Dollar Steadies Against Peers as Yen Remains Volatile Ahead of Fiscal Year-End

After a recent decline, the US dollar steadied against most major peers on Wednesday. The dollar index, which tracks the currency against six peers, was flat at 102.42, giving up small gains of up to 0.3% in the European morning. However, it has fallen for the past two sessions and is set for a 2.1% monthly fall, a victim of the market ructions induced by problems in the banking industry.

We have returned to a sense of calm right now, but I don't think it's all over. In the way that water will find cracks, the market is testing for weak points, and it's how and who will cope best in the high-rate environment.

The euro was up a whisker on the day at $1.0855 and sterling was steady at $1.2343, having touched a near two-month intraday high of $1.236.

Currency markets have been struggling to fix a particular trend in the recent volatility. If you take the dollar, on the surface markets thinking the Fed will have to cut interest rates because of the banking crisis could be dollar negative, but if rates are being cut because of a risk of recession, where are you going to move money? Not to emerging markets" added Foley.

As the end of the Japanese fiscal year approached, the yen remained volatile. The dollar touched a one-week high on the yen and was last up 0.7% to 131.85 yen, while the euro gained 0.7% against the yen to 143.

The yen hit its strongest in roughly two months against both the dollar and the euro last week, benefiting from a flight to safety. However, Foley said the market could be seeing less need for a safe haven this week.

"U.S. bond volatility has driven most of the volatility in dollar-yen, so it makes sense that we're closer to 130 than 140 because U.S. yields are that much lower. Elsewhere, the Australian dollar slipped 0.45% to $0.6677 after a reading of Australian consumer inflation slowed to an eight-month low, adding to the case for the Reserve Bank to pause its rate hiking campaign next week.

Bitcoin rose 4% to $28,360, finding its feet having slid following the problems at the world's biggest cryptocurrency exchange, Binance, which has been sued by the U.S. Commodity Futures Trading Commission.