FOREX-Dollar pares losses as investors wait on stimulus bill
The dollar gave up most of
its early losses on Tuesday as investors waited on a Senate
stimulus bill meant to blunt the economic impact of the
spreading coronavirus, and after U.S. President Donald Trump
pressed his case for a re-opening of the U.S. economy by
mid-April.
Senior Democrats and Republicans said on Tuesday they were
close to a deal on a $2 trillion coronavirus economic stimulus
package, raising hopes that the divided U.S. Congress could soon
act to try to limit the pandemic’s economic fallout.
There is mounting frustration among some politicians that
businesses are closing to stop the spread of the virus, which is
leading analysts to predict the nation will see the worst
recession since the Great Depression.
At the same time, many investors think markets and the
economy will not be able to stabilize until the worst of the
virus spread has passed.
“While we think that most currencies will eventually regain
much of the ground that they have recently lost to the U.S.
dollar, we don’t expect that process to start until the pandemic
has clearly passed its worst,” Oliver Allen, assistant economist
at Capital Economics, said in a report.
Against a basket of its rivals, the dollar fell 0.17%
to 101.95. It fell as low as 101.04 on Tuesday and is down from
a more than three-year high of 102.99 on Friday.
Trump has said he would like the U.S. economy to reopen by
Easter, saying that Americans could continue practicing
social-distancing measures, which health experts say are crucial
to prevent infection, while also returning to work.
But medical experts and officials on both sides of the U.S.
political spectrum say it is critical to stop the spread of the
virus, whatever the economic cost.
New steps taken by the Federal Reserve on Monday to boost
liquidity across debt markets and backstop lending are seen as
helping market conditions.
“The Fed’s measures are unprecedented, and they have been
extremely proactive in preventing this external shock from
morphing into a wider funding crisis,” said Vasileios Gkionakis,
head of FX strategy at Lombard Odier.
The U.S. central bank announced various programs, including
purchases of corporate bonds, guarantees for direct loans to
companies and a plan to get credit to small and medium-sized
business.
Against the dollar, the euro was up 0.47% at $1.0771.
Some more relief was also evident in dollar funding markets,
with measures of short-term funding indicators such as
euro-dollar FX swaps for three-month maturities
stabilizing around 6 basis points after blowing out to more than
100 bps last week.
The British pound rose 1.67% to $1.1741, up from a
35-year low of $1.1413 set last week.
The Australian dollar gained 1.75% to $0.5929,
extending its recovery from a 17-year low of $0.5510 last week.
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Currency bid prices at 4:00PM (2000 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.0771 $1.0721 +0.47% -3.92% +1.0887 +1.0724
Dollar/Yen JPY= 111.5000 111.2000 +0.27% +2.43% +111.7100 +110.1000
Euro/Yen EURJPY= 120.11 119.30 +0.68% -1.51% +120.5300 +118.8400
Dollar/Swiss CHF= 0.9827 0.9845 -0.18% +1.54% +0.9850 +0.9720
Sterling/Dollar GBP= 1.1741 1.1548 +1.67% -11.45% +1.1799 +1.1511
Dollar/Canadian CAD= 1.4485 1.4496 -0.08% +11.54% +1.4532 +1.4375
Australian/Doll AUD= 0.5929 0.5827 +1.75% -15.55% +0.5974 +0.5813
ar
Euro/Swiss EURCHF= 1.0585 1.0560 +0.24% -2.46% +1.0600 +1.0558
Euro/Sterling EURGBP= 0.9171 0.9286 -1.24% +8.48% +0.9326 +0.9146
NZ NZD= 0.5801 0.5720 +1.42% -13.88% +0.5839 +0.5693
Dollar/Dollar
Dollar/Norway NOK= 11.1439 11.5363 -3.40% +26.95% +11.5981 +10.8613
Euro/Norway EURNOK= 12.0040 12.4180 -3.33% +22.02% +12.4770 +11.7980
Dollar/Sweden SEK= 10.1500 10.3150 -1.32% +8.59% +10.3722 +10.1223
Euro/Sweden EURSEK= 10.9830 11.1300 -1.32% +4.91% +11.1280 +10.9507
(Reporting by Karen Brettell; Additional reporting by Saikat
Chatterjee in London; editing by Jonathan Oatis and Dan Grebler)
