© Reuters
By Peter Nurse
Investing.com – The US dollar stabilized near seven-week lows early in Europe on Friday as traders eyed the next move from the Federal Reserve as confidence in the banking sector remained fragile.
By 09:55 AM ET (0955 GMT), the , which tracks the currency against a basket of six other major currencies, is rising slightly to 102.243, just above Thursday’s seven-week low of 101. 91.
US Treasury Secretary Janet Yellen reiterated Thursday that she was willing to take further steps to ensure the safety of Americans’ bank deposits.
This is a stance he may have to adhere to as tensions are building as the Federal Reserve’s discount window lending stood at $110.2bn on Wednesday.
In addition, loans from the Federal Reserve’s new Term Bank Financing Program soared to $53.7 billion, while lending to foreign central banks rose to $60 billion.
With this in mind, the market is beginning to position itself in favor of the Fed ending its rate hike cycle early, at the expense of the dollar, especially after Fed Chairman Jerome Powell indicated that central bank monetary policymakers had considered taking such a move last week.
“Markets, so far, do not trust the Fed’s ability to manage inflation and financial stability independently,” ING (AS:) analysts say in a note. “This seems unlikely to change in the near future, which means that rate expectations should remain strictly tied to developments in the banking crisis.”
Elsewhere, the pair is down 0.1% to 1.2271, after hitting a seven-week high on Thursday at 1.2344.
UK ones unexpectedly rebounded 1.2% in February from the previous month, returning sales volume to pre-pandemic levels, but this is having little impact on sterling after he hinted on Thursday that he may have ended to his streak of rate hikes.
The pair rises to 1.0833, after hitting a seven-week high on Thursday at the 1.0931 level.
The president of the European Central Bank, Christine Lagarde, will speak at the European Council meeting and everything indicates that she will confirm that the battle against it is still alive. No talk of easing monetary policy is expected any time soon.
“We think EUR/USD could reach the 1.1000 level very soon as the USD bias should remain mostly bearish and European currencies are supported by hawkish central banks and a calmer banking environment.” adds ing.
The pair rises 0.1% to the 0.6691 level, the pair falls 0.4% to 130.26, while it points to a 0.4% rise to the 6.8487 level.
