The dollar erased early losses on Monday as a global selloff intensified, boosting greenback’s safe-haven appeal.
A 9% rally by the dollar over the past two weeks ended on Friday after major central banks stepped up their dollar injection facilities to cope with a global scramble for funding.
But Monday’s trading brought a collapse in stock markets, raising concern that central bank actions were not enough.
Central banks have laid out trillions of dollars of support to markets in recent days to keep them from freezing up but still COVID roils the global economy.
While investors worry about the economic damage from the coronavirus, the intervention helped settle some nerves. Further, investors are counting on further policy easing in the next few days to prop up both markets and the real economy.
However, one sign that the measures so far are insufficient and more stimulus is required is the persistent volatility in markets. Volatility – large ups and downs in asset prices – in financial markets across geographies and asset classes is at record highs.
START TRADINGForex – Global selloff in stocks escalated
Ιnvestors rushed to buy the U.S. dollar amid another round of panic about the economic hit from the coronavirus crisis.
Against a basket of other currencies, the dollar rose 0.2% to 102.82 after falling as much as 0.7% earlier, up nearly 1% from Asian lows. On Friday, it hit a January 2017 high of 102.99.
Against the yen, the U.S. currency bounced between gains and losses. It last traded down 0.6% at 110.07.
Versus the Swiss franc, the dollar fell 0.2% to 0.98 francs as the Swiss central bank increase foreign currency interventions to their highest since the Brexit referendum in 2016.
The dollar initially rose against the euro to the strongest since April 2017, then pared gains to trade 0.2% lower at $1.0636 per euro.
The dollar also closed in on multi-year highs against the Australian and New Zealand dollars as the economic costs of self-isolation triggered the largest intraday decline ever in New Zealand shares.
Sterling weakened on Monday, heading back towards the 35-year lows hit last week.
The pound whipsawed from a fresh low of $1.1413 versus the dollar in Asian trading hours overnight. It was last up nearly 2.4% on the day at around $1.18.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money