March 24, 2020 / 3:00 PM / in 5 days

FOREX-Dollar falls after Fed QE, on fiscal stimulus hopes

 (Adds quote, updates prices, new byline, changes dateline,
previous LONDON)
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

    By Karen Brettell
    NEW YORK, March 24 (Reuters) - The dollar fell broadly on
Tuesday after the U.S. Federal Reserve on Monday committed to
buy an unlimited amount of bonds and as investors were
optimistic the American government would pass a stimulus package
to offset the economic impact of the coronavirus pandemic.
    Against a basket of its rivals, the dollar fell 0.42%
to 101.71. It is down from a more than three-year high of 102.99
on Friday.
    "The Fed's measures are unprecedented, and they have been
extremely proactive in preventing this external shock from
morphing into a wider funding crisis," said Vasileios Gkionakis,
head of FX strategy at Lombard Odier.
    The Fed on Monday announced various programs, including
purchases of corporate bonds, guarantees for direct loans to
companies and a plan to get credit to small and medium-sized
business.
    While the Fed's latest measures were seen to have
effectively broken the spreading freeze in the dollar funding
markets in the short term, the shock to the real economy is
expected to last for a far longer period.
    The U.S. Senate could pass a $2 trillion coronavirus
economic stimulus package as soon as Tuesday, negotiators said,
which analysts say is needed to blunt the economic harm from
business shutdowns.
    Ulrich Leuchtmann, head of foreign exchange and commodity
research at Commerzbank, said in a note that, as more economies
enact draconian measures to lock down their economies, the
global economy would be massively constrained in the near future
and markets could quickly turn back into risk-off mode.
    "While we think that most currencies will eventually regain
much of the ground that they have recently lost to the U.S.
dollar, we don’t expect that process to start until the pandemic
has clearly passed its worst," Oliver Allen, assistant economist
at Capital Economics, said in a report.
    Against the dollar, the euro jumped 0.82% to $1.0809.
    Some more relief was also evident in dollar funding markets,
with measures of short-term funding indicators such as
euro-dollar FX swaps for three-month maturities
stabilizing around 8 basis points after blowing out to more than
100 bps last week.
    The British pound also rose 1.72% to $1.1747, up from
a 35-year low of $1.1413 set last week.  
    The Australian dollar gained 1.53% to $0.5916,
extending its recovery from a 17-year low of $0.5510 last week.
    
    ========================================================
    Currency bid prices at 10:19AM (1419 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.0809        $1.0721     +0.82%         -3.60%      +1.0887     +1.0724
 Dollar/Yen       JPY=        111.1300       111.2000    -0.06%         +2.09%      +111.2800   +110.1000
 Euro/Yen         EURJPY=     120.12         119.30      +0.69%         -1.50%      +120.5200   +118.8400
 Dollar/Swiss     CHF=        0.9797         0.9845      -0.49%         +1.23%      +0.9850     +0.9720
 Sterling/Dollar  GBP=        1.1747         1.1548      +1.72%         -11.40%     +1.1790     +1.1511
 Dollar/Canadian  CAD=        1.4444         1.4496      -0.36%         +11.23%     +1.4532     +1.4375
 Australian/Doll  AUD=        0.5916         0.5827      +1.53%         -15.74%     +0.5974     +0.5813
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.0588         1.0560      +0.27%         -2.43%      +1.0598     +1.0558
 Euro/Sterling    EURGBP=     0.9202         0.9286      -0.90%         +8.85%      +0.9326     +0.9191
 NZ               NZD=        0.5796         0.5720      +1.33%         -13.97%     +0.5839     +0.5693
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        11.0961        11.5363     -3.82%         +26.40%     +11.5981    +10.8613
 Euro/Norway      EURNOK=     11.9950        12.4180     -3.41%         +21.93%     +12.4770    +11.7980
 Dollar/Sweden    SEK=        10.1722        10.3150     -1.20%         +8.82%      +10.3722    +10.1223
 Euro/Sweden      EURSEK=     10.9961        11.1300     -1.20%         +5.03%      +11.1280    +10.9940
 

    
 (Reporting by Karen Brettell; Additional reporting by Saikat
Chatterjee in London; editing by Jonathan Oatis)
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