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