Since Friday, the market has been dominated by fears of a new US banking crisis. The Commerzbank economists point out that the dollar could trend in either direction.
The dollar will appreciate if the situation calms down
“If things calm down, the dollar is likely to appreciate as Fed rate expectations recover.”
“If nervousness remains high and if global contagion effects are feared, the dollar could benefit from its safe haven role. However, if the crisis remains confined to the US, as it seems for now, the dollar could suffer a double blow: as a consequence of the adverse risk environment in the US, which reduces the premium of the dollar as a safe haven currency, and due to the possible reduction of the Fed’s room for maneuver to react appropriately to inflation risks.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
