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FOREX-U.S. crude crash keeps dollar in demand

Published 22/04/2020, 02:24 pm
© Reuters.
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* Dollar holds near two-week peak

* March shopping surge lifts Aussie

* Oil recovery does little salve to investor sentiment

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

By Tom Westbrook

SINGAPORE, April 22 (Reuters) - The dollar and yen held broad gains on Wednesday, as U.S. oil's return to positive territory from a historic plunge failed to calm market nerves, while the Australian dollar jumped on record retail sales figures.

The greenback sat just below a two-week peak against a basket of peers =USD and barely budged against commodity currencies whacked by the oil collapse. O/R

The safe-haven Japanese yen JPY= held at 107.83 per dollar. The Australian dollar's AUD=D3 half-a-percent gain to $0.6354, following a record surge in retail sales last month, was an outlier and had begun to wind back by mid-session. AUD/

"I would treat the number with caution, because, like elsewhere there has been so much panic buying of toilet paper and other things," said National Australia Bank FX strategist Rodrigo Catril, who expects a plunge in April figures.

"We'd fade the rally," he said.

Elsewhere the stabilisation in oil prices gave only a small lift to the oil sensitive Russian rouble RUB= and Norwegian krone NOK= , while the Canadian dollar CAD=D3 struggled for traction.

"The bears are certainly getting the upper hand," said Chris Weston, head of research at Melbourne brokerage Pepperstone.

The greenback has gained about 0.6% this week on a basket of currencies and stands near multi-week highs hit on Tuesday against the krone, rouble and loonie.

The euro EUR= remained rangebound, holding at $1.0856, while the British pound GBP= held near a two-week trough after a gloomy assessment on Tuesday of recovery prospects from the Bank of England's chief economist. QUICK FIX

The recovery in U.S. crude CLc1 lifts it out of negative territory, but at little over $11 a barrel, it is still some 80% under January's peak as cratering energy consumption due to coronavirus lockdowns creates a supply glut.

The plunge has soured appetite for risk and seems to have halted a rebound in stock markets as investors brace for a longer and slower global economic recovery.

A return to work in the United States, the country hardest hit by the virus which accounts for about a quarter of the almost 180,000 deaths globally, is looking disorderly as states and medical experts clash about the best course of action. Singapore, initially a case study in successful supression of the new coronavirus, has extended its partial lockdown by a month as it struggles with a sharp rise in cases sweeping through cramped worker dormitories. central bank governor, Philip Lowe, said on Tuesday that the country is likely to experience its biggest contraction in output since the 1930s, and that a quick return to business as usual should not be expected. fall in commodity and equity prices is a signal market participants expect the world economy to remain weak for some time, even once the lockdowns are eased," said Commonwealth Bank of Australia FX analyst Joe Capurso.

"We expect the weak world economy to bear down on the Australian dollar and for the Aussie to oscillate around $0.6000 in coming months."

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