Dollar advances for second day, shrugs off record U.S. jobless claims

NEW YORK (Reuters) – The dollar rose for a second straight day against a basket of currencies on Thursday as investors, worried about the prospect of a global recession continued to take shelter in the greenback.

U.S. jobless claims in the latest week soared to a record level, yet the dollar’s reaction was tepid at most.

Data showed initial claims for unemployment benefits rose to 6.65 million in the latest week from an unrevised 3.3 million the previous week. The figures far exceeded the median estimate of 3.50 million in a Reuters survey of economists.

“The order of magnitude of this data is so colossal compared to expectations that there’s really no datum to work out what the story is,” said Richard Benson, co-chief investment officer at Millennium Global Investments in London.

“It’s just very, very bad. So I am not sure the market is going to trade on data surprises from that mix,” he added.

Markets have been alarmed since U.S. President Donald Trump’s warning on Tuesday of a painful two weeks ahead in fighting the coronavirus, even with strict social distancing measures.

The United States now has over 200,000 confirmed COVID-19 cases – the most worldwide – which has sent investors flocking to safe-haven assets such as the U.S. dollar.

Still, analysts do not expect the dollar rally of recent weeks to continue further amid a series of measures aimed to make sure that there is no global shortage of dollars.

The cost to borrow dollars in the euro and yen funding markets fell considerably after the Fed liquidity injections, with three-month FX swap spreads snapping back from 2008 global financial crisis levels last month.

Costs blew out in mid-March as stress in the dollar funding market caused by the coronavirus pandemic led to a global scramble to secure dollar funds. EURCBS3M=ICAP JPYCBS3M=ICAP

In mid-morning trading, the dollar index was up 0.7% at 100.19 =USD.

Against the yen, the dollar rose 0.2% at 107.33 yen JPY=EBS.

The euro, meanwhile, continued its decline, falling 1.1% to $1.0843 EUR=EBS

The Fed’s efforts to improve dollar liquidity have turned out to be beneficial for other currencies too, such as the Norwegian crown, which advanced further on Thursday to hit a three-week high of 11.1820 against the euro. It was last trading up 2% at 11.24 EURNOK=D3

To combat the economic slowdown inflicted by the pandemic, the Fed said on Wednesday it was temporarily easing its leverage rules for large banks by exempting certain investments from a key leverage calculation.

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CANADA FX DEBT-Loonie rises in volatile month-end trading; down 4.6% in March

 (Adds dealer quotes and details on activity; updates prices)
    * Canadian dollar rises 0.9% against the greenback
    * Price of U.S. oil increases 1.9%
    * The loonie ends down 7.5% for the first quarter
    * Canadian bond yields fall across a flatter curve

    By Fergal Smith
    TORONTO, March 31 (Reuters) - The Canadian dollar rose
against the greenback on Tuesday in  volatile trading to end the
first quarter as oil prices rose and data showed the domestic
economy grew in January, but the loonie still posted its biggest
monthly decline in five years.
    The currency strengthened 0.9% to 1.4040 per U.S. dollar, or
71.23 U.S. cents on Tuesday. It traded in a range of 1.4015 to
1.4350.
    "We've got big month-end and quarter-end flows going through
thin markets in the midst of a crisis," said Michael Goshko,
corporate risk manager at Western Union Business Solutions.     
    Under the circumstances, it was not surprising to see such
big swings, he said.
    For the month, the loonie weakened 4.6%, its biggest decline
since January 2015, and it was down 7.5% for the first quarter.
    Canada's economy gained 0.1% in January, driven largely by
higher manufacturing, Statistics Canada data showed on Tuesday.
            
    Still, the economy could be hit particularly hard over the
coming months by the coronavirus outbreak. Household debt is at
record levels and the price of oil       , one of the country's
major exports, has collapsed since January.
    In an effort to support the economy, the Bank of Canada has
slashed interest rates in a series of emergency moves this
month, to 0.25%. It is likely to buy about C$200 billion of
government debt after announcing its first quantitative easing
program, bond strategists estimate.             
    U.S. crude oil futures        settled 1.9% higher at $20.48
a barrel on Tuesday after U.S. President Donald Trump and
Russian counterpart Vladimir Putin agreed to talks on
stabilizing energy markets. Still, oil fell 66% in the first
quarter.             
    The U.S. dollar        gave up its early gains on Tuesday
after initially being supported by quarterly and fiscal year-end
demand from portfolio managers and Japanese firms.             
    Canadian government bond yields fell across a flatter yield
curve. The 10-year             was down 7.2 basis points at
0.697%.

 (Reporting by Fergal Smith;
Editing by Nick Zieminski and Dan Grebler)
  

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CANADA FX DEBT-Canadian dollar rallies 1% as legislators approve economic stimulus

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 1% against the greenback
    * Loonie touches its strongest since last Friday at 1.4298
    * Canada's House of Commons agrees to approve stimulus bill
    * Canadian bond yields fall across a flatter curve

    By Fergal Smith
    TORONTO, March 25 (Reuters) - The Canadian dollar climbed to
a five-day high on Wednesday as the country's legislators
approved a stimulus package to help ease the economic impact of
the coronavirus outbreak.
    Canada's C$27 billion aid package will give people affected
by the outbreak C$2,000 a month and delay student loan
repayments, among other measures, Prime Minister Justin Trudeau
said.             
    "The Canadian government wrote itself a blank cheque to
fight the coronavirus and that is an incredibly powerful tool,"
said Adam Button, chief currency analyst at ForexLive. "At some
point the markets are going to focus on which countries can
weather this storm best."
    At 31%, Canada's federal debt as a share of the economy is
low compared to some other major countries.
    At 12:27 p.m. (1627 GMT), the Canadian dollar          was
trading 1% higher at 1.4314 to the greenback, or 69.86 U.S.
cents. 
    The currency touched its strongest intraday level since last
Friday at 1.4298. It was the second best G10 currency after 
Norway's crown       .
    U.S. senators will vote on Wednesday on a $2 trillion
bipartisan package of legislation to alleviate the devastating
economic impact of the coronavirus pandemic. The U.S. dollar
       fell as the U.S. package steadied money market nerves and
prompted investors to buy back into 'riskier' currencies.
                        
    Canada is a major exporter of commodities, including oil,
which has been pummeled by demand destruction related to the
virus and a price war between major producers. U.S. crude       
prices were flat at about $24 a barrel.             
    "I think the drama for the Canadian dollar remains in oil,"
Button said." "Crude is barely hanging on as are Canadian
producers."    
    Canadian bond yields fell across a flatter curve. The
10-year was down 7.6 basis points at 0.795%.

 (Reporting by Fergal Smith; Editing by Bernadette Baum and Tom
Brown)
  

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