Dollar Demand Weakens as Stimulus Measures Mount

Friday,   27-Mar-2020   02:30 PM (IST)

The dollar fell further in early trading in Europe Friday, as the likely passage of a $2.2 trillion U.S. package helped soothe worries of a global recession following the coronavirus outbreak and also looked set to increase the Federal Reserve’s balance sheet substantially. At 3:55 AM ET (0755 GMT), the U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, stood at 99.565, rebounding a touch after sharp losses overnight. It is trading below the 100 level for the first time since March 18.The index is down some 4% from a week ago. If sustained by the end of U.S. trade, that would mark the biggest weekly decline since 2009. EUR/USD traded at 1.1020, down 0.1%, while USD/JPY fell 0.6% to 108.89. The pound also hit its highest level against the dollar in 10 days, rising as far as $1.2256 overnight. It subsequently eased back to $1.2203. The $2 trillion U.S. stimulus package is expected to be voted by the House of Representatives later Friday, and Federal Reserve Jerome Powell - while conceding the U.S. "may well already be in a recession"- insisted the central bank still had plenty of ammo after it ramped up its bond-buying program earlier this week. This has raised expectations that the central bank is looking to add to its recent stimulus packages - especially after an unprecedented rise in U.S. jobless claims underscored the virus' impact on the economy.