© Reuters.
By Peter Nurse
Investing.com – The US dollar stabilized at the start of trading on Monday in Europe on growing optimism that the US banking turmoil could be contained, although confidence in the sector remains fragile.
As of 09:15 AM ET (0915 GMT), the , which tracks the currency against a basket of six other major currencies, is largely unchanged at 102.745, above the seven-week lows recorded last week. .
News released Monday that First Citizens BancShares has agreed to acquire Silicon Valley Bank’s deposits and loans has calmed market nerves about the health of smaller US banks.
This comes after both US Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell tried to reassure the market that the US banking system remained sound.
However, small bank deposits fell by $120 billion during the week ending March 15, while loans increased by $253 billion, indicating that pressures remain strong.
Minneapolis Fed President Neel Kashkari said Sunday that recent stress in the banking sector and the possibility that it might be followed by a credit crunch have brought the United States closer to recession.
This has led the market to anticipate that it will maintain its course of raising interest rates in May, before cutting them in the summer, to the detriment of the dollar.
Elsewhere, the pair rises to the 1.0762 level, after falling 0.6% on Friday as shares of German banking giant Deutsche Bank tumbled on contagion fears.
European Central Bank President Christine Lagarde told European Union leaders on Friday that the euro zone’s banking sector remains healthy thanks to a strong regulatory regime.
Traders will be awaiting the publication of the report for the month of March during this day in search of indications about the confidence of companies in the largest economy in the eurozone.
The pair is up 0.2% to 1.2257, after falling 0.5% on Friday, while the risk-sensitive 0.3% rises to 0.6663.
The pair rises 0.4% to the 131.25 level, with the yen losing some of its appeal as a safe haven, while the yen points up 0.2% to 6.8785 after learning that company results fell sharply in the first two months of 2023, pointing to a slow economic recovery in China.