U.S. dollar rises on quarter-end flows
The dollar climbed against major currencies on Tuesday amid quarterly and fiscal year-end demand from portfolio managers and Japanese firms.
Analysts said the steep fall in U.S. equity markets during the month of March led to increased buying of dollars for asset managers seeking to rebalance their portfolios at the end of the month.
The U.S. currency did pare gains after the Federal Reserve broadened the ability of dozens of foreign central banks to access dollars during the coronavirus crisis by allowing them to exchange their holdings of U.S. Treasury securities for overnight dollar loans.
But analysts said the dollar is likely to remain supported as investors brace for a sharp economic downturn in the coming quarters.
“The Fed’s efforts so far are the closest thing to taming the dollar’s strength,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
“But the desire to hold dollars remains elevated ahead of what’s expected to be a punishing second quarter for U.S. and global growth,” he added.
In mid-morning trading, the dollar index was up 0.5% at 99.712.
It reached 102.99, its highest in more than three years, earlier this month as a global market sell-off fueled a rush for dollars. Dollar demand has ebbed, but analysts are still forecasting more dollar gains.
Against the yen, the dollar rose 0.5% to 108.31 yen on Tuesday.
Tuesday is the last trading day of Japan’s fiscal year and the end of the quarter for major investors elsewhere, which has fueled some volatility as big currency market players close their books. The bulk of those positioning changes caused the dollar to strengthen.
Currency bid prices at 10:15AM (1415 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.0962 $1.1046 -0.76% -2.21% +1.1054 +1.0927 Dollar/Yen JPY= 108.1100 107.8100 +0.28% -0.69% +108.7200 +107.7500 Euro/Yen EURJPY= 118.54 119.07 -0.45% -2.80% +119.7000 +118.4700 Dollar/Swiss CHF= 0.9637 0.9583 +0.56% -0.44% +0.9676 +0.9581 Sterling/Dollar GBP= 1.2433 1.2416 +0.14% -6.23% +1.2440 +1.2253 Dollar/Canadian CAD= 1.4265 1.4169 +0.68% +9.85% +1.4348 +1.4154 Australian/Doll AUD= 0.6111 0.6172 -0.99% -12.96% +0.6213 +0.6080 ar Euro/Swiss EURCHF= 1.0564 1.0585 -0.20% -2.65% +1.0598 +1.0565 Euro/Sterling EURGBP= 0.8814 0.8886 -0.81% +4.26% +0.8968 +0.8814 NZ NZD= 0.5955 0.6013 -0.96% -11.59% +0.6037 +0.5929 Dollar/Dollar Dollar/Norway NOK= 10.5043 10.5474 -0.41% +19.66% +10.6075 +10.4039 Euro/Norway EURNOK= 11.5170 11.6400 -1.06% +17.07% +11.6690 +11.4250 Dollar/Sweden SEK= 10.0383 10.0059 -0.45% +7.39% +10.1327 +10.0038 Euro/Sweden EURSEK= 11.0055 11.0558 -0.45% +5.12% +11.1043 +10.9850
Source: Reuters (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Saikat Chatterjee in London; Editing by Dan Grebler)