Dollar gains against major currencies as markets rush for liquid assets amid pandemic

13.03.2020 - Petr Mazaylo
Dollar gains against major currencies as markets rush for liquid assets amid pandemic

The dollar recovered on Friday as investors turned to the most liquid currency amid intensified global concerns over the pandemic virus. The euro eased losses after the European Central Bank (ECB) refrained from slashing interest rates.

The dollar gained the most against other currencies after swap spreads indicated that there was a shortage in dollars as equity markets jumped onto fears of the pandemic’s impact.

The ECB on Thursday revealed a stimulus package that offers loans to banks with rates as low as -0.75%.

The Federal Reserve allocated $1.5 trillion in short-term liquidity and reassessed the durations of Treasuries it purchases. However, market appetite showed that investors expected more measures to be implemented by the Fed.

Investors were disappointed with US President Trump’s speech on drastic measures to contain the virus and stated that there could be bigger consequences to the financial markets.

The euro stood at $1.1182, after a 0.72% decline on Thursday. The dollar maintained at 1.2544 against the pound. This week, the dollar gained 3.8% against the sterling. The dollar traded at 0.9456 against the Swiss franc.

Governments worldwide have been implementing travel bans and monetary policies, and have been injecting liquidity as global economy suffers amid the pandemic.

The dollar gained 0.34%, to 105.01 against the yen while the Canadian dollar slid to $1.3939 against the dollar.

In the Fed’s meeting next week, analysts expect the US central bank to cut its policy rate and provide the market with new guide on how to combat the effects of the virus outbreak.

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