market surpasses resistance, bullish investors may push prices higher. The projected price target falls within the green zone on the chart, reinforcing optimism.

Source: Captain Faibik

Santiment highlights the increasing correlation between cryptocurrencies and traditional equities. Powell’s comments reinforce this trend, suggesting crypto markets may mirror stock market movements. However, individual altcoins remain highly volatile, driven by independent market factors.

Source: CryptoSlate

Risk Warnings and Disclaimers

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Glendon

Economic

Forex

President Donald Trump waves after announcing Federal Reserve board member Jerome Powell as his nominee for chair of the Federal Reserve in 2017. (Photo by Jabin Botsford/The Washington Post via Getty Images) · The Washington Post via Getty Images

President Trump once again turned up the pressure on the Federal Reserve, saying Wednesday evening on social media that the central bank would "be much better off" lowering interest rates as tariffs go into effect.

The comments on Truth Social came after the Fed held interest rates steady Wednesday for the second meeting in a row and maintained a prior prediction for two rate cuts at some point this year.

What the central bank did change, however, was its outlook on inflation (higher) and economic growth (lower), with Fed Chair Jerome Powell saying that a driving reason for the change was uncertainty stemming from Trump's plans for an aggressive slate of new tariffs on top of new duties already imposed on China, Canada, and Mexico.

The president has promised to unveil "reciprocal" tariffs on many countries April 2, which he has taken to calling "liberation day."

"The Fed would be MUCH better off CUTTING RATES as U.S.Tariffs start to transition (ease!) their way into the economy," Trump said in his post on Truth Social. "Do the right thing. April 2nd is Liberation Day in America!!!"

Powell did not shy away from the impact of Trump’s tariffs during a highly anticipated press conference Wednesday.

The Fed chairman said in no uncertain terms that Trump's trade agenda would be likely to drive up prices, even amid considerable uncertainty about exactly how much — and whether the price changes would be "transitory."

In just one example Wednesday afternoon during a question about price stability, Powell said that inflation had previously neared the Fed's key goal but now "I do think with the arrival of the tariff inflation, further progress may be delayed."

Some analysts raised questions about the Fed's unchanged overall prediction of two cuts this year even as Trump's trade policy has roiled markets and cut back projections of economic growth for the remainder of the year.

"We continue to think that Fed officials are underestimating the extent to which tariffs are likely to push up inflation," Capitol Economics said in a note immediately after Wednesday's decision but before the press conference.

At other points in his press conference Wednesday, Powell also said that the exact effects of tariffs on prices were uncertain, may never be exactly known, and could even be temporary.

He called the price effects of tariffs potentially "transitory" — reusing a much-scrutinized word that was deployed by the Fed and other economic officials in 2021 as prices started to rise during Joe Biden's presidency.

Powell then called a transitory effect on prices "kind of the base case but we really can't know that" as he maintained the Fed's long-held wait-and-see approach to actually responding to Trump's still unfolding economic agenda.

It was a term that many — especially Trump allies — criticized for years after it was used only to see rising prices last longer than expected.

Trump's team has begun to use similar language to say any price effects from tariffs will be temporary and that the economy is in a "transition."

"Tariffs are a one-time price adjustment," Treasury Secretary Scott Bessent said in another recent example.

Trump’s pointed comments on rates follow a period when Trump has softened his criticisms of the Fed's monetary policy decisions and even made it clear he doesn’t intend to fire Powell, someone he criticized repeatedly during his first term.

Bessent and other Trump aides have repeated said that the president is not focused on the Fed and is instead trying to bring down 10-year Treasury yields.

"Notice that he has stopped calling for the Fed to cut rates," Bessent said during a speech earlier this month, referring to the president.

But it's clear the White House does want a closer relationship with the central bank — and other independent agencies — after issuing a new executive order last week that gives Trump's appointees more power over such agencies.

The new order makes clear that monetary policy — the direction of interest rates — will remain under the Fed's full control, but that the Fed's oversight of the country's biggest banks will now have a closer connection to the policies and priorities of the White House.

Powell was asked at his press conference Wednesday if Trump’s recent firings of board members at the FTC, another independent agency, loomed as a threat to the Fed’s independence as well.

“I did answer that question” he said, referring to comments made last November that any removal of Powell is “not permitted by law.”

“I have no desire to change that answer and have nothing new on that for you today.”

Source: Yahoo Finance

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Michelle

Cryptocurrency

Ethereum (ETH) is currently trading at $2014, having successfully broken through the $1950 resistance level, which has now turned into a key support zone. The $2000 level is crucial in determining whether ETH continues its upward trajectory or faces a pullback. If this support holds, buyers may gain momentum to push the price higher. However, failure to maintain this level could trigger a deeper retracement.

Key Support and Resistance Levels

Support Levels: $2000, $1950, $1800
Resistance Levels: $2150, $2225

Bullish Outlook: Targeting $2225 and Beyond

If Ethereum (ETH) remains above the $2000 support, bullish momentum may build, driving the price toward $2150, a critical resistance point. A decisive break above $2150 could spark a further rally, sending ETH toward the $2225 resistance level.

At $2225, some traders may take profits, leading to a temporary pullback. However, if buyers sustain their pressure, Ethereum (ETH) could maintain its bullish momentum, setting the stage for a long-term uptrend.

Bearish Outlook: Potential Drop to $1800

If ETH fails to hold $2000, increased selling pressure could drive it back to the $1950 support zone. A break below this level may result in further downside movement, with ETH potentially sliding to $1800, a crucial support area.

Should bearish momentum persist, Ethereum (ETH) could experience a more extended decline, testing even lower levels before stabilizing.

However, Ethereum’s (ETH) next move largely depends on how it reacts to the $2000 support level. A strong rebound from this zone could fuel a rally toward $2150 and $2225, while a breakdown might trigger a decline to $1800. Traders should monitor these levels closely as ETH prepares for its next significant move.

Source: CryptoSlate

Risk Warnings and Disclaimers

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Glendon

Commodity

(Bloomberg) -- Oil erased gains as global markets were buffeted by mixed signals from the Federal Reserve and Donald Trump.

Brent traded below $71 a barrel, with US equity futures also reversing an earlier increase. Fed Chair Jerome Powell acknowledged the high degree of uncertainty from the US president’s policies, but said the central bank is in no hurry to cut rates.

Trump, meanwhile, said the Fed should reduce borrowing costs, splitting with policymakers weighing the economic cost of his tariff push. New Fed projections showed lower growth forecasts but higher inflation estimates. The Treasury market boosted its bets on lower rates.

Crude remains markedly below its mid-January peak, as a confluence of bearish factors pressures prices. While the escalating trade war threatens to hit energy demand as tariffs and counter levies are imposed, OPEC and its allies are set to raise output from April, contributing to weaker global balances.

“US tariff news is likely to keep oil prices volatile,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “That said, we retain our moderately constructive outlook for crude prices.”

US inventories of gasoline, meanwhile, fell last week to the lowest since the start of the year, while distillates — a category that includes diesel — also sank, allaying concerns about consumption. Crude stockpiles rose less than flagged in an industry report, while levels dropped at the Cushing, Oklahoma, hub.

Source: Yahoo Finance

Risk Warnings and Disclaimers

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Warren Takunda

Cryptocurrency

Bitcoin price has jumped by 4% in the last 24 hours to reach over $86,000 on March 20. At its intraday high, the cryptocurrency was trading for $87,470, signaling modest profit-taking among traders. Why Is Bitcoin Price Up Today?_1

BTC/USD four-hour price chart. Source: TradingView

Top catalysts that have driven Bitcoin prices higher today include:

Gains across risk assets after the Federal Reserve’s dovish signals.

Rising BTC supply among long-term holders’ addresses.

Bitcoin rises after Fed calms trade war bears

Bitcoin rose as the Federal Reserve signaled it still expects to cut interest rates twice later this year, easing investor concerns over prolonged monetary tightening.

Key takeaways from the Federal Open Market Committee’s meeting on March 19:

The Fed kept its benchmark rate on hold while acknowledging that tariff-driven inflation pressures may be “transitory.”

Chair Jerome Powell’s measured tone on recession risk, stating it was "not high," reassured risk-on investors.

The Fed trimmed its growth forecast, fueling a bond rally and reinforcing expectations of lower borrowing costs in the future. Why Is Bitcoin Price Up Today?_2

US 2-year and 10-year Treasury note yields daily chart. Source: TradingView

Lower interest rates make risk assets like Bitcoin more attractive, as they reduce the opportunity cost of holding non-yielding investments.

US President Donald Trump’s renewed pressure on the Fed to cut rates added to speculation that monetary policy may loosen further, benefiting Bitcoin.

Long-term Bitcoin holders turn to accumulation

Bitcoin’s ongoing price rise coincides with signs of accumulation among its long-term holders: entities holding BTC for more than 155 days.

Key points:

Long-term holder (LTH) spending pressure is waning, as indicated by a slowdown in the Binary Spending Indicator and a rise in LTH supply.

A greater willingness to hold rather than sell suggests a shift away from sell-side distribution. Why Is Bitcoin Price Up Today?_3

Bitcoin long-term holder spending Binary Indicator. Source: Glassnode

A brief but sharp spike in LTH distribution (the red bars in the chart below) occurred when Bitcoin dropped to four-month lows, as some investors took profits.

Bull markets typically see sell-side pressure from LTHs balanced by new demand, and this cycle has absorbed a similar volume of LTH profits as previous ones. Why Is Bitcoin Price Up Today?_4

Bitcoin long-term holder balance sent to exchanges. Source: Glassnode

“This perhaps alludes to a degree of saturation being reached among Long-term holders, where they have completed a majority of their sell-side activity within the current price range,” wrote Glassnode analysts in their latest weekly report.

Bitcoin bounces from technical support

Bitcoin price rise today comes after testing the lower trendline of its prevailing ascending channel pattern.

What to note:

Bitcoin has been trending higher inside the ascending channel since March 9.

The cryptocurrency has since tested the channel’s lower boundary thrice, the latest being on March 18. Why Is Bitcoin Price Up Today?_5

BTC/USD four-hour price chart. Source: TradingView

The first two scenarios led to 7.50% and 6.60% bounce — while the current one preceded 7.60% gains.

As of March 20, BTC/USD was facing stiff resistance around the channel’s upper boundary, aligning with the 200-4H EMA (the blue wave) near $87,830.

A decisive pullback may lead the pair initially toward the 50-4H EMA at around $83,900.

A further correction could have it test the channel’s lower boundary as support, aligning with $82,400, which served as support between March 16 and March 17.