* Dollar surges, adds more than 2% vs yen
* ECB did not follow Fed, BoE in cutting rates
* European markets rebound after Thursday's meltdown
* Policymakers struggle with coronavirus response
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Adds new comment, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, March 13 (Reuters) - The dollar surged on Friday, posting sharp gains against the safe-haven
Japanese yen as stock markets recovered globally and investors cheered efforts by governments and
policymakers to address the economic fallout from the coronavirus outbreak.
The greenback extended gains against several currencies after a blowout in swap spreads on Thursday
signaled that investors want dollars. While those spreads came in on Friday, the dollar held strong.
The dollar also benefited from a news report that U.S. President Donald Trump will declare a national
emergency over the fast-spreading coronavirus on Friday, opening the door to more federal aid to combat
the disease. But market participants said signs of dollar funding stress persist and policymakers probably need to
do more.
"Underlying concerns regarding the economic fallout from the coronavirus on credit markets broadly
remain," said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto.
"It may be tempting to look for signs of a low in global stocks but with the underlying issue - the
coronavirus - still unchecked, we think that is premature at this point," he added.
He noted that the cost of raising U.S. dollar funds in the cross-currency euro swap market has widened
again on Friday after narrowing the day before on the Federal Reserve's announcement to inject more
liquidity into the banking system.
Wider spreads in the cross currency basis swap market suggested increased signs of U.S. dollar
shortage for corporates seeking funding.
In afternoon trading, the dollar gained 2.9% against the yen to 107.66 JPY=EBS .
Wells Fargo said it had further upgraded its forecast for the yen against the dollar as the risk of
financial turmoil remains, saying that the greenback will fall below 100 yen.
"The rate cuts and other policy actions from global central banks have done little to quell market
panic. That may be due to the fact that fiscal policymakers have generally been slow to act," said Wells
Fargo in a research note.
The dollar also rallied versus another safe haven, the Swiss franc, rising 1.1% to 0.9543 franc
CHF= .
Against a basket of currencies, the dollar rose 1.2% to 98.362 =USD .
The euro nursed losses despite European Central Bank policymakers' efforts to reassure markets.
European assets sold off on Thursday after investors were underwhelmed by the bank's stimulus measures.
The euro was last down 0.9% at $1.1091 EUR= .
The ECB on Thursday announced a stimulus package that provides loans to banks with rates as low as
-0.75% and increases bond purchases, but it did not join its counterparts in the United States and Britain
by cutting rates. The pound GBP=D3 also plunged 2% against the dollar to $1.2302.
The greenback's rebound this week reflects its role as the world's most liquid currency, which
investors seek in times of stress.
The Fed meets next week and many analysts now expect the central bank to chop its own target policy
rate, quite possibly to zero, and give markets new guidance about how it plans to combat the economic
fallout from the coronavirus.
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Currency bid prices at 2:53PM (1853 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1071 $1.1183 -1.00% -1.24% +1.1221 +1.1055
Dollar/Yen JPY= 108.0600 104.6300 +3.28% -0.73% +108.1400 +104.5100
Euro/Yen EURJPY= 119.64 117.01 +2.25% -1.89% +119.8400 +116.9000
Dollar/Swiss CHF= 0.9546 0.9437 +1.16% -1.36% +0.9560 +0.9423
Sterling/Dollar GBP= 1.2306 1.2571 -2.11% -7.19% +1.2624 +1.2278
Dollar/Canadian CAD= 1.3922 1.3926 -0.03% +7.20% +1.3994 +1.3782
Australian/Doll AUD= 0.6147 0.6234 -1.40% -12.45% +0.6326 +0.6123
ar
Euro/Swiss EURCHF= 1.0568 1.0555 +0.12% -2.62% +1.0618 +1.0551
Euro/Sterling EURGBP= 0.8995 0.8894 +1.14% +6.41% +0.9019 +0.8845
NZ NZD= 0.6040 0.6086 -0.76% -10.33% +0.6160 +0.6018
Dollar/Dollar
Dollar/Norway NOK= 10.1174 10.1613 -0.43% +15.33% +10.2363 +9.8832
Euro/Norway EURNOK= 11.2110 11.3478 -1.21% +13.97% +11.4520 +11.0055
Dollar/Sweden SEK= 9.7323 9.7346 -0.63% +4.11% +9.8247 +9.6258
Euro/Sweden EURSEK= 10.7732 10.8414 -0.63% +2.90% +10.9411 +10.7710