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Super dollar fell on changing rate expectations after SVB collapse

Super dollar fell on changing rate expectations after SVB collapse

He dollar fell this Monday due to expectations that the Federal Reserve will be less aggressive with monetary policy to curb inflationafter the authorities intervened to limit the consequences of the sudden bankruptcy of Silicon Valley Bank.

President Joe Biden He said the government’s swift action on Sunday to ensure depositors can access their funds at SVB and Signature Bank should give Americans confidence that the US banking system is safe.

The Federal Reserve announced Sunday that it would make more funds available through a new Term Bank Financing Program, which would offer loans of up to one year to depository institutions, backed by Treasury bonds and other assets these institutions own.

the dollar indexwhich measures the performance of the US currency against six other currencies, it was down 0.59% as yields on two-year Treasuries plummeted.

The two-year note’s return plunged 57.2 basis points to 4.016%, its biggest daily drop since the Black Monday crash of 1987.

With speculation running rampant about how the Fed will conduct monetary policy and fight to control inflation, the focus is the publication on Tuesday of the data of the Consumer Price Index (CPI).

Goldman Sachs said it no longer expects the Federal Reserve to raise rates at its meeting next week.

The Japanese yen, a safe haven currency, benefited from the fallout from SVB. The yen strengthened 1.26% to 133.33 to the dollar.

Meanwhile, the euro rose 0.79% to $1.0737, near a one-month high of $1.0737 hit earlier, ahead of the European Central Bank’s policy meeting on Thursday.

Source: Ambito

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