FOREX-Dollar slows, but FX swaps signal funding pressures remain

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee
LONDON, March 20 (Reuters) - The dollar eased on Friday
after a rally that put it on track for its biggest weekly rise
since the 2008 financial crisis, as a global scramble for
funding sent other currencies reeling.
Currencies from the Australian dollar AUD=D3 to the
British pound GBP=D3 tumbled to multi-year lows this week,
after coordinated rate cuts by central banks and billions of
dollars of fund injections failed to calm panicky markets.
But Friday restored some calm after days of selling. The
Australian dollar AUD=D3 jumped 3.4%, although analysts warned
that it was too early to call an end to the rout.
The U.S. dollar is up about 3.5% against a basket of
currencies =USD through a week when investors have liquidated
everything from stocks to bonds to gold and commodities. At its
three-year peak of nearly 103 hit overnight, the dollar was up
more than 5%, its biggest weekly gain since October 2008.
Gauges of expected market swings in the euro for one-month
maturities EUR1MO= edged lower. Currency swap spreads, where
most of the funding pressure in dollar markets was evident,
eased.
"While FX volatility is lower and currency basis swaps are
less scary for example, the situation remains stressed," said
Kit Juckes, a strategist at Societe Generale in London.
The euro was among the major gainers EUR=EBS , up more than
1% to $1.0832. Sterling GBP=D3 rose 3.3% from a 35-year low to
$1.1878.
"People are selling everything and the common thread is they
just want cash," said Stuart Oakley a Singapore-based executive
with Nomura, who runs the bank's trading with its clients.
"People just want cash because at the end of the day, people
don't know where their next revenue is coming from and they've
got payments to meet. I don't think that's going to change."
Cross-currency basis swaps, which show the cost of borrowing
dollars abroad, showed that strains remained.
The premium over interbank rates that investors were paying
to swap yen for one-year dollar funding JPYCBS1Y= was around
68 basis points, close to the 2016 highs hit last week.
Euro cross-currency basis swap spreads also remain wide
EURCBS3M=ICAP . So is the FRA-OIS spread USDF-O0X1=R , a
barometer of risk in the interbank market.