The US dollar continued to trade sideways this week, with the broad dollar index remaining within a tight 1.2% range. Markets are still looking for answers about how extensive credit tightening will be following last month’s banking turmoil, which resurfaced as a topic of conversation after First Republic reported a $100bn outflow of customer deposits in March. With no clear understanding of its quantitative impact, the hard versus soft landing debate raged on. Next week, markets could get clearer answers to these questions, thanks to upcoming ISM data and the fact that the Fed will have an early look at the Q2 Senior Loan Officer survey prior to its decision on Wednesday. Outside the US, eurozone inflation and bank lending data will also be in focus ahead of the ECB’s decision on Thursday.
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Simon Harvey, Head of FX Analysis
Jay Zhao-Murray, FX Market Analyst
María Marcos, FX Market Analyst
Nick Rees, FX Market Analyst