By Peter Nurse
Investing.com – The US dollar loses positions at the start of trading on Thursday in Europe, and the euro rises as the measure of Swiss credit (SIX:) to strengthen its financial position has fueled interest in risk.
By 9:55 AM ET (0955 GMT), the , which tracks the currency against a basket of six other major currencies, was down 0.3% at 103.980, reversing part of the day’s 1% gain. former.
Credit Suisse announced late on Wednesday that it intends to borrow 50 billion Swiss francs (1 euro = 0.98 Swiss francs) from the Swiss National Bank, thereby strengthening its liquidity position.
Concerns over the financial health of the Swiss lender have been growing for some time as it faces heavy customer withdrawals after a series of scandals. On Wednesday, its share price plunged to record lows as its main investor, the Saudi National Bank, said it could not provide the lender with any more financing.
News of this credit line has boosted confidence, calming some concerns about an immediate collapse in the sector, which had been hit hard by the three recent failures of US banks.
The pair is up 0.4% to 1.0619, rebounding after the news, before the latest from the European Central Bank.
The ECB had previously signaled the likelihood of another 50 basis point rate hike as core inflation in the eurozone remains high, but concerns over the potential repercussions of such a sharp rise in the sector banking could lead monetary policy makers to act more cautiously.
“The market (…) will follow the example of the European Central Bank today. Going ahead with a 50 basis point rate hike will prove difficult and we should expect more volatility immediately after the (…) decision,” say ING (AS) analysts 🙂 on a note.
Also interesting will be ECB President Christine Lagarde’s appearance at , as she will likely be asked how the central bank can balance efforts to achieve price stability with safeguarding financial stability.
The same question arises in the United States, where the United States is likely to refrain from raising interest rates by 50 basis points next week, given the strain on the US banking system.
Goldman Sachs has raised its expectations for the odds of a US recession to 35% over the next 12 months, in response to increased uncertainty about the economic impact of the banking stress, up from 25% previously.
Elsewhere, the pair is aiming for a 0.3% rise to the 1.2105 level, driven by improving risk confidence. Also helping were Chancellor of the Exchequer Jeremy Hunt’s remarks on the budget on Wednesday that the economy was likely to contract by 0.2% in 2023, an improvement on the earlier forecast for a contraction. of 1.4%.
The pair falls 0.5% to the 132.69 level, and was one of the most bullish values of the day. The risk-sensitive , is up 0.6% at 0.665670, while the is down 0.1% at 6.9007.