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SINGAPORE — The U.S. dollar and the yen were steady on Wednesday, holding onto overnight gains as concerns over the U.S. banking sector and economy hit sentiment, while the Aussie slid after easing inflation suggested less pressure to raise interest rates.

The dollar index, which measures the currency against six major rivals, nudged 0.01% higher to 101.80 after a 0.5% increase overnight. The index is down 0.76% for the month.

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Shares of First Republic Bank slid nearly 50% on Tuesday after it reported a more than $100 billion plunge in deposits in the quarter, battered by lost confidence in the banking sector.

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It faces dwindling and tough options to turn around its business with the creation of a “bad bank” or asset sales possibilities, a source familiar with the matter told Reuters.

“The USD increase is the typical response to bad news, even if the bad news is based in the United States,” said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia. “While concerns about small U.S. banks remain, we expect the USD to stay elevated.”

The Japanese yen strengthened 0.13% to 133.53 per dollar, after gaining about 0.4% on Tuesday. The traditional safe-haven gained 2.6% in March amid fears of a widespread banking crisis but has lost 0.6% in April as the worries eased.

Also weighing on sentiment was fresh economic data. U.S. consumer confidence dropped to a nine-month low in April, data overnight showed, heightening the risk that the economy could fall into recession this year.

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The U.S. Richmond Fed manufacturing index slid as well, down to -10 in April, the fourth straight month of contraction.

Markets are now pricing in a 76% chance of a 25 basis point increase when the Federal Reserve meets next week, CME FedWatch tool showed, down from a 90% chance at the start of the week.

DBS strategists said data and sentiment could shift pricing as the Fed is in a blackout ahead of its policy meeting next week. They said that the market participants are not comfortable pricing in a full increase for May since the bank problems.

“We are wary of downside risks and think that the widely expected last 25bps hike next week might not be quite cast in stone,” the strategists said in a note.

Investor attention will firmly be on the slate of central bank meetings in the next few weeks with the Bank of Japan, under the new Governor Kazuo Ueda, holding its policy meeting later this week.

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Meanwhile, the Federal Reserve said it will publish its internal review of its supervision of Silicon Valley Bank on Friday.

The review, which is being led by Fed Vice Chairman for Supervision Michael Barr, follows the regional bank’s abrupt failure last month. It will include policy recommendations and confidential supervisory information that the Fed typically does not disclose to the public, Barr has said.

The euro was up 0.02% to $1.0974, but has drifted away from the 10-month high it touched this month. Sterling was at $1.2413, up 0.04% on the day, while the kiwi eased 0.07% to $0.613.

The Australian dollar slid to a six-week low of $0.6604 before settling down 0.3% at $0.6605 after data showed inflation eased from 33-year highs in the first quarter, while core inflation dipped below forecasts.

ING economists said a cooler-than-estimated inflation report should be enough to “encourage thoughts that the recent pause in rate tightening by the Reserve Bank of Australia (RBA) may end up being more than that, and confirm that 3.6% was the peak in rates this cycle.”

Investors reacted to the data by lengthening the odds on the RBA resuming raising rates at its May 2 meeting, having paused in April after a streak of 10 straight increases.

(Reporting by Ankur Banerjee in Singapore; Editing by Edwina Gibbs and Gerry Doyle)