U.S. Dollar Lowers Again While Pound and Yen Rise Moderately

The U.S. dollar fell insignificantly on Wednesday after the central bank took measures to ease some of the funding squeezes. However, the currency managed to retain most of the gains from the overnight when it hit high due to the mounting fears about the fallout from the coronavirus crisis.

As the pandemic spreads, lots of countries announce lockdowns. The virus has killed over 8,000 people worldwide, while the total number of cases is approaching 200,000.

Amidst the ongoing panic, the pound and the Japanese yen made the efforts at recovery. The pound gained 0.5% to $1.2110, while the safe-haven yen rose by 0.5% to 107.18 per dollar.

After suffering severe losses, the Australian dollar scraped back over $0.60. The New Zealand dollar also increased by 0.3%.

However, almost all major currencies fell sharply as investors sell nearly everything for dollars, while businesses hoard cash and draw loans to ride out the crisis.

Central bank liquidity measures are beginning to service some of the demand for dollars as of Wednesday’s tentative moves in the currency market show.

The Bank of Japan suggested $30.272 billion in 84-day dollar funding on Tuesday as part of a pledge from six big central banks to offer discount dollar credit. This is the bank’s biggest injection of dollar funds since 2008.

What about the Euro and Aussie?

The euro fluctuated between flat and a little firmer at $1.1021. It was a bit weaker against a basket of currencies and the dollar at 99.289. However, some analysts think that the dollar demand will disappear soon, or export-exposed currencies will rebound.

The Australian dollar, on the other hand, has lost more than 14% against the U.S. dollar this year and fell below 60 cents for the first time since 2003. The kiwi also lowered at $0.5959.

Traders have been watching volatility in the U.S. Treasury market, trying to get a sense of the demand for dollars. So far, the yield on benchmark U.S. 10-year Treasuries soared 34 basis points overnight.