* Dollar rises, but only just
* Market balanced between Fed's cash and dollar demand
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Hideyuki Sano and Tom Westbrook
TOKYO/SINGAPORE, April 1 (Reuters) - The dollar was a touch
firmer on Wednesday, buoyed by its safe-haven status with the
world staring at what is likely to be one of the worst economic
contractions for decades as it locks down to fight the
coronavirus pandemic.
It advanced against the Australian and New Zealand dollars,
the euro, yen, Swiss franc and pound in Asian trade - but not
much - as appetite for the safety of cash dollars was offset by
aggressive liquidity measures from the U.S. Federal Reserve.
The Australian dollar dipped 0.2% to $0.6123 AUD=D4 and
the New Zealand dollar dropped 0.3% to $0.5945 NZD=D4 . The
euro EUR= eased 0.3% to $1.1010 and the dollar rose 0.2% to
107.74 Japanese yen JPY= .
However that still left the dollar beneath overnight highs
against most majors and well below multi-year peaks made last
month, before the Fed's pumped more dollars into the system to
calm markets.
The Fed on Tuesday 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. "The whole experience is testing the maxim in the market of
'don't fight the Fed,'" said Kyle Rodda, analyst at broker IG
Markets in Melbourne.
"The Fed clearly wants to do everything it can necessary to
ensure dollar liquidity, which puts downward pressure on the
dollar," he said.
"But by the same token there is still this very structural
push to buy dollars right now because liquidity is coming at an
absolute premium with so much risk in the market."
OUTLOOK GRIM
The dollar was marginally higher against emerging market
currencies and steady at 7.0810 Chinese yuan CNY= . Against the
pound GBP= the dollar firmed 0.3% to $1.2381 per pound.
Against a basket of currencies =USD it was flat at 99.028.
Meanwhile, manufacturing data in Asia painted a bleak
picture. Factory activity in Japan and South Korea posted the
biggest contractions in about a decade. The Bank of Japan's "tankan" corporate survey showed
Japanese manufacturers turned pessimistic for the first time in
seven years. Surveys due later on Wednesday from countries including
Germany and the United States are expected to do similarly
little for investor confidence, while U.S. private employment
data is likely to show a drop in payrolls.
The virus has now killed more than 42,000 people and
infected more than 851,000 in 205 countries.
Goldman Sachs on Tuesday said it now forecasts a real GDP
sequential decline of 34% in the United States this quarter, on
an annualised basis, compared with an earlier estimate of a 24%
drop. "In the absence of either a material improvement in global
risk sentiment, or commodity prices, then together with ongoing
dollar strength, we are not convinced the Australian dollar can
easily maintain its foothold back above $0.60," National
Australia Bank analysts said in a note.
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