* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Updates prices, adds chart)
By Iain Withers
LONDON, April 15 (Reuters) - The dollar rebounded on
Wednesday amid growing concerns that the damage to the global
economy from the coronavirus pandemic will be long and
protracted, boosting the safe-haven appeal of the greenback.
A fall in oil prices on expectations that production cuts by
OPEC may not be enough to support crude during a global demand
crunch also weakened riskier currencies, with the oil-exposed
Norwegian crown and Canadian dollar down sharply. O/R
The U.S. dollar had weakened in the previous four
consecutive sessions on cautious optimism that lockdowns were
slowing the spread of the virus.
But analysts warn that it remains unclear whether economies
will recover quickly or whether it might take longer than
expected.
Fresh economic data from the U.S. later on Wednesday is
expected to show a steep fall in retail sales, as well as hits
to manufacturing and industrial production. This will be the
first set of economic data outside U.S. jobless claims.
"Investors are taking stock and bracing for some big U.S.
numbers. These are the numbers you want to see to get a sense of
how bad things are going to be," said Kenneth Broux, FX
strategist at Societe Generale.
"Oil prices going down is also not good for sentiment. It's
broken the expectation that OPEC's action would stabilise
prices."
The global economy is expected to shrink by 3% during 2020,
a collapse in activity that will mark its steepest fall since
the Great Depression of the 1930s, the International Monetary
Fund said on Tuesday. In European trading hours the dollar bounced off early lows
hit in Asian trading and rose 0.8% to just shy of 99.6 =USD
against a basket of rivals, on track to break a four-day losing
streak.
The greenback gained across the board, particularly against
currencies seen as riskier bets such as sterling, where it was
around 1% higher. GBP=D3
The dollar rose more than 0.5% versus the euro and Swiss
franc, and inched up 0.1% against the Japanese yen. EUR=EBS
CHF=EBS JPY=EBS
Antje Praefcke, FX and EM analyst at Commerzbank, said
investors were preparing for a slew of negative economic data.
"That means the worst might yet be to come, facing the
market with an ice bucket challenge. In that case risk aversion
would rise, allowing the dollar to appreciate again."
Oil price concerns sent the Norwegian crown tumbling almost
2% against the U.S. dollar, while the Canadian dollar was down
more than 1% versus the greenback. NOK= CAD=
The Bank of Canada is due to announce later on Wednesday
whether it plans to take further action to limit the economic
fallout from the coronavirus pandemic.
But having already slashed rates to 0.25% and ramped up
asset purchase programmes, analysts said the central bank had
little wriggle room.
"I don't see any further cuts in store unless things get
really, really bad - and the fact is, we're redefining 'really,
really bad' every day," said analysts at MUFG in a note.
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FX positions IMAGE https://reut.rs/2VxUB6i
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