Currency markets react to banking instability fears

The U.S. dollar retreated slightly as fears of full-scale banking instability dampened demand for the so-called on-protected shelter assets.

The yen advanced, despite also being traditionally a haven, with analysts pointing to higher flows ahead of the end of Japan’s fiscal year.

The dollar retreated to 130.52 yen and was last down 0.38% at 102.49 as the Japanese currency advanced. That erased some of the dollar’s 0.65% jump against the yen in earlier trade, which tracked a big advance in U.S. Treasury yields.

Analysts say Japanese companies are further selling foreign bonds to strengthen their balance sheets.

Elsewhere, the euro and pound strengthened as markets responded positively to First Citizens BancShares’ agreement to acquire all of Silicon Valley Bank’s deposits and loans and the assurance that there were no other looming problems in the international banking sector.

The euro last advanced by 0.27% and amounted to 1.084 USD. Sterling advanced 0.2% to $1,232, below a two-month high.

The U.S. dollar index evaluates how its value stacks up against six other currencies, including the Japanese yen. It fell 0.16% to 102.7 after retreating 0.27% on Monday.

Bitcoin retreated 0.41% to around $26,938 after a 3% drop the previous day amid problems at Binance, the world’s largest cryptocurrency exchange.

The U.S. Commodity Futures Trading Commission sued the company and its founder. The exchange also experienced a technical glitch on Monday, forcing it to halt several operations temporarily.

The risk-sensitive Australian dollar advanced, further boosted by better-than-expected retail sales data. It was last up by 0.34% to $0.668.

Monex Europe’s head of F.X. analysis said a later U.S. Senate hearing with bank regulators could cause some volatility.