The banking crisis linked to the bankruptcy of the Silicon Valley Bank is creating uncertainty in the financial markets.

This week, panic invaded the markets following the collapse of the Silicon Valley Bank (SVB) last Friday, causing banking and technology stocks to fall on Monday and Tuesday. In an attempt to reassure investors, the U.S. authorities have taken several actions. In addition, U.S. consumer prices rose sharply in February as expected.

While the issue of higher interest rates was sinking many anchors, banking stocks around the world experienced disastrous days due to the failure of a major U.S. bank named Silicon Valley Bank. This event created a total panic so that Signature Bank also went bankrupt 48 hours later. As investors feared further bankruptcies, the major US banks lost about $90 billion in stock market value on Monday. To avoid the worst, U.S. authorities resorted to emergency measures including making additional funds available through a new term bank financing program, which would provide loans of up to one year to depository institutions backed by Treasury bills and other assets held by those institutions. In addition, U.S. President Joe Biden has pledged to take further steps to ensure the safety of the banking system.

However, bets of a 50 basis point hike at the next Fed meeting were lowered. Market participants believe that the banking crisis could affect the decisions of Fed officials in the upcoming meetings. Nevertheless, U.S. inflation rose again in February, yet the Federal Reserve is increasing its actions, including raising interest rates to combat inflationary pressures.

In the foreign exchange market, safe haven currencies, such as the Japanese yen and the Swiss franc, have been in great demand as a hedge against the financial crisis. The Japanese yen strengthened 1.26% to 133.33 per dollar, while the dollar fell 1.02% against the Swiss franc. The euro rose 0.79 percent to $1.0727. Earlier, it had peaked at $1.0737 ahead of the European Central Bank's policy meeting on Thursday. Bitcoin and other crypto-currencies soared as investors breathed a sigh of relief that regulators had decided to strengthen the U.S. banking system. Bitcoin rose 20.54 percent to $24,223.00

Written by Steve Keutcha - Head of Trading