FOREX-Dollar slips ahead of expected surge in U.S. jobless claims due to coronavirus

Reuters

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    * Euro and Japanese yen rise vs dollar
    * Sterling jumps vs dollar, flat vs euro
    * Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

 (Updates prices, adds new line on euro rise)
    By Olga Cotaga
    LONDON, March 26 (Reuters) - The dollar fell further on
Thursday ahead of key U.S. data that is expected to show a surge
in unemployment benefit claims as companies lay off workers due
to the rapid spread of the coronavirus.
    Investors welcomed the U.S. Senate's passage of a $2
trillion stimulus package to offset the economic impact of the
respiratory pandemic, but there are already indications that
some American states will need more money for medical supplies.
    Economists polled by Reuters anticipate a rise in U.S.
jobless claims by 1 million in the week to March 21 - an
indicator of much the spread of the virus has affected the
world's largest economy. 
    If the number meets market expectations, it would be well
above the previous peak seen during the 2008 global financial
crisis. The record before that was just a little under 700,000
in 1982 when the United States was going through a recession. 
    Many analysts, however, have put the number between 1
million and 4 million.
    "The wide range of estimates, from around 1 million to 4
million, show that we lack historical references to really
understand the impact of this unique and probably massive crisis
hitting the economy," said Christopher Dembik, head of macro
analysis at Saxo Bank.
    The dollar shed 0.8% of its value against the euro to trade
at $1.0979  EUR=EBS , a one-week low. It also lost 1.4% of its
value versus the safe-haven Japanese yen and was last exchanging
hands for 109.60 yen  JPY=EBS , a six-day low.
    Analysts at MUFG said the common currency was also boosted
by the fact that nine European Union countries including France,
Italy and Spain have called for issuing joint bonds to help
revive the euro zone economy from a deep slump caused by the
coronavirus. 
    However, Germany and the Netherlands will lead opposition to
issuing the mutualised debt when the EU's national leaders
discuss emergency assistance later on Thursday.  urn:newsml:reuters.com:*:nL8N2BI8JD
    The $2 trillion U.S. package includes one-off payments to
individuals, increased benefits for the unemployed and aid to
companies, including loans and debt relief to small businesses,
plus assistance to states and local governments.
    The United States also opened the taps for short-term dollar
funding as the Federal Reserve swapped dollars for foreign
currencies with other major central banks. 
    This has helped to ease the cost of swapping three-month yen
into dollars, which blew out to 144 basis points (bps) over
interbank rates this month as stress in the dollar-funding
market caused by the pandemic led to a shortage of the American
currency.  JPYCBS3M=ICAP 
    "The Fed is winning the battle to get enough dollars into
the global financial engine to keep it turning over. Demand for
dollars through the Fed/BOJ swap line remains higher than in
Europe, but the USD/JPY basis has now narrowed," said Kit
Juckes, macro strategist at Societe Generale.
    The three-month basis swap in dollar/yen was last at 49 bps.
    Elsewhere, sterling jumped 1% versus the dollar to $1.20
 GBP=D3 , an eight-day high, but was flat against the euro at
91.63 pence  EURGBP=D3 .
    The Australian and New Zealand dollars, both closely linked
to the global commodity trade, were rising against their U.S.
counterpart after falling during the Asian trading session. 
        

 (Reporting by Olga Cotaga
Editing by Mark Heinrich)

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