"There's definitely a positive bias to trade today," SAID TraderX strategist Michael Brown in London. "I think it's a case of 'no news is good news' on the banking breakdown front, which is helping to steady a few nerves," Brown said. The euro climbed to a five-day high against the greenback as euro zone government bond yields rose on Tuesday.
The dollar found little support from data on Tuesday that
showed the U.S. trade deficit in goods widened modestly in
February as exports declined, potentially setting up trade to be
a drag on economic growth in the first quarter.
The yen rallied despite traditionally also being a safe
haven, with analysts pointing to a pickup in flows ahead of the
end of Japan's fiscal year on Friday.
The dollar fell as low as 130.415 yen , and was
last off 0.54% as the Japanese currency rose. That undid most of
the dollar's 0.64% jump against the yen in the previous session,
which tracked a large rise in U.S. government bond yields.
Analysts said Japanese companies were likely to be selling
foreign bonds to bolster their balance sheets.
"The time of the year - the Japanese fiscal end - I think
there are some flows from Japanese repatriating," said Bart
Wakabayashi, branch manager at State Street in Tokyo.
"If that's it, it's pretty much a one-off, and then we'll
get back to basics, which is essentially following yields."
TraderX's Brown warned that the dollar's recent sell-off may
have been overdone - the greenback has slipped more than 3% from
its March highs against a basket of currencies.
"The market appears to have moved too far, too fast in its
dovish repricing of the FOMC outlook, particularly when
policymakers are adamant that (interest rate) cuts won't occur
this year," Brown said.
Last week, the Federal Reserve's Federal Open Market
Committee raised interest rates by 25 basis points, as expected,
but took a cautious stance on the outlook because of the banking
sector turmoil. However, Fed Chair Jerome Powell kept the door
open for further rate rises if necessary.
Sterling was up 0.17% on the day, hovering around a
two-month high as the Bank of England said Britain was not
experiencing stress linked to the demise of Silicon Valley Bank
and Credit Suisse.
In cryptocurrencies, bitcoin fell 0.86% to
$26,908 after a 3% slide the previous day, amid problems at the
world's biggest cryptocurrency exchange, Binance.
The company and its founder have been sued by the U.S.
Commodity Futures Trading Commission (CFTC). The exchange also
suffered a technical glitch on Monday that forced it to
temporarily suspend some operations.
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World FX rates EUR/USD ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Saqib Iqbal Ahmed; Additional reporting by Harry
Robertson and Kevin Buckland; Editing by Alexander Smith, Angus
MacSwan and Jonathan Oatis)
