The dollar rose on Thursday as easing concerns about the banking sector helped increase risk appetite, while investors shifted their focus to the Federal Reserve’s battle to combat inflation.
The dollar index, which measures the performance of the US currency against six major currencies, rose 0.097 percent to 102.73, after rising 0.19 percent overnight. However, the index is set to decline by 2 percent in March due to market turmoil caused by problems in the banking sector.
“It appears that the broader risk appetite is continuing as fears of contagion among banks continue to fade, and the rise in Chinese stocks is attracting some interest,” said Christopher Wong, currency analyst at OCBC in Singapore.
Bank stocks have taken a hit in the past few weeks following the sudden collapse of two US banks and the Credit Suisse bailout, with the dollar under pressure on fears that the Federal Reserve will have to soften its fight against inflation and pause interest rate hikes.
But with no other signs of a crack in the financial sector and with steps taken by regulators, investor anxiety has subsided. The focus has shifted again to what the US central bank can do at its next meeting in May.
“With recession fears fading, market focus now turns to US PCE data due later in the week, which is seen as the Fed’s favorite inflation indicator,” said Tina Ting, market analyst at CMC Markets. .
The euro fell 0.13% to $1.0829, but is set to end the month with a gain of 2%. The pound sterling recorded in the latest trading at $ 1.2297, down 0.11 percent, after declining 0.2 percent yesterday, Wednesday.
The Japanese yen rose 0.05% to 132.77 per dollar, after falling 1.5% overnight. The currency is volatile ahead of the end of Japan’s fiscal year on Friday.
The Australian dollar fell 0.21% to $0.667, and the New Zealand dollar fell 0.22% to $0.621.