Annoyance Over Banking Crisis Is Fading? Impressive Yen Trading!


 The US dollar traded steady on Monday, while the yen eased from a seven-week high, as investors assessed steps taken by authorities and regulators to curb concerns about the global banking system.

The US dollar index, which tracks the US dollar against six rivals, strengthened 0.1% to 103.09 before slipping 0.07% amid worries in the European banking sector.

Global banking stocks have been hit this month by the sharp collapse of two U.S. lenders. and the bailout of Credit Suisse, with authorities acting to calm investor concerns.

On Monday, the Federal Deposit Insurance Corporation released a statement that First Citizens BancShares Inc will acquire all of Silicon Valley Bank's deposits and loans from the regulator.

This helped ease concerns about contagion in Europe with an index of European banking shares rising 1.5%, led by Deutsche Bank which surged 4.3% after falling 8.5% on Friday.

Risk-averse investors pushed the yen to a seven-week high of 129.65 per dollar on Friday and the currency is on track for a nearly 4% gain in March. It was last down around 0.6% at 131.50 per dollar.

"Traders are cautious, not knowing whether there will be new negative news from the European financial sector or from the U.S.," said Niels Christensen, chief analyst at Nordea.

The Fed on Wednesday raised interest rates by 25 basis points, as expected, but took a cautious stance on the outlook due to the turmoil in the banking sector. However, Fed Chairman Jerome Powell kept the door open for further rate hikes if necessary.

"Market prices are more hawkish for the ECB than the Fed," said Nordea's Christensen.

Data on Monday showed German business sentiment rose unexpectedly in March despite the turmoil in the banking sector.

The euro strengthened 0.1% to $1.0772, after falling 0.6% on Friday, with key inflation data due later in the week.

Minneapolis Fed President Neel Kashkari said on Sunday that recent stress in the banking sector and the possibility of a subsequent credit crisis had led the U.S. closer to recession.