FOREX-Dollar mostly firmer but U.S. stimulus gridlock narrows gains

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Dollar retains advantage amid coronavirus crisis
* U.S. lawmakers trying to pass fiscal stimulus
* Travel curbs raise risk of global recession

By Stanley White
TOKYO, March 23 (Reuters) - The dollar held gains against
most peers on Monday as fresh declines in stocks accelerated the
flight to cash, although it lost ground against the euro and yen
as U.S. lawmakers failed to pass a stimulus package to fight the
coronavirus.
Legislators in Washington were unable to clear the stimulus
measures on Sunday and a vote on Monday was ruled out as
Republicans and Democrats tussled over the details of a proposed
$1 trillion spending package.
Some investors who had bet on big stimulus vented their
frustration by selling the dollar against the yen and the euro,
but analysts warn this move is likely short-lived as the
majority of investors unwind positions to hold cash.
"We've moved from risk off to a phase where major players
are competing with each other for the safety of holding dollars
in cash," said Yukio Ishizuki, FX strategist at Daiwa Securities
in Tokyo.
"There are still a lot of investors who need to sell riskier
assets, and they want to hold their money in dollars."
Against the yen JPY=EBS , the U.S. currency bounced between
gains and losses but last traded down 0.6% at 110.07.
The dollar initially rose against the euro EUR=EBS to the
strongest since April 2017 but then pared gains to trade 0.4%
lower at $1.0737 per euro.
U.S. political uncertainty added to the tense mood in Asia.
Partisan battles in the Senate stopped a $1 trillion-plus
coronavirus response bill from advancing on Sunday, but talks
continued over Democrats' demands for more funding for medical
care and state and local efforts to combat the pandemic.
The bill is Congress' third effort to blunt the economic
toll of a disease that has killed at least 420 people in the
United States and sickened more than 33,000.
Nearly one in three Americans was ordered to stay home on
Sunday to slow the spread of the disease, while Italy banned
internal travel as deaths there reached 5,476. U.S. President Donald Trump has approved disaster
deceleration requests from New York and Washington, while St.
Louis Federal Reserve President James Bullard warned
unemployment could reach 30% unless more was done fiscally.
Elsewhere, the dollar extended gains.
The greenback rose 0.1% against the pound GBP=D3 to
$1.1657, trading near the strongest since at least 1985.
It closed in on multi-year highs against the Australian
AUD=D3 and New Zealand NZD=D3 dollars as the economic costs
of self-isolation triggered the largest intraday decline ever in
New Zealand shares.
Investors have been liquidating positions in safe-havens and
other riskier investments to keep their money in dollars due to
the uncertainty caused by the epidemic.
Major central banks have ramped up efforts to ease a global
dollar funding crunch, but the U.S. currency remains in demand
due to the high degree of uncertainty about the unknown flu-like
virus. Investors have to pay 86 basis points (bps) over interbank
rates to swap 3-month yen into dollars JPYCBS3M= ,
cross-currency basis swap rates showed on Monday. This is less
than a 139 bps premium reached on March 19, but swap rates are
still above average.
The dollar has also surged against many emerging market
currencies, highlighting the growing sense of risk aversion
across the globe.
In Asian trading, the dollar rose to a record high against
the Mexican peso MXN= and the highest since December 2018
against the Thai baht THB= .
So far this year, the dollar is up 26% against Brazil's real
BRL= , up around 11% against the Korean won KRW= and up 20%
against the Indonesian rupiah IDR= .
Global markets have been upended in recent weeks as the
coronavirus spread from central China and governments responded
with increasingly strict restrictions on travel and daily life,
disrupting businesses and prompting consumers to stay at home
and rein in spending.
The virus has now been reported in more than 100 countries
and has claimed more than 13,000 lives.