© Reuters.
Investing.com – The US dollar fell in early European trade on Friday, as traders worried that continued turmoil in the US banking system could lead to an earlier-than-expected interest rate cut by the Federal Reserve.
At 03:10 ET (07:10 GMT), the greenback, which measures the greenback against a basket of six other currencies, was trading 0.2% lower at 101.23, after falling more than 0.6% in the previous session. .
Interest rates were raised on Wednesday, but she hinted that this would be the culmination of a year-long aggressive tightening cycle by removing the phrase “expects” further rate hikes from the accompanying statement.
The Fed emphasized the importance of the upcoming data in making its future decisions, and therefore the official jobs report scheduled later in the session will be carefully studied.
However, the health of the country’s banking system is also one factor that traders include as they price in steeper interest rate cuts from the Fed in the second half of the year.
shares Backwest Bancorp (NASDAQ:) tumbled on Thursday after the regional lender said it was exploring strategic options, including a sale, while Canada’s Toronto-Dominion Bank (TSX:) canceled its $13.4 billion acquisition of First Horizon (NYSE:) in another sign of jitters. . within the sector.
This comes just days after regulators took over First Republic Bank and JPMorgan Chase (NYSE:NYSE) agreed to buy its deposits and most of its assets.
It rose 0.3%, to 1.1038, the day after raising benchmark interest rates by 25 basis points, with the president signaling further tightening to come.
However, it fell significantly more than expected in March, falling 10.7% from the previous month, the largest monthly decline since 2020 at the height of the COVID-19 pandemic.
“EUR/USD remains near its highs for the year as a Federal Reserve pause and a simmering banking crisis cut the dollar’s short-term yield advantage over the euro,” analysts at ING said in a note.
It was trading 0.5% higher at 1.2630, hitting a new one-year high, and the rest is in a pitched battle with inflation.
Last year consumer price inflation came in at 10.1%, which is five times the Bank of England’s mandate and well above the core rate of 6.9% in and 5% in
The Bank of England was the first to tighten again in December 2021, and is expected to raise interest rates a quarter point to 4.5% next week.
It fell 0.1% to 134.08 in light trade due to the holiday, while it rose 0.7% to 0.6743 as a report confirmed that interest rates may continue to rise after a surprise rally earlier in the week.
It rose 0.1% to 6.9115 after a weaker-than-expected increase raised concerns about China’s post-COVID economic recovery.