Banking Crisis Unnerves, US Dollar Steady

US dollar - On Monday, investors watched the actions of authorities and regulators to control concerns over the global banking system. This resulted in a strengthening of the dollar and a weakening of the yen.

The DXY index, which measures a basket of currencies against six rivals, was up 0.078% at 103.060 after rising 0.5% on Friday. Shares of Deutsche Bank (DBK) also fell nearly 9% on the day. Global banking stocks have been on a tear this month after two sudden collapses of U.S. lenders and the bailout of Swiss bank Credit Suisse (CSGN) by authorities eased investor concerns. As the moves were made, investors took a watchful, assessing stance, leading to moves in the dollar and yen on Monday. Despite the Financial Stability Oversight Council’s statement on Friday that the U.S. banking system was “healthy and resilient,” investors remained wary of risks. Marc Chandler, chief market strategist at Bannockburn Global Forex, said pragmatic actions by central banks, governments and the private sector were not enough to convince investors that the problems were solved. As a result, investors opted to send yen into USDJPY, which hit a seven-week high of 129.65 per dollar on Friday. However, by Monday the USDJPY exchange rate had returned to 130.70. On Wednesday, the Fed raised interest rates by 25 basis points, as expected, but took a cautious stance on the outlook amid a volatile banking sector, although Fed Chairman Jerome Powell said he would raise rates further if necessary. According to the CME FedWatch tool, the market is currently pricing in an 87% chance that the Fed will keep rates on hold for its next meeting in May, and is pricing in a rate cut as early as July. This contrasts with the clear signal from Fed Chairman Jerome Powell, leading Chandler to say that Fed fund futures are pricing in a very dramatic easing in the coming months. This is considered very aggressive and stretching the imagination. Minneapolis Fed President Neel Kashkari said on Sunday that recent stress in the banking sector and the possibility of a further credit crisis have brought the U.S. closer to a recession. This suggests that there is still uncertainty and concern among Fed officials about the health of the U.S. economy and the health of the banking system. Minneapolis Fed President Neel Kashkari said that what is unclear to Fed officials is how much stress in the banking sector could lead to a widespread credit crisis, which would then slow economic growth. This is a big concern for Fed officials, and they are monitoring the situation very closely. Meanwhile, on Monday, the euro rose 0.03% to $1.0762, after falling 0.6% on Friday. The British pound (GBP/USD) rose 0.06% to $1.2236 on Monday, after falling about 0.5% on Friday. The Australian dollar also gained 0.03% against the greenback to $0.665, while the kiwi was flat at $0.620.

Enjoy the Ease of Trading & Take Profit in Just One Application, Download Now!

also read :

Warning!

This analysis is based on fundamental and technical views from trusted sources, not advice or invitation. Always remember that this content is intended to enrich the reader's information. Always use independent research first regarding other forex information to be used as a reference in your trading.