The Dollar is Stable as Investors Remain Concerned Crisis
The dollar held steady on Monday, while the yen stayed at a seven-week high as investors examined steps by authorities and regulators to calm concerns about the global financial system.
The dollar index, which compares the greenback to six rival currencies, was up 0.078% at 103.060, after rising 0.5% on Friday amid banking jitters, with shares of Deutsche Bank falling nearly 9%.
Global banking equities have been pummelling this month as a result of the abrupt collapse of two US bankers and the last-minute bailout of struggling Swiss bank Credit Suisse, with regulators stepping in to calm investors' fears.
Notwithstanding the burden on some institutions, the US Financial Stability Oversight Council concluded on Friday that the US financial system remained "strong and robust." Investors, on the other hand, are apprehensive.
"Pragmatic action by central banks, governments, and the private sector has thus far been inadequate to provide investors with confidence that the situation has been contained," said Marc Chandler, chief market analyst at Bannockburn Global FX.
On Friday, risk-averse investors drove the yen to a seven-week high of 129.65 per dollar. On Monday, it was at 130.70. The Fed hiked interest rates by 25 basis points on Wednesday, as expected, but adopted a cautious attitude on the outlook due to financial sector upheaval, even as Fed Chief Jerome Powell left the door open for more rate hikes if required.
According to the CME FedWatch tool, markets are pricing in an 87% likelihood of the Fed holding interest rates steady at its next meeting in May and predict a rate decrease as early as July.
"Contrary to Powell's obvious signal," Chandler added, "the Fed funds futures are pricing in considerable easing in the coming months." "This is highly violent and beyond comprehension."
Minneapolis Fed President Neel Kashkari stated on Sunday that recent stress in the banking industry, as well as the risk of a subsequent credit crisis, has pushed the United States closer to recession.
"What we don't know is how much of these financial concerns are causing a general credit constraint. The credit crisis will then slow the economy "Kashkari stated this on the CCBS show Face the Nation. "This is something we are keeping a careful eye on."
Meanwhile, the euro was up 0.03% at $1.0762, following a 0.6% drop on Friday. Sterling was trading at $1.2236, up 0.06% on the day after falling 0.5% on Friday.
The Australian currency increased 0.03% against the US dollar to $0.665. The kiwi stayed unchanged at $0.620. Bitcoin yesterday increased 0.92% to $27,883.00 in cryptocurrencies. Ethereum just gained 1.05% to $1,769.40.