FOREX-U.S. 'fiscal bazooka' blows dollar a little lower

* White House and Senate agree $2 trln aid package
* Aussie jumps back over 60 cents
* Pound, kiwi, euro ahead
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Westbrook
SINGAPORE, March 25 (Reuters) - The dollar slipped for a
third consecutive session on Wednesday, as a deal to backstop
the U.S. economy with a huge fiscal stimulus package promised to
further ease some of the pandemic-driven skyrocketing demand for
hard cash.
U.S. Senate majority leader Mitch McConnell said the
package, expected to be worth $2 trillion, had been agreed and
would be put to a vote later on Wednesday. The risk-sensitive Australian dollar AUD=D3 jumped over
the 60-cent mark for the first time in a week as news of the
agreement trickled out, and then extended gains to $0.6047.
The British pound GBP= rose 0.6% to a session high of
$1.1834 and the New Zealand dollar was 1% ahead at $0.5894. The
euro EUR= lifted 0.3% to $1.0819.
"Now we are seeing the fiscal bazooka in action, and that
should help further ease the dollar funding stress," said Moh
Siong Sim, currency analyst at the Bank of Singapore.
"There has been a need for cash to ride through this period
where there is a revenue shortfall," he said, adding the deficit
could be alleviated should help find its way quickly to affected
businesses, especially in the travel and hospitality sectors.
Against a basket of currencies =USD the dollar eased 0.2%
to 101.43. The U.S. currency was broadly steady against the
Japanese yen JPY= at 111.17 yen per dollar.
The precise details of the U.S. rescue bill are not clear,
but Senate Democrat leader Chuck Schumer said it included $150
billion to aid hospitals and the same amount again to support
state and local governments.
Three sources briefed on the matter had also told Reuters
that U.S. lawmakers are nearing agreement on a $61 billion
rescue package for the aviation sector. The fiscal deal also follows enormous moves from the U.S.
Federal Reserve to restore market confidence with limitless bond
purchases and a flood of discount dollars.
Yet, despite the burst of rescue measures, signs of dollar
funding stress do remain, and so does the dollar's broad
strength.
While the Australian dollar is up 1.5% for the session, both
it and the pound have lost more than 7% for the month as nearly
everything has been clobbered by the rush for U.S. dollars.
Few analysts expect any lasting turnaround until there are
signs that the virus is in retreat, though there is none of that
happening beyond China and South Korea.
Spain reported its sharpest increase in cases on Tuesday
while India announced a 21-day lockdown of its 1.3 billion
population. The World Health Organization said that New York could
become the next epicentre of the pandemic. And within funding markets, signs of stress remain as
businesses and investors drive enormous demand for dollars to
cover liabilities.
Cross-currency basis swap spreads, which reflect the cost of
borrowing dollars abroad, have relaxed for the euro
EURCBS3M=ICAP .
But they remain elevated for the yen JPYCBS= and
Australian dollar AUDCBS=ICAP , even as the Bank of Japan and
Reserve Bank of Australia tap the Fed's funding lines for
billions of short-term dollars.
"There's a lot of reasons to believe that we're not out of
the woods yet," said Chris Weston, head of research at Melbourne
brokerage Pepperstone.
"People still feel that the downside risk is far more
prevalent."