The dollar remained firm on Monday, while the yen remained close to its seven-week high as investors assessed actions taken by authorities and regulators to ease concerns regarding the global banking system.
The Dollar Index, which measures the currency once morest six rivals, was up 0.078% at 103.060, following gaining 0.5% on Friday amid jitters in the banking sector, with Deutsche Bank shares falling by almost 9%.
Global banking stocks took a beating throughout the month following the sudden collapse of two US creditors and the bailout of Swiss bank Credit Suisse last week, with authorities intervening to calm investors’ nerves.
On Friday, the United States Financial Stability Oversight Board said the U.S. banking system was “sound and resilient” despite strains at some institutions. Investors, however, remain on their guard.
“Pragmatic action by central banks, governments and the private sector has not been enough so far to give investors confidence that the problem is solved,” said Marc Chandler, chief strategist at Bannockburn Global. Forex.
Cautious investors pushed the yen up to 129.65 to the dollar, its highest level in seven weeks, on Friday. It was at 130.70 on Monday.
The Fed raised interest rates by 25 basis points on Wednesday, as expected, but took a cautious stance on the outlook amid turmoil in the banking sector, although Fed Chairman Jerome Powell kept the door open to further rate hikes if necessary.
Markets are pricing an 87% chance that the Fed won’t change interest rates at its next meeting in May and are anticipating a rate cut as early as July, according to the CME’s FedWatch tool.
“Contrary to Powell’s clear signal, fed funds futures are forecasting considerable easing in the coming months,” Chandler said. “It’s extremely aggressive and beyond imagination.”
Minneapolis Fed Chairman Neel Kashkari said Sunday that recent strains in the banking sector and the possibility of an ensuing credit crunch have brought the United States closer to recession.
“What’s not clear to us is the extent to which these banking strains are leading to a generalized credit crunch. That credit crunch… would then slow down the economy,” Kashkari said. on CCBS’s Face the Nation show. “It’s something we’re watching very closely.
Meanwhile, the euro was up 0.03% at $1.0762, following falling 0.6% on Friday. The pound was at $1.2236, up 0.06% on the day, following falling 0.5% on Friday.
The Australian dollar rose 0.03% once morest the greenback to $0.665. The kiwi remained stable at $0.620.
In cryptocurrencies, bitcoin last rose 0.92% to $27,883.00. Ethereum last rose 1.05% to $1,769.40.
