The dollar slid against all major currencies, but was essentially flat against the Canadian dollar. The dollar index , a basket of trading currencies, fell 0.618%.
Adding to the plunge in Treasury yields was the closing of SVB Financial Group , the largest bank failure since the financial crisis, as California regulators moved quickly to protect depositors at the startup-focused lender.
The yield on benchmark 10-year Treasury notes fell more than 22 basis points to under 3.70% in the biggest single-day drop in four months. Bond yields move opposite to their price. "There is a significant, in my opinion anyway, safe-haven bid going on," said Kevin Flanagan, head of fixed income strategy at WisdomTree. "There are concerns about potential banking stress." Average hourly earnings for all private workers rose 0.2% versus 0.3% in January, and lifted the year-on-year figure to 4.6%. Economists expected hourly earnings to rise 0.3% in February, which would have raised wages by 4.7% annually.
The dollar may be range-bound as slowing inflation to the Fed's target of 2% is likely to be bumpy, said Joe Manimbo, senior market analyst at Convera in Washington.
"When the market revises up expectations for peak rates, we see the dollar take two steps up. But once the dust settles, we see the dollar take a step back," Manimbo said. "The market already anticipates that the Fed is going to pause this year, but exactly when it's just unknown." Futures for fed funds slid to a 41% chance of a 50 bps hike when Fed policymakers meet on March 22, compared with a 71.6% probability a week ago, according to CME's FedWatch Tool. The market got ahead of itself on the prospect of a 50 basis-point hike at the next Fed meeting, said Dec Mullarkey, managing director of investment strategy and asset location at SLC Management in Boston. "Rate hikes of 25 basis points at this point make more sense as it allows the Fed to keep tightening but extend the period over which they do it to allow the data to catch up," he said. The euro rose 0.57% to $1.064 and Sterling traded at $1.2024, up 0.83% on the day.
The "quite important" consumer price index (CPI) scheduled
for release on March 14 is now front and center, said Andrzej
Skiba, head of the BlueBay U.S. fixed income team at RBC Global
Asset Management in New York.
"The focus now moves on to the CPI print and the overall
financial conditions given what's happening in the banking
space in the U.S.," he said.
The Japanese yen strengthened 1.01% to 134.79 per dollar.
The dollar earlier jumped against the yen in a knee-jerk move after the Bank of Japan kept policy unchanged in Governor Haruhiko Kuroda's last policy meeting before he steps down in April.
While the "no surprises" decision was expected by most
market-watchers, many see the days of the BOJ's bond yield curve
control (YCC) as numbered, which led to some pricing in a slim
chance of a policy tweak at Kuroda's last policy meeting.
========================================================
Currency bid prices at 3:45PM (2045 GMT)
Description RIC Last U.S. Pct Change YTD Pct High Bid Low Bid
Close Change
Previous
Session
Dollar index 104.6000 105.2500 -0.62% 1.073% +105.3600 +104.0200
Euro/Dollar $1.0640 $1.0583 +0.54% -0.70% +$1.0702 +$1.0574
Dollar/Yen 134.7850 136.1250 -0.98% +2.81% +136.9850 +134.1150
Euro/Yen 143.42 144.06 -0.44% +2.22% +145.1000 +143.3600
Dollar/Swiss 0.9214 0.9323 -1.16% -0.35% +0.9331 +0.9175
Sterling/Dolla $1.2023 $1.1927 +0.82% -0.57% +$1.2113 +$1.1910
r
Dollar/Canadia 1.3832 1.3827 +0.04% +2.09% +1.3861 +1.3765
n
Aussie/Dollar $0.6577 $0.6591 -0.15% -3.46% +$0.6640 +$0.6565
Euro/Swiss 0.9803 0.9867 -0.65% -0.93% +0.9882 +0.9796
Euro/Sterling 0.8848 0.8873 -0.28% +0.05% +0.8891 +0.8822
NZ $0.6130 $0.6102 +0.48% -3.45% +$0.6176 +$0.6091
Dollar/Dollar
Dollar/Norway 10.6260 10.6720 -0.57% +8.12% +10.7500 +10.5700
Euro/Norway 11.3175 11.2817 +0.32% +7.85% +11.3684 +11.2356
Dollar/Sweden 10.6977 10.7312 +0.31% +2.79% +10.7785 +10.6100
Euro/Sweden 11.3853 11.3500 +0.31% +2.11% +11.4101 +11.3460
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Wage growth is slowing Global currencies vs. dollar IMG ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Herbert Lash in New York
Additional reporting by Rae Wee and Alun John
Editing by Susan Fenton and Matthew Lewis)
