Dollar ends lower after intra-day volatile swings

 Market Review - 01/04/2020  00:34GMT  

Dollar ends lower after intra-day volatile swings

Although the greenback initially jumped at Asian open due to last minute usd buying at Tokyo fixing at 00:55GMT on end-of-fiscal year dollar demand by Japanese companies, price pared its gains and ended lower on Tuesday after retreat in the U.S. Treasury yields.  
  
Reuters reported the U.S. Federal Reserve on Tuesday broadened the ability of foreign centrals banks to access U.S. dollars during the coronavirus crisis by allowing them to exchange their holdings of U.S. Treasury securities for overnight dollar loans.      The new repurchase program, distinct from the swap lines with major central banks in which dollars are exchanged for foreign currencies, "should help support the smooth functioning of the U.S. Treasury market by providing an alternative temporary source of U.S. dollars other than sales of securities in the open market," the Fed said. The program is to be running by April 6 and last for at least six months.   
  
Versus the Japanese yen, although dollar briefly rallied to 108.72 at Asian open, price retreated to 108.10 at European open before recovering to 108.72 again. However, renewed selling emerged and knocked price down to session lows of 107.47 in New York on usd's weakness together with falling U.S. Treasury yields.  
  
The single currency went through a hectic session. Although euro briefly dipped to 1.0985 at Asian open on sudden bout of usd demand, price rebounded to 1.1032 on short-covering but later dropped to session lowa of 1.0927 in Europe. However, the pair then staged a strong rebound in tandem with cable to 1.1037 in New York due to renewed usd weakness.  
  
Reuters reported German unemployment rose slightly in March, data showed on Tuesday, but the Federal Labour Office warned that this did not reflect the escalation of coronavirus crisis and its impact on the job market since only figures up to March 12 were included.     The number of people out of work rose by 1,000 to 2.267 million in seasonally adjusted terms, the data showed. That compared with an expected rise of 29,000 forecast in a Reuters poll.     The unemployment rate was unchanged at 5%.   
    
The British pound went through a volatile session. Despite a brief but sharp fall to 1.2241 (Reuters) at Asian open on broad-based usd's strength, price then staged a strong rebound to 1.2364 at European open before weakening to 1.2285. However, cable later rallied to session highs of 1.2472 in New York due to dollar's weakness and later swung sideways.  
  
In other news, Reuters reported the European Central Bank is ready to consider all options available within its mandate to support the economy in the current coronavirus crisis, Governing Council member Ignazio Visco said on Tuesday.     In a speech prepared for the presentation of the Italian central bank's 2019 financial statements, Visco listed all the measures adopted by the ECB, which is so far the only European institution that has taken major steps to prop up the economy.     The ECB has raised its goal for planned purchases of assets to around 1.1 trillion euros ($1.21 trillion) this year to fight the pandemic.   
  
On the data front, Reuters reported U.S. consumer confidence fell less than expected in March even as the country grappled with the coronavirus pandemic, which has upended life for Americans.     The Conference Board said its consumer confidence index decreased to a reading of 120.0 this month from an upwardly revised 132.6 in February. Economists polled by Reuters had forecast the index falling to 110.0 in March from the previously reported reading of 130.7 in February.   
  
Data to be released on Wednesday :  
  
Australia AIG manufacturing index, building approvals, Japan Tankan big manufacturing index, Tankan big manufacturing outlook, Tankan big non-manufacturing index, Tankan big non-manufacturing outlook, Tankan small manufacturing index, Tankan small manufacturing outlook, Tankan small non-manufacturing index, Tankan small non-manufacturing outlook, China Caixin manufacturing PMI.

UK BRC shop price index, Markit manufacturing PMI,  Germany retail sales, Markit manufacturing PMI, Swiss manufacturing PMI, Italy Markit manufacturing PMI, unemployment rate, France Markit manufacturing PMI, EU Markit manufacturing PMI, unemployment rate.

U.S. MBA mortgage applications, ADP national employment, Markit manufacturing PMI, construction spending, ISM manufacturing PMI, and Canada Markit manufacturing PMI.