March 16, 2020 / 7:44 PM / 21 days ago

FOREX-Yen gains as Fed rate cuts fails to boost risk appetite

    * Safe havens gain as coronavirus threatens economic
    * Fed cuts rates to zero, launches QE

 (New throughout, updates prices and market activity, adds G7
leaders' comments)
    By Karen Brettell
    NEW YORK, March 16 (Reuters) - The safe-haven Japanese yen
jumped on Monday as investors worried about the spreading
coronavirus outbreak fled riskier assets, even after the U.S.
Federal Reserve slashed rates to zero and launched what is
effectively a new round of quantitative easing.
    The Fed cut U.S. interest rates on Sunday and said it would
expand its balance sheet by at least $700 billion in the coming
    The move is expected to help resolve some market
dislocations including illiquidity in the U.S. Treasury market,
but companies may still struggle as people avoid going out
because of the virus and some businesses face mandatory
    “What’s needed is more direct support to industries that are
hit directly by the virus. That can only be provided by fiscal
policy, and governments have not shown the same swift reaction
that central banks have,” said Marshall Gittler, head of
investment research at BDSwiss Group.
    Leaders of the Group of Seven wealthy democracies said they
were committed to doing "whatever is necessary" to battle the
coronavirus pandemic and to work together more closely to
protect public health, jobs and growth.
    The dollar index against a basket of major currencies
gained 0.24% to 98.11 while the dollar dipped 1.60% to 106.18
    The euro gained 0.49% against the greenback to $1.11.
    The greenback has gained in the past week as companies drew
on credit lines and bank lenders sought out the currency to fund
the loans. That has led to strains in sourcing dollars.
    To address this, the Fed and other major foreign central
banks also cut pricing on their swap lines to make it easier to
provide dollars to financial institutions around the world.
    Multiple global central banks acted to ease conditions on
    The Bank of Japan said at an emergency meeting it would buy
more corporate bonds, commercial debt and establish a new
corporate lending scheme. New Zealand's central bank slashed
rates in an emergency move while the Reserve Bank of Australia
(RBA) injected extra cash into the financial system.

    The People's Bank of China injected 100 billion yuan ($14.28
billion) into financial institutions, minutes before data showed
China's retail sales, industrial output and fixed-asset
investment all tumbled in January and February.
    "The measures introduced to stop the spread of the virus in
China may have led to a sharper slowdown in activity than will
be the case elsewhere, but it's clear that the measures central
banks have taken, and whatever they do next, cannot prevent a
major economic hit being felt globally," Societe Generale
strategist Kit Juckes said.
    The dollar was last down 0.19% against the offshore yuan
 at 7.007.
    Currency bid prices at 3:22PM (1922 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1159        $1.1105     +0.49%         -0.46%      +1.1236     +1.1047
 Dollar/Yen       JPY=        106.1800       107.9100    -1.60%         -2.46%      +107.9100   +105.1600
 Euro/Yen         EURJPY=     118.48         119.91      -1.19%         -2.85%      +119.8700   +117.1700
 Dollar/Swiss     CHF=        0.9481         0.9496      -0.16%         -2.04%      +0.9544     +0.9393
 Sterling/Dollar  GBP=        1.2245         1.2276      -0.25%         -7.65%      +1.2429     +1.2203
 Dollar/Canadian  CAD=        1.3970         1.3803      +1.21%         +7.58%      +1.4015     +1.3735
 Australian/Doll  AUD=        0.6126         0.6182      -0.91%         -12.75%     +0.6303     +0.6081
 Euro/Swiss       EURCHF=     1.0579         1.0559      +0.19%         -2.52%      +1.0594     +1.0539
 Euro/Sterling    EURGBP=     0.9110         0.9045      +0.72%         +7.76%      +0.9149     +0.8989
 NZ               NZD=        0.6061         0.6057      +0.07%         -10.02%     +0.6153     +0.5945
 Dollar/Norway    NOK=        10.2773        9.9961      +2.81%         +17.07%     +10.3996    +9.9957
 Euro/Norway      EURNOK=     11.4670        11.1250     +3.07%         +16.56%     +11.5866    +11.1287
 Dollar/Sweden    SEK=        9.7362         9.7081      +0.80%         +4.16%      +9.8755     +9.5878
 Euro/Sweden      EURSEK=     10.8704        10.7840     +0.80%         +3.83%      +10.9964    +10.7737
 (Additional reporting by Tommy Wilkes in London; Editing by
David Gregorio)
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