March 20, 2020 / 2:44 PM / 19 days ago

FOREX-Dollar eases as central banks pledge dollar liquidity

    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh
    * Dollar eases after ferocious rally
    * Cross currency swaps show continuing strains

 (New throughout, updates prices, market activity and comments
to U.S. market open, new byline, changes dateline, previous
LONDON)
    By Karen Brettell
    NEW YORK, March 20 (Reuters) - The dollar eased on Friday
after a rally that put it on track for its biggest weekly rise
since the 2008 financial crisis, as a global scramble for dollar
funding sent other currencies reeling.
    Currencies from the Australian dollar to the British
pound tumbled to multi-year lows this week, after
coordinated rate cuts by central banks and billions of dollars
of fund injections failed to calm panicky markets.
    But Friday restored some calm after days of selling.
    “The dollar has taken a rotation lower following
interventions and the threat of interventions over the last
day,” analysts at Action Economics said in a report on Friday.
    From Brazil to Norway, policymakers are leaping to defend
their currencies against the onslaught of the dollar.

    On Friday six major central banks announced a coordinated
action to enhance liquidity in the greenback by increasing the
frequency of their currency swap operations.
    “For many countries with borrowings in dollars, the massive
depreciation in their domestic currencies, and strength in the
dollar, has been increasingly threatening at a time when most
emerging market and developed-world economies are either headed
to or are already in recession,” Action Economics said.
    The U.S. dollar is up about 4% against a basket of
currencies through a week when investors have liquidated
everything from stocks to bonds to gold and commodities. At its
three-year peak of nearly 103 hit overnight, the dollar was up
more than 5%, its biggest weekly gain since October 2008.
    Gauges of expected market swings in the euro for one-month
maturities edged lower, after hitting a more than
three-year high on Thursday.
    Some funding indicators, however, showed that strains
remain.
    The premium over interbank rates that investors were paying
to swap yen for one-year dollar funding was elevated
at around 52 basis points.
    The FRA-OIS spread USDF-O0X1=R, a barometer of risk in the
interbank market, edged higher on Friday to 97 basis points.
    "While FX volatility is lower and currency basis swaps are
less scary for example, the situation remains stressed," said
Kit Juckes, a strategist at Societe Generale in London.
    Sterling was among the major gainers, rising 3.42%
from a 35-year low to $1.1878.
    The Australian dollar jumped 2.19% to $0.5867.
    
    ========================================================
    Currency bid prices at 10:27AM (1427 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.0725        $1.0690     +0.33%         -4.33%      +1.0831     +1.0654
 Dollar/Yen       JPY=        110.7000       110.6900    +0.01%         +1.69%      +111.3500   +109.3200
 Euro/Yen         EURJPY=     118.75         118.35      +0.34%         -2.62%      +118.9500   +117.8600
 Dollar/Swiss     CHF=        0.9821         0.9858      -0.38%         +1.48%      +0.9890     +0.9746
 Sterling/Dollar  GBP=        1.1878         1.1485      +3.42%         -10.42%     +1.1888     +1.1414
 Dollar/Canadian  CAD=        1.4251         1.4510      -1.78%         +9.74%      +1.4536     +1.4151
 Australian/Doll  AUD=        0.5867         0.5741      +2.19%         -16.44%     +0.5986     +0.5666
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.0535         1.0541      -0.06%         -2.92%      +1.0557     +1.0527
 Euro/Sterling    EURGBP=     0.9030         0.9308      -2.99%         +6.78%      +0.9338     +0.9027
 NZ               NZD=        0.5761         0.5671      +1.59%         -14.47%     +0.5880     +0.5613
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        11.2866        11.2486     +0.34%         +28.57%     +11.4605    +10.8044
 Euro/Norway      EURNOK=     12.1110        12.0280     +0.69%         +23.11%     +12.1390    +11.6061
 Dollar/Sweden    SEK=        10.2621        10.3884     -0.87%         +9.79%      +10.4290    +10.2151
 Euro/Sweden      EURSEK=     11.0078        11.1048     -0.87%         +5.14%      +11.1356    +10.9960
 
    
    

 (Additional reporting by Saikat Chatterjee in London
Editing by Marguerita Choy)
  
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