Calm in cross-currency after Fed soothes dollar trauma

Dollar fotolia
By Ross Lancaster
02 Apr 2020

The US Federal Reserve’s unprecedented injections of dollar liquidity calmed conditions after a chaotic month in the cross-currency swap market’s short-end, but traders are looking at its effects on the primary bond markets as the next test.

Amid the coronavirus and oil crises of the last few weeks, the US dollar has appreciated dangerously. A marketwide scramble for the currency has put emerging markets in peril and dislocated the cross-currency basis swap and FX swap markets.

“[The appreciation] was faster to materialise and more aggressive ...

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