FOREX-Dollar maintains gains after weeks of rallying

* Norwegian crown up nearly 2% amid better dollar liquidity
* Dollar up vs euro, Japanese yen
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Olga Cotaga
LONDON, April 2 (Reuters) - The U.S. dollar firmed on
Thursday but paused its strong rally of recent weeks after the
Federal Reserve made it easier for other central banks to swap
their currencies for dollars.
Markets were spooked after U.S. President Donald Trump's
media briefing late on Tuesday in which he warned Americans of a
painful two weeks ahead in fighting the coronavirus, even with
strict social distancing measures. Still, analysts do not expect the dollar rally seen in
recent weeks to continue further, following the Federal Reserve
measures in March. The cost to borrow dollars in the euro and
yen funding markets fell considerably after the Fed liquidity
injections, with three-month FX swap spreads snapping back from
2008 global financial crisis levels last month.
Costs blew out in mid-March as stress in the dollar funding
market caused by the coronavirus pandemic lead to a global
scramble to secure dollar funds. EURCBS3M=ICAP JPYCBS3M=ICAP
The euro traded down 0.4% at $1.0916 as the dollar advanced.
EUR=EBS The greenback also rose against the Japanese yen,
trading last up 0.2% at 107.33 yen JPY=EBS , though the
Japanese currency protected well its safe-haven status this
week, advancing against its U.S. counterpart.
The Fed's efforts to improve dollar liquidity have turned
out to be beneficial for other currencies too, such as the
Norwegian crown, which advanced further on Thursday to hit a
three-week high of 11.1820 against the euro. It was last trading
up 1.8% at 11.26 EURNOK=D3
"The Norwegian crown is the least liquid currency in the G10
space so when a crisis hits, it gets hammered. So the
improvement in dollar funding has already started manifesting
itself in the crown, which has rallied sharply so far this
week," said Petr Krpata, chief EMEA FX and IR strategist at ING.
On top of that, "the crown is the cheapest currency in the
G10 space", therefore it is appealing from that front as well,
he said.
To combat the economic slowdown inflicted by the pandemic,
the Fed said on Wednesday it was temporarily easing its leverage
rules for large banks by exempting certain investments from a
key leverage calculation.