SINGAPORE/LONDON—The dollar was steady on Monday, while the yen hovered near its seven-week peak as investors assessed moves made by authorities and regulators to rein in worries over the global banking system.
The dollar index, which measures the currency against six rivals, rose 0.06 percent at 103.05, having gained 0.5 percent on Friday amid banking jitters, with shares of Deutsche Bank sliding nearly 9 percent. Shares in Deutsche Bank were up 4 percent in early trade on Monday.
Global banking stocks have been battered through the month following the sudden collapse of two U.S. lenders and the rescue of embattled bank Credit Suisse last week, with authorities stepping in to ease investors nerves.
On Monday, the Federal Deposit Insurance Corporation said First Citizens BancShares Inc. would acquire all of Silicon Valley Bank’s deposits and loans from the regulator.
The U.S. Financial Stability Oversight Council said on Friday the U.S. banking system was “sound and resilient” despite stress on some institutions. Investors, though, remain wary.
Risk-averse investors sent the yen to a seven-week high of 129.65 per dollar on Friday and the currency was on track to clock a near 4 percent gain in March. It was last at 131.03 on Monday.
“Traders are being careful, not knowing if there will be any new negative news from the European financial sector or from the U.S.,” said Niels Christensen, chief analyst at Nordea.
Cautious Stance
The Fed on Wednesday raised interest rates by 25 basis points, as expected, but took a cautious stance on the outlook because of banking sector turmoil even as Fed Chair Jerome Powell kept the door open on further rate rises if necessary.Markets are pricing in around a 75 percent chance of the Fed standing pat on interest rates in its next meeting in May and anticipate a rate cut as early as July, according to CME FedWatch tool.
Meanwhile, markets are still pricing in around 40 basis points worth of tightening from the European Central Bank by the summer, and no rate cuts by the end of the year.
“Market pricing is more hawkish for the ECB than the Fed, so on that front the dollar is a little bit vulnerable,” Nordea’s Christensen said.
Minneapolis Fed president Neel Kashkari said on Sunday the recent stress in the banking sector and the possibility of a follow-on credit crunch had brought the U.S. closer to recession.
“What’s unclear for us is how much of these banking stresses are leading to a widespread credit crunch. That credit crunch ... would then slow down the economy,” Kashkari said in comments to CBS show Face the Nation. “This is something we are monitoring very, very closely.”
The euro was up 0.08 percent to $1.0771, after falling 0.6 percent on Friday, with key inflation data due at the end of the week.
Sterling was at $1.2260, up 0.25 percent on the day, having slid 0.5 percent on Friday.
The Australian dollar rose 0.14 percent to $0.6652. The kiwi was up 0.02 percent at $0.6202.
In cryptocurrencies, bitcoin last fell 0.64 percent to $27,826. Ether was down 1.26 percent to $1,753.
