March 5, 2020 / 4:29 PM / 3 months ago

FOREX-U.S. dollar dips as traders brace for more Fed rate cuts

    * Safe-haven Japanese yen hits five-month high vs dollar
    * Sterling rises as BoE resists pressure of to cut rates
    * Graphic: World FX rates in 2019

 (New throughout, updates prices, market activity and comments;
new byline, changes dateline, previous LONDON)
    By Saqib Iqbal Ahmed
    NEW YORK, March 5 (Reuters) - The U.S. dollar slipped to a
fresh eight-week low as traders bet the U.S. Federal Reserve
will cut interest rates further, after slashing them by 50 basis
points this week in an emergency move to shield the economy from
the effects of coronavirus. 
    Monetary policy easing in the United States fueled by
worries about the economic impact of the coronavirus is
endangering the dollar's years-long rally and giving a boost to
currencies around the world.
    On Thursday, the dollar index, which measures the
greenback's strength against a basket of six other major
currencies, was about 0.5% lower at 96.99, after slipping to a
low of 96.886, its weakest since Jan. 8.
    Money markets were pricing in another 25 basis point cut
from the current 1% to 1.25% range at the next Fed meeting on
March 18-19 and a 50 basis points cut by April.
    "The cuts were emergency so it's worth wondering, will the
Fed strike again like this or will they telegraph another move?
It seems like they're willing to help at any point, thus the
lack of faith in the buck is understandable," said Juan Perez,
senior foreign exchange trader and strategist at Tempus Inc in
    The fast-spreading virus, which emerged late last year in
central China, is now in some 80 countries and has killed more
than 3,000 worldwide. The U.S. death toll from coronavirus
infections rose to 11 on Wednesday as new cases emerged around
New York City and Los Angeles, while Seattle-area health
officials discouraged social gatherings amid the nation's
largest outbreak.
    Against the Japanese yen, which tends to attract
investors during times of geopolitical or financial stress as
Japan is the world’s biggest creditor nation, the dollar slipped
to a five-month low and was last at 106.69 yen.
    The dollar found little support from data that showed the
number of Americans filing for unemployment benefits fell last
week, suggesting the labor market was on solid footing despite
the coronavirus outbreak.
    The Canadian dollar weakened against its U.S. counterpart on
Thursday, a day after the Bank of Canada delivered its biggest
interest rate cut in more than 10 years and signaled it was
ready to ease further because of the coronavirus outbreak.

    Sterling gained 0.4% against the greenback as expectations
waned for an immediate Bank of England rate cut to follow this
week's emergency move by the Fed.
    Incoming BoE governor Andrew Bailey dampened expectations of
an inter-meeting cut late on Wednesday, telling lawmakers the
central bank should wait until it has more clarity about the
economic hit from the outbreak.
    Currency bid prices at 11:10AM (1610 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1185        $1.1134     +0.46%         -0.22%      +1.1200     +1.1120
 Dollar/Yen       JPY=        106.7000       107.5200    -0.76%         -1.98%      +107.7300   +106.6200
 Euro/Yen         EURJPY=     119.36         119.74      -0.32%         -2.12%      +119.9800   +119.1900
 Dollar/Swiss     CHF=        0.9501         0.9567      -0.69%         -1.83%      +0.9573     +0.9504
 Sterling/Dollar  GBP=        1.2918         1.2870      +0.37%         -2.57%      +1.2936     +1.2861
 Dollar/Canadian  CAD=        1.3394         1.3384      +0.07%         +3.14%      +1.3432     +1.3383
 Australian/Doll  AUD=        0.6605         0.6626      -0.32%         -5.93%      +0.6637     +0.6585
 Euro/Swiss       EURCHF=     1.0630         1.0655      -0.23%         -2.05%      +1.0675     +1.0632
 Euro/Sterling    EURGBP=     0.8657         0.8649      +0.09%         +2.40%      +0.8678     +0.8622
 NZ               NZD=        0.6303         0.6296      +0.11%         -6.43%      +0.6334     +0.6281
 Dollar/Norway    NOK=        9.2784         9.2554      +0.25%         +5.70%      +9.3074     +9.2417
 Euro/Norway      EURNOK=     10.3790        10.3060     +0.71%         +5.50%      +10.4010    +10.3006
 Dollar/Sweden    SEK=        9.4544         9.4777      +0.24%         +1.15%      +9.4899     +9.4379
 Euro/Sweden      EURSEK=     10.5764        10.5510     +0.24%         +1.03%      +10.5974    +10.5370
 (Reporting by Saqib Iqbal Ahmed; Additional reporting by Olga
Kotaga in London)
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