FOREX-Dollar hammered as Treasury yields sink

Published 06/03/2020, 16:45
Updated 06/03/2020, 16:54
© Reuters.  FOREX-Dollar hammered as Treasury yields sink
EUR/USD
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GBP/USD
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USD/JPY
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DX
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* Euro, yen jump vs dollar

* Tumbling Treasury yields blunt U.S. interest rate

advantage

* Dollar on course for worst week since 2016

(New throughout, updates prices, market activity and comments

to U.S. market open, new byline, changes dateline, previous

LONDON)

By Saqib Iqbal Ahmed

NEW YORK, March 6 (Reuters) - The U.S. dollar fell across

the board on Friday, on pace for its worst weekly loss in four

years, as a sharp drop in U.S. government bond yields hurt the

greenback's appeal.

The dollar index =USD , which measures the greenback's

strength against a basket of six other major currencies, was

about 0.8% lower at 95.883, its lowest in about a year. For the

week, the index was down 2.4%, its worst weekly performance

since early February 2016.

"Another day of dollar underperformance, which has been

concurrent with a precipitous tumble in U.S. Treasury yields,"

Jonathan Coughtrey, managing director at Action Economics, said

in a note.

Investors have slashed their expectations for U.S. interest

rates after an emergency Federal Reserve rate cut of 50 basis

points earlier this week to counter the economic fallout from

the spreading coronavirus.

Worries about the virus have left market fundamentals in the

dust, and the 10-year note yield 10YT=RR sank to a record low

on Friday. That is wiping out the yield advantage that had

fueled a popular carry globally - borrowing at negative rates in

the euro and yen to buy U.S. assets. Markets now bet the Fed

will again cut rates by 50 basis points this month.

The euro EUR= climbed about 0.8% to an eight-month high of

1.1328. Against the Japanese yen JPY= , the dollar was down

0.9% at 105.19 yen, a more than six-month low.

Currency volatility gauges rose on Friday, with one-month

euro-dollar implied volatility reaching its highest since

November 2018. The dollar found little support from data that showed U.S.

employers maintained a robust pace of hiring in February, giving

the economy a strong boost as it confronts the coronavirus

outbreak that has stoked financial market fears of a recession.

"The print is very impressive," said John Doyle, vice

president for dealing and trading at Tempus Inc in Washington.

"But I think the positivity of the numbers will be drowned

out by the overarching risk-off environment today," Doyle said.

Sterling GBP= extended gains against the broadly weaker

dollar and was also boosted by comments from the European

Union's Brexit chief negotiator that a trade deal between

Britain and the bloc was still possible this year. The currency

was up 0.56% at $1.3026.

========================================================

Currency bid prices at 10:28AM (1528 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar EUR= $1.1294 $1.1239 +0.49% +0.75% +1.1354 +1.1213

Dollar/Yen JPY= 105.5700 106.1600 -0.56% -3.02% +106.3400 +105.0000

Euro/Yen EURJPY= 119.25 119.30 -0.04% -2.21% +119.4300 +118.7300

Dollar/Swiss CHF= 0.9368 0.9453 -0.90% -3.20% +0.9466 +0.9320

Sterling/Dollar GBP= 1.3026 1.2954 +0.56% -1.76% +1.3049 +1.2945

Dollar/Canadian CAD= 1.3422 1.3405 +0.13% +3.36% +1.3438 +1.3379

Australian/Doll AUD= 0.6630 0.6613 +0.26% -5.57% +0.6657 +0.6586

Euro/Swiss EURCHF= 1.0580 1.0623 -0.40% -2.51% +1.0629 +1.0576

Euro/Sterling EURGBP= 0.8667 0.8673 -0.07% +2.52% +0.8717 +0.8653

NZ NZD= 0.6345 0.6302 +0.68% -5.80% +0.6372 +0.6295

Dollar/Dollar

Dollar/Norway NOK= 9.2585 9.2855 -0.29% +5.47% +9.3320 +9.2333

Euro/Norway EURNOK= 10.4573 10.4340 +0.22% +6.30% +10.5025 +10.4170

Dollar/Sweden SEK= 9.3581 9.4329 -0.31% +0.11% +9.4691 +9.3345

Euro/Sweden EURSEK= 10.5691 10.6015 -0.31% +0.95% +10.6343 +10.5735

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