© Reuters.
By Peter Nurse
Investing.com – Updated at 17:00 GMT
The dollar index is now declining by more than 0.53%, standing at 103.550 levels. The decline comes on the back of Michigan consumer confidence data, which showed a strong decline in consumer confidence in February, due to increasing inflationary pressures.
Today, the US market is witnessing a return to the specter of bank collapses, amid warnings of larger declines that will hit the market.
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The US dollar fell in early European trade on Friday and riskier currencies rose amid calming concerns about the global banking crisis.
A technical overview of the dollar index and its most important levels
At 04:25 EST (08:25 GMT), the currency, which tracks the greenback against a basket of six other currencies, was down 0.4% at 103.715.
The foreign exchange market has rebounded after a number of large US banks poured $30 billion in deposits into First Republic Bank (NYSE: FRC), boosting the regional bank caught amid the collapse of two other smaller US banks over the past week.
The move followed Credit Suisse (Six:CSGN) announcing earlier Thursday that it would borrow up to $54 billion from the Swiss National Bank, ensuring the beleaguered lender has enough liquidity to handle massive withdrawals in the wake of a number of scandals. banking.
EUR/USD edged up 0.5% to 1.0659, benefiting from the European Central Bank’s decision to go ahead with Thursday’s previously mentioned 50 basis point interest rate hike amid banking turmoil.
This indicates that ECB policy makers remain confident in the fundamental strength of the banking sector in the region.
In her regular press conference, President Christine Lagarde walked a fine line between acting tough on inflation and acknowledging the need for caution amid growing indications of financial stability risks.
Final CPI data for the Eurozone is due later in the session and is expected to show that inflation grew by 0.8% in February, up 8.5% over the year.
GBP/USD was up 0.5% to 1.2166, AUD/USD was up 0.8% to 0.6708, NZD/USD was up 0.8% to 0.6246, while USD/USD was down 0.6%. 0.3% to 133.32.
Japanese Finance Minister Shunichi Suzuki said on Friday that the Japanese government is coordinating closely with the Bank of Japan and overseas financial authorities to prevent the repercussions of banking crises for a number of Western banks.
US economic data will center around the release of a March aggregate reading later in the session, which will provide a clue as to how Americans deal with the current economic difficulties. A report is also issued.
However, most eyes have now turned to the Federal Reserve’s policy-setting meeting next week, with speculation mounting that the US central bank may slow down its aggressive rate hike campaign in a bid to ease tensions in the financial sector.
Market expectations are now at 90% that the Fed will hike rates 25bps lower next week.
