Breaking: USD surges on funding stress, AUD/USD breaks 0.60, GBP/USD under 1.21, EUR/USD nears 1.10

Yohay Elam FXStreet

The demand for dollar is surging amid a global sell-off of stocks related to the coronavirus crisis. There is growing fear of over USD shortage.

EUR/USD is trading near 1.10, close to the monthly lows. GBP/USD has extended its slump, flirting with 1.21, the lowest since September. AUD/USD is around 0.60, a level that was last seen in 2003. The greenback is gaining ground across the board, beating assets that are usually safe-haven ones such as the Japanese yen and Gold. XAU/USD is trading below $1,470.

Reuters reports that excessive US swap prices show the US dollar funding situation worsening. Dealers say overnight (T/N) EUR/USD swap 10% vs 0.15% on a regular day. The Benchmark 3-month EUR basis swap is -124 basis points - new high since 2012, and that was -154 in 2012 and -305 basis points during 2008 financial crisis. Large corporations said to be drawing down on available credit lines. Amid fears of further USD shortages, exacerbating the issue.

Apart from the Aussie's spectacular fall, other commodity currencies are suffering. NZD/USD is trading around 0.5950 and USD/CAD is nearing 1.40.

More: Trading Volatility: Resist the temptation to pick tops and bottoms

Here is the monthly AUD/USD chart, showing the depths of the fall:

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

EUR/USD appears supported by the 200-day SMA, for now

Following an early pullback to multi-week lows near 1.1670, EUR/USD now manages to reclaim the 1.1700 region as the NA session draws to a close on Monday. The steep retracement in spot follows the equally strong move higher in the US Dollar, as investors continue to assess the geopolitical landscape in the wake of the US and Israel attacks on Iran.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold eases some ground, approaches $5,300

Gold now surrenders part of the earlier advance, reshifting its attenton to the $5,300 zone per troy ounce at the beginning of the week. Indeed, the yellow metal’s firm performance appears propped up by incresing geopolitical jitters in the Middle East, which at the same time fuels the demand for the safe-haven space.