28 Mar 2023
The US Dollar declined on Tuesday as fading fears of a full-on banking crisis led to a demand slowdown for safe-haven assets.
That said, there was a rally for the Japanese Yen, with analysts signalling a pick up inflows ahead of Friday's end of Japan's fiscal year.
The Dollar fell as much as 130.51 Yen and at the time of writing was down 0.29% at 131.2. This reversed some of the greenback's 0.64% increase against the Japanese currency in the previous session, which tracked a considerable jump in US government bond yields.
According to analysts, Japanese firms were likely selling foreign bonds to boost their balance sheets, Reuters news agency reports.
"The time of the year - the Japanese fiscal end - I think there are some flows from Japanese repatriating," according to 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."
In addition, both the Pound and Euro edged up as markets welcomed the First Citizens BancShares' agreement to purchase collapsed Silicon Valley Bank's deposits and loans.
The single currency was up 0.27% at the time of writing to $1.803, whilst the Sterling rose 0.31% to $1.233, just under a two-month top.
"Markets are just generally a little bit risk-positive … and the default position against that background is that the Dollar drifts lower," stated Adam Cole, RBC Capital Markets chief currency strategist.
"We could be in this kind of risk-on, risk-off environment for a couple of months," Cole went on to say.
Whereas the US Dollar index – measuring the greenback against six rivals – dropped 0.19% to 102.56 following a 0.26% decline on Monday.
Elsewhere, the Australian Dollar registered a sharp uptick, as well as an extra boost from better-than-forecast retail sales data. At the time of writing, the Aussie was 0.56% higher at $0.669.