The euro and sterling fell sharply against a strengthening dollar on Friday amid nervousness over banks, with better-than expected economic data failing to lift sentiment.
Banking stocks plunged in Europe with heavyweights Deutsche Bank (DBKGn.DE) and UBS Group (UBSG.S) pummelled by worries that the worst problems to hit the sector since the 2008 financial crisis have not yet been contained.
The dollar index rose 0.497% at 103.100, with the euro down 0.68% to $1.0756.
"Over many, many years, whenever there's perceived or actual problems that look like they might be deep-rooted, people go to the dollar, and I think that's probably all it is right now, said Joseph Trevisani, senior analyst at FXStreet.com.
Better-than-expected flash Purchasing Managers' Index (PMI) data failed to lift the single currency as sentiment in markets were fragile with European banks (.SX7P) falling more than 3%.
"The data were better than expected, but the mood in the market is risk aversion, which is supporting another move back to the safe haven dollar," said Jane Foley, Head of FX Strategy at Rabobank London.
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Risk aversion also sent sterling 0.48% lower to $1.2226, despite data showing the British economy was set to grow in the first quarter and confidence was growing.
The pound touched a seven-week high of $1.2341 on Thursday in volatile trading after the Bank of England raised interest rates by 25 bps to 4.25%, but said a surprise resurgence in inflation would probably fade fast, stoking speculation it had ended its run of hikes.
Banking stocks have been battered this month following the sudden failures of two regional U.S. lenders and the emergency sale of embattled Swiss bank Credit Suisse to rival UBS.
The Nation, 24 Mar, 2023