Markets are slowly but surely calming down amid hopes for the end of the banking crisis. The US dollar tried to consolidate in the morning after a 2-week losing streak.
Its status as a safe haven asset has recently declined. However, demand for such assets is now low. The US dollar is weak despite rising yields of US government bonds. This morning, Treasury notes remained unchanged after adding several basis points overnight.

The US dollar index rose to 102.6 in the Asian session. After decreasing by almost 1% over the past two sessions, the greenback slightly rebounded, trading in the upward range of 102.4-102.7.

The yen shed losses in the morning due to a rise in the US dollar and risk appetite. Its rally on Tuesday was rather unusual.

Yesterday, the dollar/yen pair climbed by 0.5% despite growing yields of US government bonds. Such a strange trajectory occurred because of the end of the fiscal year in Japan on March 31.

Until the end of the week, more Japanese companies will convert profits from the US dollar to the yen. So today, tomorrow, and the day after tomorrow, the yen is likely to retain an upward movement. On Wednesday morning, the pair was moving in the range of 130.7–132.1.

Commodity currencies also tumbled today. Although jitters over the banking crisis have eased, markets will continue to react sharply to the slightest signs of failures in the financial system.

This is why the risk-sensitive Australian dollar showed a mixed dynamic. At first, it climbed but after the release of CPI data in Australia, it changed its trajectory.

The CPI for February rose by 6.8% in annual terms. Inflation in Australia has been falling for the second month in a row and at the mildest pace since June 2022. So, the probability of a pause in the tightening cycle has increased even more.

The RBA meeting will be held next week on April 4. Judging by inflation reports, the regulator will hardly hike the key rate. This is rather bearish for the Aussie.

The kiwi/dollar pair has already sunk to 0.6655, gradually moving down. It slid into the range of 0.6661–0.6714 in the Asian session. Further movements of the pair will depend entirely on the sentiment on the US dollar.

The New Zealand dollar also entered the bearish price corridor of 0.6232-0.6272. However, unlike the Aussie, the kiwi may resume growth thanks to a rate hike by the Reserve Bank of New Zealand.

The meeting is on tap on April 5. The regulator is expected to raise the benchmark rate by a quarter point. It may help the kiwi rise against the US dollar. The pair closed the Asian session with a fall to 0.6232.



00:00 Intro
00:24 Asian stock markets
02:02 Rise in shares of tech companies
02:33 The banking crisis
03:49 CME FEDWATCH TOOL
04:18 USDX
05:08 USD/JPY
05:57 AUSTRALIA MONTHLY CPI INDICATOR
06:47 AUD/USD
06:59 NZD/USD


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