# Dollar outshines euro, sterling amid European bank jitters
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-24
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Euro and Sterling Plummet as Dollar Strengthens on Banking
Meta Description: Euro and sterling plummet as worries over banks persist, with dollar strengthening. Market experts speculate on safe-haven demand and Fed future decisions.
URL: https://financedigest.com/dollar-outshines-euro-sterling-amid-european-bank-jittershtml

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By Hannah Lang

WASHINGTON (Reuters) – The euro and sterling fell sharply against a strengthening dollar on Friday amid lingering nervousness over banks.

Banking stocks plunged in Europe with heavyweights Deutsche Bank and UBS Group pummelled by worries that the worst problems to hit the sector since the 2008 financial crisis have not yet been contained.

The dollar index rose 0.536% at 103.140, with the euro down 0.71% to $1.0753.

“Over many, many years, whenever there’s perceived or actual problems that look like they might be deep-rooted, people go to the dollar, and I think that’s probably all it is right now, said Joseph Trevisani, senior analyst at FXStreet.com.

Risk aversion also sent sterling 0.53% lower to $1.222, despite data showing the British [economy was set](https://www.financedigest.com/uk-economy-set-for-smaller-hit-in-2023-than-previously-feared-imf.html "UK economy set for smaller hit in 2023 than previously feared – IMF") to grow in the first quarter and confidence was growing.

The pound touched a seven-week high of $1.2341 on Thursday in volatile trading after the [Bank of England](https://www.financedigest.com/bank-of-england-fines-former-tsb-executive-over-2018-it-failure.html "Bank of England fines former TSB executive over 2018 IT failure") raised interest rates by 25 bps to 4.25%, but said a surprise resurgence in inflation would probably fade fast, stoking speculation it had ended its run of hikes.

[Banking stocks](https://www.financedigest.com/asian-stocks-rally-as-bank-jitters-calm-alibaba-lifts-mood.html "Asian stocks rally as bank jitters calm, Alibaba lifts mood") have been battered this month following the sudden failures of two regional U.S. lenders and the emergency sale of embattled Swiss [bank Credit](https://www.financedigest.com/explainer-what-are-credit-default-swaps-and-why-are-they-causing-trouble-for-europes-banks.html "Explainer-What are credit default swaps and why are they causing trouble for Europe’s banks?") Suisse to rival UBS.

SAFE-HAVEN DEMAND

The FX world seemed to suggest a bout of [risk aversion](https://www.financedigest.com/dollar-higher-on-risk-aversion-euro-revisits-parity.html "Dollar higher on risk aversion; euro revisits parity") with safe-haven proxies, gold and yen outperforming and most other currencies softer, according to Christopher Wong, currency strategist at OCBC.

Still the [Japanese yen](https://www.financedigest.com/japanese-yen-gains-as-ueda-set-to-be-named-next-boj-governor.html "Japanese yen gains as Ueda set to be named next BOJ governor") strengthened just 0.08% versus the greenback at 130.73 per dollar.

The more puzzling behavior in light of this is the fact that the yen is just a touch stronger — you can argue it’s pretty much unchanged,” said Paresh Upadhyaya, director of [fixed income](https://www.financedigest.com/ipc-and-transficc-announce-collaboration-on-fixed-income-and-derivatives-connectivity.html "IPC and TransFICC announce collaboration on fixed income and derivatives connectivity") and currency strategy at Amundi US. I would have thought in this environment that you would [see a stronger](https://www.financedigest.com/inpost-sees-stronger-2022-but-warns-of-slowing-demand.html "InPost sees stronger 2022 but warns of slowing demand") yen.

The Fed on Wednesday [raised interest rates by 25 basis points](https://www.financedigest.com/how-to-raise-my-credit-score-40-points-fast.html "How to raise my credit score 40 points fast"), as expected, but took a cautious stance on the outlook because of banking sector turmoil even as Fed Chair Jerome Powell kept the door open on further rate rises if necessary.

U.S. Treasury Secretary Janet Yellen [reiterated on Thursday that she was prepared to take further action to ensure Americans’ bank](https://www.financedigest.com/first-abu-dhabi-bank-reiterates-not-eyeing-offer-for-standard-chartered.html "First Abu Dhabi Bank reiterates not eyeing offer for Standard Chartered") deposits stayed safe, to ease investor nerves.

The markets will be closely watching next week’s readout of the personal consumption expenditures (PCE) price index, due March 31, for indications as to how the print could influence the [Fed’s upcoming rate decisions](https://www.financedigest.com/wage-data-dents-dollar-recovery-before-fed-rate-decision.html "Wage data dents dollar recovery before Fed rate decision"), said Trevisani.

If you get a as expected or weaker number, I [think that gives the Fed reason to pull](https://www.financedigest.com/the-pull-of-the-past-1-in-5-keep-items-they-think-will-be-valuable-in-the-future.html "The pull of the past! 1 in 5 keep items they think will be valuable in the future") back, which is what they’re doing anyway,” he said.

In cryptocurrencies, bitcoin last fell 2.16% to $27,732.00.

========================================================

Currency bid prices at 2:30PM (1830 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 103.1400 102.6000 +0.54% -0.338% +103.3600 +102.5000

Euro/Dollar $1.0754 $1.0832 -0.71% +0.38% +$1.0839 +$1.0714

Dollar/Yen 130.7500 130.8300 -0.07% -0.28% +130.9300 +129.6450

Euro/Yen 140.62 141.73 -0.78% +0.23% +141.8500 +139.0800

Dollar/Swiss 0.9201 0.9164 +0.42% -0.48% +0.9216 +0.9157

Sterling/Dollar $1.2220 $1.2285 -0.53% +1.05% +$1.2290 +$1.2192

Dollar/Canadian 1.3739 1.3716 +0.16% +1.40% +1.3804 +1.3710

Aussie/Dollar $0.6642 $0.6684 -0.60% -2.54% +$0.6694 +$0.6625

Euro/Swiss 0.9894 0.9925 -0.31% -0.01% +0.9940 +0.9850

Euro/Sterling 0.8800 0.8814 -0.16% -0.50% +0.8828 +0.8778

NZ $0.6201 $0.6249 -0.74% -2.31% +$0.6252 +$0.6193

Dollar/Dollar

Dollar/Norway 10.4900 10.4010 +0.81% +6.84% +10.5850 +10.3810

Euro/Norway 11.2771 11.2504 +0.24% +7.47% +11.3575 +11.2366

Dollar/Sweden 10.4317 10.3248 +0.21% +0.23% +10.4726 +10.3055

Euro/Sweden 11.2137 11.1901 +0.21% +0.62% +11.2302 +11.1758

(Reporting by Hannah Lang in Washington; Additional reporting by Joice Alves in London and Ankur Banerjee in Singapore; editing by Angus MacSwan, Mark Heinrich and Diane Craft)


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