Credit Agricole CIB Research sees the Fed still on track to raised rates at its next week's meeting.
"Our working assumption in the near term is that the SVB failure should not distract the Fed from delivering on its inflation mandate, and we believe that the US inflation outlook will once again become the main driver of the USD in the near term. In that, potential positive surprises from the CPI data could reignite Fed rate hike expectations in a boost to the currency," CACIB notes.
"We also note that the SVB debacle has fuelled USD scarcity once again (eg, when looking at Libor-OIS and cross-currency basis swap spreads). The moves by US regulators to guarantee deposits and the Fed to provide liquidity have removed this support for the USD," CACIB adds.