Silver whipsawed as US Dollar firms
- Silver is choppy on Monday surrounding US data and the banking sector.
- US Dollar firms on JPMorgan Chase’s takeover of First Republic Bank.
Silver is trading at $25.0445 at the time of writing and has traveled in a wide range of between $24.8845 and $25.9123 so far.
It has been a particularly choppy session for the white metal as traders digested news of JPMorgan Chase’s takeover of First Republic Bank, ahead of Wednesday’s policy decision by the US Federal Reserve.
JPMorgan Chase has bought failed First Republic Bank’s deposits and a “substantial amount of their assets and certain liabilities,” JPMorgan Chase said in a press release Monday.
“Our government invited us and others to step up, and we did,” JPMorgan Chase CEO Jamie Dimon said in a statement. “This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise.”
Analysts at Brown Brothers Harriman said that ´´while the deal leads to even greater consolidation of the US banking sector, it was a necessary one in order to address this long-festering problem.´´
´´We are cautiously optimistic that this resolution finally ends the banking sector turmoil that began nearly two months ago,´´ the analysts said.
Meanwhile, the US Dollar is firmly higher as per the DXY index that measures the Greenback vs. a basket of currencies. DXY rallied from a low of 101.624 to a high of 102.189 so far. The boost came in line with Monday’s good news for the banking sector as well as US data. US Manufacturing pulled off a three-year low in April as new orders improved slightly and employment rebounded.
Additionally, US construction spending increased more than expected in March. Weak economic data from China may have been a factor also with the manufacturing purchasing managers’ index (PMI) declining to below contraction territory (50) with the data reading 49.2 from 51.9 in March for the world’s second-biggest economy.
Meanwhile, this week is shaping up to be an eventful one in terms of economic data and earnings news while investors await the Federal Reserve decision. ´´We expect a 25bp rate hike at next week’s FOMC meeting, and anticipate that post-meeting communication will: (i) emphasize that disinflation has been evolving slower than expected, leaving open the possibility of additional tightening, and (ii) acknowledge the more uncertain economic environment, especially with regard to credit conditions post SVB collapse,´´ analysts at TD Securities said.