While Faith Helps, The US Dollar Struggles to Find Demand
As the market vibe improves as fears about a deeper financial crisis fade near the end of the week, the US Dollar is struggling to maintain its resilience versus its major competitors. In the European session, Eurostat will release February inflation figures (revision).
Later in the day, the University of Michigan's Consumer Sentiment Survey for March, as well as the US Federal Reserve's (Fed) Industrial Production figures for February, will be scrutinized for new impetus.
During its March policy meeting, the European Central Bank (ECB) boosted its main interest rates by 50 basis points (bps). While ECB President Christine Lagarde refrained from committing to further large rate rises shortly, she reassured investors that the Eurozone banking system was in excellent shape.
Meanwhile, the Fed stated late Thursday that 11 banks had placed $30 billion into First Republic Bank to assist it in resolving its liquidity problems. Wall Street's major indexes gained significant daily gains as a result of this event. After Wednesday's steep drop, the 10-year US Treasury bond yield increased by more than 3%.
Early Friday, US stock index futures are clinging to minor daily gains, while the US Dollar Index remains deep in negative territory, just below 104.00, and the 10-year US Treasury note rate hovers above 3.5%.
The EUR/USD fluctuated throughout the ECB event on Thursday but held its ground in the American session. The pair maintained its recovery momentum early Friday, trading above 1.0650.
GBP/USD gained ground on Thursday and continued to rise early Friday. The pair is trading over 1.2150 in the European morning, aided by continuing US Dollar weakening.
After Thursday's indecision, USD/JPY came under light negative pressure and fell to 133.00 on Friday. Bank of Japan (BoJ) Governor Haruhiko Kuroda said on Friday that the short-term interest rate could be reduced further from minus 0.1%, but he couldn't say how much.
The Nikkei Asian Review reported during Asian trade hours that the Japanese Government, the Bank of Japan (BoJ), and the Financial Services Authority (FSA) will meet later this evening to review Japan's financial market position.
The Reserve Bank of New Zealand (RBNZ) announced in a statement early Friday that all New Zealand banks are now functioning beyond their minimal regulatory standards. On this news, the NZD/USD gained traction and advanced towards 0.6250.
Gold price finished nearly steady on Thursday as rising US Treasury note rates didn't allow XAU/USD to gain on the resumed US Dollar weakening. Yet, the pair appears to have reversed north on Friday morning, trading near $1,930.
Bitcoin is benefiting from the risk-on market climate and is trading above $26,000 early Friday, up roughly 4% on the day. After Thursday's rally, Ethereum is trading above $1,700 in the European morning.