FOREX-Risk currencies ease, yen firms as investors brace for global downturn

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, April 1 (Reuters) - Risk currencies looked fragile
and the yen firmed on Wednesday, the first day of a quarter that
looks set to see the worst economic contractions for decades in
many countries as they scramble to tackle the coronavirus
epidemic.
The U.S. dollar could come also under pressure, particularly
against other liquid major currencies, under the weight of
Federal Reserve measures designed to ensure sufficient liquidity
in the global financial system, analysts said.
The Australian dollar dipped 0.2% to $0.6125 AUD=D4 before
paring losses and the New Zealand dollar dropped 0.35% to
$0.5950 NZD=D4 , although both currencies kept some distance
from multi-year lows hit last month.
The euro fetched $1.1029 EUR= , easing slightly, while the
dollar dipped 0.1% to 107.42 yen JPY= .
Overnight the U.S. dollar gained against the both Aussie and
the kiwi but weakened against the yen and ended almost flat
against most European currencies.
Most market players say the moves were largely driven by
quarter-end flows, and in the case of the yen, Japanese fiscal
year-end flows.
On the whole, chaotic scrambling for dollar cash in the wake
of global market routs in mid-March has subsided for now, with
quarter-end funding demand out of way.
"I do not expect the dollar to rise to the level we saw last
month, given that the Fed has been pumping dollars," said Minori
Uchida, chief currency analyst at MUFG Bank.
"Against the yen, dollar is likely to slip further. Given
the current economic conditions, Japanese firms will refrain
from foreign direct investment."
The U.S. Federal Reserve has been buying U.S. bonds at an
unprecedented pace and has started programmes to support credit
markets, including commercial paper, corporate bonds and
asset-backed securities.
The Fed on Tuesday broadened the ability of dozens of
foreign central banks to access U.S. dollars during the
coronavirus crisis by allowing them to exchange their holdings
of U.S. Treasury securities for overnight dollar loans.
Given unusually high levels of uncertainty about the global
economic outlook, investors are likely to prefer more liquid
currencies, analysts say.
The Bank of Japan's "tankan" corporate survey showed
Japanese manufacturers turned pessimistic for the first time in
seven years as the coronavirus pandemic dealt a heavy blow to
business activity. Manufacturing surveys due later on Wednesday from countries
including Germany and the United States are expected to paint a
similar picture, while U.S. private employment data is likely to
show a drop in payrolls.