He dollar barely went up this Thursday, March 23, after the Federal Reserve seems to be about to terminate interest rate hikes.
The dollar index, which compares the greenback with a basket of six leading currencies, rose 0.078%, its first rise after five sessions of decline.
The Fed had raised its reference rate 25 basis points on Wednesdayas expected, but dropped language about the need for “continuous hikes” in favor of “some more hikes” as he watches how faltering confidence in banks affects the economy.
The Federal Reserve’s interest rate hike was especially notable as financial markets were rocked by Faltering confidence in banks around the world after a run on Silicon Valley Bank two weeks ago and the sudden disappearance of Credit Suisse.
“If the banking crisis calms down significantly and inflation stays stubbornly high, that could be a recipe to help revive the dollar, because maybe the Fed could go back to fighting inflation full steam ahead, and not be so worried about the banking crisis that is making a significant dent in the economy,” said Joe Manimbo, a senior market analyst at Convera.
“It seems like there’s not necessarily a lot of flight to safety,” said Juan Perez, director of trading at Monex USA. “There’s actually a feeling that if the banking world is doing well, and the banking world is going to get bailed out every time it seems to be in trouble, that things are generally going to survive and be okay,” he added.
The euro soared to a seven-week high before falling to trade at $1.08480. The Bank of England raised funding costs by 25 basis points on Thursday, in line with expectations, signaling further tightening would be necessary if more persistent price pressures were seen.
Sterling gained 0.13% against the dollar to $1.22845. The Swiss National Bank raised its policy rate by 50 basis points, trying to balance fighting inflation with concerns about financial market turmoil.
Source: Ambito
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