US Dollar struggles to find demand as mood improves

Here is what you need to know on Friday, March 17:

As the market mood continues to improve on easing concerns over a deepening financial crisis toward the end of the week, the US Dollar is having a tough time staying resilient against its major rivals. Eurostat will release February inflation data (revision) in the European session. Later in the day, the University of Michigan’s Consumer Sentiment Survey for March and the US Federal Reserve’s (Fed) Industrial Production data for February will be looked upon for fresh impetus. 

The European Central Bank (ECB) raised its key rates by 50 basis points (bps) following its March policy meeting as expected. Although ECB President Christine Lagarde refrained from committing to additional big rate hikes in the near futures, she reassured markets that the banking sector in the Eurozone was in good condition. 

Meanwhile, the Fed announced late Thursday that 11 banks deposited $30 billion into First Republic Bank to help it resolve the liquidity issues. Wall Street’s main indexes gathered bullish momentum on this development and registered decisive daily gains. Following Wednesday’s sharp decline, the benchmark 10-year US Treasury bond yield rose more than 3%.

Early Friday, US stock index futures cling to modest daily gains and the US Dollar Index stays deep in negative territory slightly below 104.00 while the 10-year US T-bond yield fluctuates above 3.5%.

EUR/USD fluctuated during the ECB event on Thursday but managed to keep its footing in the American session. The pair preserves its recovery momentum early Friday and was last seen trading above 1.0650.

GBP/USD posted gains on Thursday and continued to push higher early Friday. Supported by the renewed US Dollar weakness, the pair trades above 1.2150 in the European morning.

Following Thursday’s indecisive action, USD/JPY came under modest bearish pressure and declined toward 133.00 on Friday. Bank of Japan (BoJ) Governor Haruhiko Kuroda said on Friday that it would be possible to further lower short-term interest rate from minus 0.1% but added that he cannot comment on to what extent. During the Asian trading hours, the Nikkei Asian Review reported that the Japanese Government, the BoJ and the Financial Services Authority (FSA) will meet later this evening to assess the financial market situation in Japan.

The Reserve Bank of New Zealand (RBNZ) said in a statement early Friday that all New Zealand banks are currently operating above their minimum regulatory requirements. NZD/USD gathered bullish momentum on this headline and advanced toward 0.6250.

Gold price closed virtually unchanged on Thursday as rising US Treasury bond yields didn’t allow XAU/USD to capitalize on the renewed US Dollar weakness. Nevertheless, the pair seems to have turned north early Friday, trading near $1,930.

Bitcoin benefits from the risk-positive market environment and trades at around $26,000 early Friday, rising nearly 4% on the day. On the back of Thursday’s rebound, Ethereum continues to stretch higher and trades above $1,700 in the European morning.

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