The foreign exchange market’s reaction to the SVB affair has been milder, on the whole, than the reaction in other markets. How contagious the SBV crisis proves to be will decide whether it sends the dollar down slowly or up fast, Kit Juckes, Chief Global FX Strategist at Société Générale report.

Stronger Dollar if SBV was a canary in the global economy’s mine

“The reason it matters for FX is clear – if SBVs woes cap Fed rate hikes, slow the US economy somewhat but not disastrously and don’t spread globally, the Dollar is set to resume the downtrend that began at the end of September, and which was interrupted by strong data in February.”

“If on the other hand, SBV was a canary in the global economy’s mine, the Dollar will be stronger in a few months.”