Dollar gains on Japanese demand before fiscal year end, pandemic weighs on mood
By Administrator_India
The dollar rose against the yen on Tuesday as Japanese investors and companies rushed to cover a shortage of the U.S. currency before their fiscal year end, but sentiment remained fragile as the global coronavirus crisis showed no signs of abating.
China’s yuan held steady in offshore trade but could be buffeted by the release of a key manufacturing survey later in the day as investors count the economic cost of the coronavirus, which first emerged in China late last year.
The pound fell against the greenback and the euro as a sovereign ratings downgrade continued to weigh on sterling, underlining the strain on public finances from a much needed massive fiscal stimulus.
Tuesday is the last trading data for Japan’s fiscal year and the end of the quarter for major investors elsewhere, which could lead to some volatile swings as big players in the currency market close their books.
However, analysts warn that an almost certain global recession due to the coronavirus will remain a dominant influence in trading and eventually favor currencies least affected by the economic downturn.
The dollar rose 0.23% to 108.06 yen on Tuesday in Asia.
In the offshore market, the yuan was little changed at 7.1114 versus the dollar.
China’s official manufacturing Purchasing Manager’s Index is expected to show activity likely remained in contraction in March, though it was set to stabilize slightly from the coronavirus-led collapse that virtually paralyzed the world’s second-biggest economy.
China’s currency eased on Monday after the People’s Bank of China unexpectedly cut its reverse repo rate by the most in almost five years.
The euro was little changed at $1.1031. Traders are bracing for data expected to show a rise in German unemployment as the global economy reels from the coronavirus pandemic.
The pound remained under the gun after ratings agency Fitch cut Britain’s sovereign debt rating on Friday, saying debt levels would jump as it ramped up spending to offset a near shutdown of the economy.
The New Zealand dollar dipped after the country’s government extended a nationwide state of emergency for another seven days to slow the spread of the coronavirus, but the kiwi quickly regained its composure to trade steady at $0.5962.
