Fed and regional bank stress add to Dollar's appeal – ING

The Dollar is doing a little better and equity markets are a little softer after the Federal Reserve pushed back against early easing and US regional banks again hit the headlines, economists at ING report.

Two more reasons to hold Dollar

The Fed's pushback against a March cut has helped short-dated US rates edge a little higher and offered some support to the Dollar.

New York Community Bancorp's (NYCB) share price was marked down heavily on poor quarterly earnings, with some of the large loan loss provisions being linked to the Commercial Real Estate sector - perhaps the Achilles Heel of the strong US story. We did notice a 7 bps widening of the 3m EUR/USD cross-currency basis swap on the NYCB news. If the US regional bank crisis flares up again, keep a close watch on this basis swap, where the USD may initially strengthen until the Fed calms funding conditions Down again.

DXY should continue to grind higher towards the upper end of a 103.00-104.00 range.