News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bearish
Gold
Mixed
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Knowing how to accurately value a stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/Evr5KgUjVo
  • $GBPUSD corrects from stretched valuations, however, positioning clear is likely to entice dip-buyers. Get your market update from @JMcQueenFX here: https://t.co/sfFdBx9pN6 https://t.co/j6nnry65SW
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out https://t.co/c51s3IBcEu https://t.co/oQrOpYINOj
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/LSVPlus0vv
  • There’s a strong correlation between interest rates and forex trading. Forex is ruled by many variables, but the interest rate of the currency is the fundamental factor that prevails above them all. Learn how interest rates impact currency markets here: https://t.co/J0EPMD2Cfi https://t.co/rPd6B5KzuI
  • Time-cycle analysis suggests that the Japanese Yen could slide significantly lower against its major counterparts. Key levels for AUD/JPY, EUR/JPY and GBP/JPY. Get your market update from @DanielGMoss here:https://t.co/WPq4Z9zzEw https://t.co/VzVLrBbL9q
  • The Australian Dollar looks poised to outperform the haven-associated US Dollar and Japanese Yen. However, it may lose ground to the New Zealand Dollar. Key levels for AUD/USD, AUD/JPY and AUD/NZD. Get your market update from @DanielGMoss here:https://t.co/cuxRxl5WaF https://t.co/pujrmqSxV7
  • Has anyone explained the risk of inflation on the markets in terms of tendies?
  • The US Dollar is trying to break higher versus ASEAN currencies. The Singapore Dollar, Philippine Peso, Thai Baht and Indonesian Rupiah are under pressure. Will follow-through last? Get your market update from @ddubrovskyFX here:https://t.co/JOWG9q01q0 https://t.co/j2ICxgrLa3
  • The commodity-sensitive Canadian Dollar may continue outperforming its major counterparts in the coming weeks. USD/CAD, CAD/CHF, CAD/JPY and EUR/CAD key levels to watch. Get your $USDCAD market update from @DanielGMoss here:https://t.co/9bkVXQuP5C https://t.co/cLNEG36mZ8
Fed Stress Test: Bank Stocks Trim Gains on Dividend Restrictions

Fed Stress Test: Bank Stocks Trim Gains on Dividend Restrictions

Thomas Westwater, Analyst

Fed Stress Tests, Bank Stocks, Recession – Talking Points:

  • Fed limits share repurchase programs and dividends
  • Bad loan losses could hit $700 billion in adverse virus scenario
  • Bank stocks slightly lower following Fed results

The Federal Reserve released its annual stress tests results Thursday afternoon, following a green day on Wall Street for big banks as certain provisions of the Volcker rule were rolled back to allow banks to invest in private markets more easily and lower margin limits for derivative trading. Overall, the Fed’s analysis concluded capital levels will hold up under several modeled scenarios. In Thursday's Wall Street session, before the stress tests results were released, the Financial Select Sector SPDR ETF (XLF) rose 2.65% in Thursday’s session, while the S&P 500 index gained 1.10%. A portion of those gains are pulling back in after-hours trading. Still, financials continue to lag the S&P 500 index year-to-date as investors worry over depressed interest rates and increased loan losses amid the virus-induced economic fallout.

S&P 500 Index versus XLF-Financial Select Sector SPDR ETF

Fed stress tests SPX vs XLF

Chart created in TradingView by Thomas Westwater

Alongside the conventional stress tests, in place since the 2010 Dodd-Frank Act, a “sensitivity analysis” was released in tandem with the annual results, designed to replicate three scenarios amid the COVID-19 pandemic. The Fed’s Vice Chair for Supervision, Governor Quarles, previously described these three scenarios as a rapid V-shaped recovery, a slower U-shaped recovery, and a W-shaped double dip recession recovery. Under the most adverse scenario, the 34 largest banks in the United States could lose $700 billion in loan losses. These results will be used “to inform our overall stance on capital distributions and in ongoing bank supervision,” said Governor Quarles.

Scenario Variables in Fed Stress Tests

Select scenario variables in the severely adverse scenarios FED

Source: Federal Reserve Assessment of Bank Capital During the Coronavirus Event

Traits of Successful Traders
Traits of Successful Traders
Recommended by Thomas Westwater
Traits of Successful Traders
Get My Guide

Bank stocks dropped marginally on the report’s release. Specific results were not released, but in aggregate, the report concludes that banks are still well capitalized to weather future shocks. However, the Federal Reserve is implementing several actions following the results, including suspending share buybacks in the third quarter and limiting dividends. Vice Chair Quarles said, the results of our sensitivity analyses show that our banks can remain strong in the face of even the harshest shocks.”

Aggregate CET1 Capital Ratio Levels

Aggregate CET1 capital ratios

Source: Federal Reserve Assessment of Bank Capital During the Coronavirus Event

Even as bank stocks fell on the report’s release, Thursday brought several large events that could cause some volatility in bank stocks in the coming days, as investors digest the latest information. Moreover, the Fed states that some assumptions appear conservative. The main variables in the scenarios reflect changes in the peak unemployment rate, GDP changes, and the 10-year Treasury yield, among others. Going forward, the Fed stresses that the outlook remains highly uncertain and these results do not capture all possible scenarios.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES