March 6, 2020 / 3:48 PM / a month ago

FOREX-Dollar hammered as Treasury yields sink

    * Euro, yen jump vs dollar
    * Tumbling Treasury yields blunt U.S. interest rate
advantage
    * Dollar on course for worst week since 2016

 (New throughout, updates prices, market activity and comments
to U.S. market open, new byline, changes dateline, previous
LONDON)
    By Saqib Iqbal Ahmed
    NEW YORK, March 6 (Reuters) - The U.S. dollar fell across
the board on Friday, on pace for its worst weekly loss in four
years, as a sharp drop in U.S. government bond yields hurt the
greenback’s appeal.
    The dollar index, which measures the greenback's
strength against a basket of six other major currencies, was
about 0.8% lower at 95.883, its lowest in about a year. For the
week, the index was down 2.4%, its worst weekly performance
since early February 2016.
    "Another day of dollar underperformance, which has been
concurrent with a precipitous tumble in U.S. Treasury yields,"
Jonathan Coughtrey, managing director at Action Economics, said
in a note.
    Investors have slashed their expectations for U.S. interest
rates after an emergency Federal Reserve rate cut of 50 basis
points earlier this week to counter the economic fallout from
the spreading coronavirus.
    Worries about the virus have left market fundamentals in the
dust, and the 10-year note yield sank to a record low
on Friday. That is wiping out the yield advantage that had
fueled a popular carry globally - borrowing at negative rates in
the euro and yen to buy U.S. assets. Markets now bet the Fed
will again cut rates by 50 basis points this month.
    The euro climbed about 0.8% to an eight-month high of
1.1328. Against the Japanese yen, the dollar was down
0.9% at 105.19 yen, a more than six-month low.
    Currency volatility gauges rose on Friday, with one-month
euro-dollar implied volatility reaching its highest since
November 2018.
    The dollar found little support from data that showed U.S.
employers maintained a robust pace of hiring in February, giving
the economy a strong boost as it confronts the coronavirus
outbreak that has stoked financial market fears of a recession.

    "The print is very impressive," said John Doyle, vice
president for dealing and trading at Tempus Inc in Washington.
    "But I think the positivity of the numbers will be drowned
out by the overarching risk-off environment today," Doyle said.
    Sterling extended gains against the broadly weaker
dollar and was also boosted by comments from the European
Union's Brexit chief negotiator that a trade deal between
Britain and the bloc was still possible this year. The currency
was up 0.56% at $1.3026. 
    ========================================================
    Currency bid prices at 10:28AM (1528 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1294        $1.1239     +0.49%         +0.75%      +1.1354     +1.1213
 Dollar/Yen       JPY=        105.5700       106.1600    -0.56%         -3.02%      +106.3400   +105.0000
 Euro/Yen         EURJPY=     119.25         119.30      -0.04%         -2.21%      +119.4300   +118.7300
 Dollar/Swiss     CHF=        0.9368         0.9453      -0.90%         -3.20%      +0.9466     +0.9320
 Sterling/Dollar  GBP=        1.3026         1.2954      +0.56%         -1.76%      +1.3049     +1.2945
 Dollar/Canadian  CAD=        1.3422         1.3405      +0.13%         +3.36%      +1.3438     +1.3379
 Australian/Doll  AUD=        0.6630         0.6613      +0.26%         -5.57%      +0.6657     +0.6586
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.0580         1.0623      -0.40%         -2.51%      +1.0629     +1.0576
 Euro/Sterling    EURGBP=     0.8667         0.8673      -0.07%         +2.52%      +0.8717     +0.8653
 NZ               NZD=        0.6345         0.6302      +0.68%         -5.80%      +0.6372     +0.6295
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        9.2585         9.2855      -0.29%         +5.47%      +9.3320     +9.2333
 Euro/Norway      EURNOK=     10.4573        10.4340     +0.22%         +6.30%      +10.5025    +10.4170
 Dollar/Sweden    SEK=        9.3581         9.4329      -0.31%         +0.11%      +9.4691     +9.3345
 Euro/Sweden      EURSEK=     10.5691        10.6015     -0.31%         +0.95%      +10.6343    +10.5735
 

 (Reporting by Saqib Iqbal Ahmed; editing by Jonathan Oatis)
  
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