FOREX-Dollar climbs down as panic subsides, on course for biggest loss in decade

Reuters

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    * Dollar slips on U.S. stimulus
    * Dollar index on track for biggest loss in decade
    * Market could see more volatility toward month-end
    * Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

    By Hideyuki Sano
    TOKYO, March 27 (Reuters) - The dollar is on track for its
biggest weekly fall in more than a decade on Friday as a series
of stimulus steps around the world, including a $2.2 trillion
U.S. package, calmed a panic over a global recession following
the coronavirus outbreak.
    Data showing an unprecedented rise in U.S. jobless claims
underscored the virus' devastating impact on the economy, but
subsequent rise in Wall Street shares raised hopes a torrent of
selling in risk assets may have run its course for now.
    The dollar dropped to 109.42 yen  JPY= , shedding 1.44%
overnight while the euro also jumped 1.40% on Thursday and last
stood at $1.1025  EUR= .
    The biggest mover among major currencies was sterling, which
rose 2.8% overnight before giving up part of that gain in early
Asian trade. The British pound last stood at $1.2183  GBP=D4 .
    An easing in dollar funding conditions is helping to reduce
demand for the dollar. 
    The number of Americans filing claims for unemployment
benefits surged to a record of more than 3.28 million last week
as strict measures to contain the coronavirus pandemic unleashed
a wave of layoffs.
    While that eclipsed the previous record of 695,000 set in
1982 and was up 3 million from last week, it was below
investors' worst fears.
    The focus stayed on an unprecedented $2.2 trillion stimulus
expected to be approved by the U.S. House of Representatives on
Friday.  urn:newsml:reuters.com:*:nL1N2BJ15W
    The dollar's index against six other major currencies  =USD 
lost 1.5%, its biggest daily fall in almost four years.
    So far this week it is down 2.9%. If sustained by the end of
U.S. trade, that would mark the biggest weekly decline since
2009, underscoring the currency market's extreme volatility
after last week racking up its biggest weekly gain since the
global financial crisis more than a decade ago.
    Highly choppy trade could continue towards the end of month,
when there tend to be large flows from corporate and investors
to hedge their currency exposures.
    In particular, many asset managers may need to adjust their
currency hedge positions after wild swings in global share
prices. 
    The dollar's rises until last week, in particular against
the Australian dollar and the New Zealand dollar were primarily
driven by such currency hedge adjustment, said analysts at
National Bank of Australia in report.
    "We can well believe that we are for an extremely rocky ride
in the currency markets between now and month end," they said.
"Some will not yet have adjusted, and some will now find
themselves under-hedged given the big equity reversal so far
this week. And, some may be looking to implement changes to
strategic hedge ratios at the same time. Buckle up." 
    The Australian dollar traded at $0.6068  AUD=D4 , having
gained more than 10% from its 17-year low of $0.5510 touched on
Thursday last week.
    The New Zealand dollar  NZD=D4  stood at $0.5974.     

 (Reporting by Hideyuki Sano; Editing by Lincoln Feast)
 ((hideyuki.sano@thomsonreuters.com; +81 3 4563 2768;))

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