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FOREX-Dollar slows slide as investors seek shelter amid pandemic crisis

Published 30/03/2020, 01:15
Updated 30/03/2020, 01:18
© Reuters.

© Reuters.

* Dollar steady after worst week since 2009
* Yen higher with risk-off mood
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Westbrook
SINGAPORE, March 30 (Reuters) - The dollar slowed its
descent after a week of declines and the safe-haven yen edged
ahead on Monday, as coronavirus lockdowns tightened across the
world and investors braced for a prolonged period of
uncertainty.
In bumpy trade the dollar ran ahead early before settling
back against the pound, euro, kiwi and the Australian dollar.
Sterling GBP= was last 0.1% softer at $1.2449, the Aussie
AUD=D3 flat at $0.6158 and the euro EUR= stable at $1.1132.

"After all, the dollar is a safe-haven currency," said
Rodrigo Catril, senior FX strategist at National Australia Bank
in Sydney. "It's reflecting caution, and an uncertain market
where you're seeing a lot of illiquidity."
The weekend brought more bad news on the virus front. The
U.S. has emerged as the latest epicentre of the outbreak, with
more than 137,000 cases and 2,400 deaths. President Donald Trump, who had talked about reopening the
economy for Easter, on Sunday extended guidelines for social
restrictions to April 30 and said the peak of the death rate
could be two weeks away. Australia also ratcheted up control measures, while an
extension to lockdowns in Italy looms. The halt in the dollar's slide came with a broader
risk-averse mood, which lifted the Japanese yen JPY= 0.4% to
107.47 per dollar.
The moves come after the dollar has surged amid a scramble
for cash and then subsided as central bank launched
unprecedented liquidity measures.
Over the past two weeks the dollar has posted its biggest
weekly rise since the 2008 financial crisis and then its biggest
weekly drop since 2009. Yet as signs of funding stress have
eased, but not abated, the dollar remains at elevated levels.
"Risk aversion has been more important to the direction of
the dollar than traditional interest rate differentials,"
Standard Chartered analysts said in note.
"For the dollar to surrender some of its recent gains,
investors would need to shift their preferences back to a
broader basket of safe-haven assets."
Monday's moves showed some hints of that, since dollar gains
were modest and in tandem with rises in gold, bonds and the yen.
MKTS/GLOB
Yields at the very short end of the U.S. curve dipped into
negative territory and futures for 10-year notes TYc1 implied
a 0.54% yield, some 20 basis points below Friday's close of the
underlying Treasuries US10YT=RR . Gold rose 0.5%.
Against a basket of currencies =USD , the dollar was steady
at 98.312. It edged ahead against the Chinese yuan in offshore
trade to 7.0800 per dollar CNH=D3 .


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