The dollar rebounded in cautious trading on Tuesday, after tumbling the previous day following the collapse of Silicon Valley Bank (SVB). Investors awaited the release of US consumer inflation data later in the day, which has the potential to drive further volatility in global markets.
Monday’s market turmoil was sparked by fears of a potential banking crisis, causing traders to rapidly scale down their expectations for Federal Reserve rate hikes. The euro was down 0.36% at $1.069 as the greenback bounced back. On Monday, the euro hit a one-month high of $1.075 and rose 0.85% across the session.
Investors await US consumer inflation data
Tuesday’s consumer price index (CPI) figures are highly anticipated, as they have the potential to cause further market volatility. Investors are carefully monitoring the CPI data, as it could impact the Federal Reserve’s decision on whether to raise interest rates.
The nervous market sentiment was reflected in the comments of Alvin Tan, head of Asia FX strategy at RBC Capital Markets. “Essentially, it’s a very, very nervous market,” Tan said.
Dollar up against the yen
The dollar rose 0.79% to 134.25 yen, reversing some of Monday’s 1.4% slide. The rebound in the dollar against the yen suggests that investors are moving away from safe-haven assets.
Market remains cautious
Despite the rebound in the dollar, the market remains cautious. Investors are still uncertain about the future of the global economy, given the ongoing pandemic and the risk of a potential banking crisis.
In conclusion, the dollar rebounded in cautious trading on Tuesday, following Monday’s market turmoil caused by the collapse of Silicon Valley Bank. Investors are carefully monitoring the release of US consumer inflation data, which has the potential to cause further market volatility. The market remains cautious, as uncertainty about the future of the global economy lingers.