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Dollar Recovers After Initial Weakness

Dollar Recovers After Initial Weakness

The U.S. dollar retreated early on in the session on Friday, giving up some of its recent gains, but regained most of the lost ground as the day progressed and was trading flat by late afternoon.

Global central banks have announced massive release packages and interest rate cuts over the last few days, aiming to limit the economic impact of the coronavirus pandemic.

The US Federal Reserve today announced a coordinated action with other five leading central banks to further boost the US dollar liquidity through swap facilities as the spread of the coronavirus, or Covid-19, pandemic and the consequent economic shock, triggered recession fears that are rattling markets.

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank are part of this move.

The six central banks agreed to increase the frequency of 7-day maturity operations from weekly to daily to improve the US dollar liquidity swap lines’ effectiveness.

These daily operations will commence on Monday, March 23 and will continue at least through the end of April, the banks said in a joint statement. The central banks also will continue to conduct the weekly 84-day maturity operations.

The European Central Bank’s supervisory arm came out with relief measures for euro area banks on Friday, giving further flexibility in prudential treatment of loans backed by public support measures.

The Bank of England has decided to cancel the 2020 annual stress test for the eight major UK banks and building societies, with an aim to help lenders focus on meeting the credit needs of households and businesses at this hour of crisis.

The dollar index moved in a broad range between 101.09 (in the Asian session) and 102.99 today. When last seen, it was at 102.72, down slightly from previous close of 102.76.

Against the euro, the dollar was up more than 0.2% at $1.0669, after having weakened to $1.0832 earlier.

Against pound sterling, the greenback slipped to $1.1567, losing about 0.7%.

The yen weakened to 111.32 a dollar, after having settled at 110.71 on Thursday.

The dollar was weak against the Aussie and the loonie. Against the former, it was down more than 0.6% with the Aussie-Dollar pair at 0.5780, and against the latter, it was down 0.75%, at 1.4402.

The Swiss franc extended recent losses against the dollar. At $0.9886, the dollar was up by a little over 0.25%.

The material has been provided by InstaForex Company – www.instaforex.com