Dollar pulls back in Asia as risks ebb

The dollar was on track for its biggest weekly fall in more than a decade on Friday as a series of stimulus measures around the world, including a $2.2 trillion US package, helped temper a rout in global markets triggered by the coronavirus pandemic.
An unprecedented jump in US jobless claims on Thursday underscored the virus' devastating impact on the economy, but a subsequent bounce in Wall Street shares raised hopes that a torrent of selling in risk assets may have run its course for now.
That eased a run on the dollar since last week, with many market players - from leveraged investors who faced margin calls to avoid forced selling to companies hoarding dollars to brace for recession - feeling less need for the currency.
The dollar fell about 1% to 108.57 yen, due largely to Japanese repatriating funds ahead of their fiscal year-end in March, after having shed 1.44% the day before.
The euro ticked up 0.2% to $1.1049 building on a jump of 1.40% on Thursday. The British pound gained 0.3% to $1.2183.
The number of Americans filing claims for unemployment benefits surged to a record of more than 3.28 million last week as strict measures to contain the coronavirus pandemic unleashed a wave of layoffs.
That eclipsed the previous record of 695,000 set in 1982 and was up 3 million from last week. The forecast ranged from one to five million or even larger.
The dollar's index against six other major currencies lost 0.4% after having shed 1.5% on Thursday, its biggest daily fall in almost four years.
So far this week it is down 3.1%. If sustained by the end of US trade, that would mark the biggest weekly decline since 2009, underscoring the currency market's extreme volatility after last week racking up its biggest weekly gain since the global financial crisis more than a decade ago.
The dollar funding squeeze in the interbank market has abated considerably this week.
Currency basis swap spreads, the premium investors need to pay over interbank rates to fund dollars through foreign currency swaps, have fallen considerably.
Even the dollar/yen basis, which had stayed elevated until the middle of this week, has dropped, with the three-month spread now at around 40 basis points, compared with a high around 140 basis points last week.
Highly choppy currency trade could continue until the end of the month, when there tends to be large flows from corporate and investors to hedge their currency exposures.
The Australian dollar rose 0.4% to $0.6086, having gained more than 10% from its 17-year low of $0.5510 touched on Thursday last week. The New Zealand dollar fell 0.25% to $0.5944.