FOREX-Dollar slips as banking turmoil snares markets


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 (Adds comment, fresh prices)
    By Herbert Lash and Amanda Cooper
       NEW YORK/LONDON, March 17 (Reuters) - The dollar fell on
Friday as further declines in the shares of Credit Suisse and
First Republic Bank rattled markets fearful of contagion and
increased concerns that a recession lies ahead because of the
impact of tighter monetary policy.
    An early recovery in European stocks ran out of steam as
investor sentiment remained fragile after a week of turbulence
following the failure of Silicon Valley Bank on March 10.
    U.S. banks have sought a record $153 billion in emergency 
liquidity from the Federal Reserve in recent days, while the $54
billion loan for Credit Suisse  CSGN.S  and $30 billion lifeline
for First Republic  FRC.N  failed to halt their stock declines.
Credit Suisse fell 8% in Europe and First Republic tumbled 30%.
    The dollar index  =USD , a measure of the dollar against six
other currencies, slid 0.604% as traders waited for the Fed's
two-day policy meeting that is expected to end with a
one-quarter percentage point hike in interest rates on March 22.
    Contracts for fed funds futures show a 61.3% probability
that the Fed will raise rates by 25 basis points, according to
CME's FedWatch Tool. Futures also show the Fed will have cut
rates by July in a sign recession fears are mounting as the U.S.
central bank tightens monetary policy to fight high inflation. 

    Whether the banking turmoil of the past week leads to an
immediate recession is hard to say, said Mazen Issa, senior FX
strategist at TD Securities in New York. 
    "It probably increases the probability that you do have a
recession and perhaps it increases the probability that you may
have a hard-landing scenario, a more severe recession dynamic,"
he said.
    "Once you have one regional bank go down, households
question whether or not the regional banks are in trouble,
that's a natural human emotion to feel," he said.
    Banking troubles revived memories of the 2008 financial
crisis, when dozens of institutions failed or were bailed out
with billions of dollars of government and central bank money.
    Three smaller U.S. lenders, including First Republic, have
had regulators and other banks step in to prop them up, while in
Europe, Credit Suisse became the first major global bank since
the financial crisis to get an emergency lifeline.
    "There is a wait and see approach as to what will happen
with the U.S. economy," said Ed Moya, senior market analyst at
OANDA in New York. "Now we're not debating a‘soft landing, no
landing.’ We're debating is it a mild or severe recession?"
    The euro  EUR=  rose 0.66% to $1.0675.
    The rescue of First Republic on Thursday initially boosted
risk appetite on Friday as concerns about global banks eased,
making way for surges in the Australian and New Zealand dollars.
    Sterling  GBP=  last traded at $1.2192, up 0.70%, while the
dollar  CHF=  fell 0.39% against the Swiss franc. Earlier this
week, the franc plunged the most against the dollar in one day
since 2015, when the Swiss central bank loosened its currency
    The Japanese yen  JPY= , which tends to benefit in times of
extreme market volatility or stress, strengthened 1.48% versus
the greenback to 131.77 per dollar. 
    Japan's Ministry of Finance, Financial Services Agency and
Bank of Japan officials met on Friday evening to discuss
financial markets. 
    Masato Kanda, vice finance minister for international
affairs, told reporters after the trilateral meeting that the
government, the central bank and the banking watchdog would
coordinate to ensure the stability of the financial system.
    The Australian dollar  AUD= , which often outperforms when
investors are feeling optimistic, rose 0.81% to $0.671.

    Currency bid prices at 3:09 p.m. (1909 GMT)
 Description        RIC          Last        U.S. Close   Pct Change       YTD Pct         High Bid     Low Bid
                                              Previous                      Change                      
 Dollar index        =USD        103.7400    104.3900     -0.60%           0.242%          +104.4400    +103.6800
 Euro/Dollar         EUR=EBS     $1.0677     $1.0611      +0.62%           -0.36%          +$1.0686     +$1.0611
 Dollar/Yen          JPY=EBS     131.7650    133.7800     -1.49%           +0.51%          +133.7350    +131.5550
 Euro/Yen            EURJPY=     140.68      141.91       -0.87%           +0.27%          +142.2000    +140.1700
 Dollar/Swiss        CHF=EBS     0.9255      0.9293       -0.38%           +0.12%          +0.9299      +0.9241
 Sterling/Dollar     GBP=D3      $1.2194     $1.2110      +0.69%           +0.82%          +$1.2200     +$1.2103
 Dollar/Canadian     CAD=D3      1.3721      1.3722       +0.00%           +1.28%          +1.3773      +1.3679
 Aussie/Dollar       AUD=D3      $0.6708     $0.6658      +0.79%           -1.56%          +$0.6724     +$0.6650
 Euro/Swiss          EURCHF=     0.9883      0.9859       +0.24%           -0.12%          +0.9911      +0.9841
 Euro/Sterling       EURGBP=     0.8754      0.8760       -0.07%           -1.02%          +0.8782      +0.8745
 NZ Dollar/Dollar    NZD=D3      $0.6271     $0.6196      +1.20%           -1.24%          +$0.6277     +$0.6192
 Dollar/Norway       NOK=D3      10.6960     10.7700      -0.68%           +9.00%          +10.7660     +10.6700
 Euro/Norway         EURNOK=     11.4219     11.4211      +0.01%           +8.84%          +11.4412     +11.3507
 Dollar/Sweden       SEK=        10.4853     10.5049      +0.29%           +0.74%          +10.5515     +10.4430
 Euro/Sweden         EURSEK=     11.1910     11.1582      +0.29%           +0.42%          +11.2054     +11.1239

World FX rates
SVB Financial seeks bankruptcy protection as banking turmoil
ECB watchdog sees no Europe contagion after US, Swiss bank
First Republic shares fall despite unprecedented Wall Street
rescue deal*:nL4N35O47V
GRAPHIC-Banking worries send US markets on dizzying ride*:nL1N35O2WZ
Major US banks inject $30 bln to rescue First Republic Bank*:nL1N35O01H
ANALYSIS-Is the backlash over SVB collapse a threat to 'woke'
ANALYSIS-SVB's climate tech clients face humbling funding
ANALYSIS-Investors stick to bets on early end to ECB hikes as
uncertainty grows*:nL1N35P0MD
GRAPHIC-Markets tumble then recover amid bank crisis
GRAPHIC-Americans opt to keep their money with the banks
GRAPHIC-Majority of Americans oppose a bank bailout
Global currencies vs. dollar IMG
Odds point to 25 bps Fed rate hike next week
 (Additional reporting by Rae Wee in Singapore; Editing by Nick
Zieminski and Mark Potter)
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