March 12, 2020 / 12:51 PM / 16 days ago

Dollar rebounds as preads widen

LONDON, March 12 (Reuters) - The dollar rebounded on Thursday as swap spreads on major currency pairs blew out to their widest levels in years in a sign that dollar demand is rising across the board.

The dollar index which started in the red, firmed as much as 0.5% while three-month euro/dollar cross currency basis swap spreads jumped to a late-2017 high of 65 bps.

“It’s all about dollar liquidity, the cross-curency basis swap has blown out. I would assume it’s banks/corporates driven. We are moving to the next phase of the selloff,” said Kenneth Broux, a strategist at Societe Generale.

Reporting by Saikat Chatterjee and Sujata Rao

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