TOKYO, March 10 — The dollar recovered slightly today from heavy losses against the yen, the euro, and the Swiss franc due to hopes for US economic stimulus and a bounce in Treasury yields.
The greenback started to grind higher as US stock futures rose after US President Donald Trump said the White House will hold news conference today about economic measures in response to the coronavirus outbreak.
US Treasury Secretary Steve Mnuchin also said the White House would hold a meeting with bank executives this week in a sign the US government is preparing to roll out more measures to soften the blow from the spread of the flu-like virus.
However, analysts say it is too early to call a bottom in the dollar, which was pummelled yesterday after a price war between Saudi Arabia and Russia triggered the biggest daily rout in oil prices since the 1991 Gulf War.
“Expectations for a coordinated policy response are something that is evolving and ultimately this could help,” said Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney.
“But in the short term the dollar is driven by expectations for US Federal Reserve easing.”
The dollar rose 0.63 per cent to 102.34 yen, pulling back from the lowest in more than three years.
Against the euro, the greenback rose 0.24 per cent to US$1.1400 (RM4.83) after falling yesterday to its lowest in more than a year against the common currency.
The dollar rose 0.36 per cent to 0.9283 Swiss franc today after three days of heavy selling pushed it to the lowest in almost five years. Data suggests the Swiss National Bank is now ramping up its market interventions to weaken its currency.
Against the pound, the dollar rose 0.39 per cent to US$1.3075.
The dollar gradually accelerated after US stock futures opened higher and Treasury yields climbed off record lows.
Oil futures also rose in Asia today in a sign that financial markets are trying to regain some composure, but many traders warn that recent turmoil has been so dramatic that risks are still tilted to the downside.
Financial markets, which were already reeling as investors counted the mounting economic costs of a global coronavirus epidemic, were dealt another severe blow yesterday by the sharp sell-off in crude prices.
Money markets show the Fed, which already stunned investors with a surprise 50 basis point rate cut last week, is likely to ease policy further in the future.
The Fed is also injecting cash into the banking system in a sign of underlying financing stress in the world’s largest economy.
Expectations for Fed easing are likely to bring the dollar and US yields back down, but for the time being today the greenback got a brief respite.
The currencies of oil-producing countries also managed to rise slightly after receiving a mauling yesterday.
The Russian rouble rose 0.5 per cent against the dollar. The Norwegian krone also rose 0.2 per cent. The Canadian dollar gained 0.1 per cent, pulling back slightly from its lowest since 2017.
The Australian dollar, which is closely tied to the global commodity trade and China’s economy, rose 0.17 per cent to US$0.6592. However, the New Zealand dollar was little changed at US$0.6335. — Reuters
