FX Daily: Looking for ‘cockroaches’
Eyes remain firmly on US regional banks this week. As Jamie Dimon warned,
there may be more ‘cockroaches’ (i.e. distressed lenders) out thereafter two US regional banks reported credit issues last week.
Markets will be looking very closely for evidence of that, and the dollar continues to face substantial downside risks. Later this week, US CPI should not come in hot enough to derail Fed easing plans.
Concerns about the health of regional banks and the broader quality of credit in the US remain very central for FX markets. On Friday, some recovery in sentiment helped the dollar rebound, signalling that going forward, some harder evidence backing those concerns is probably required to pressure the dollar again.
Risks appear tilted on the downside for the dollar. Author's summary: Dollar faces downside risks.