By Peter Nurse
Investing.com - The dollar traded a little higher Wednesday, helped by its status as a safe haven currency as manufacturing data out of Asia pointed to a severe economic slowdown as the region tries to combat the coronavirus pandemic.
At 03:10 AM ET (0710 GMT), the U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, stood at 99.430, up 0.3%. EUR/USD fell 0.4% to 1.0980, while GBP/USD dropped 0.56 to 1.2353. USD/JPY climbed 0.1% to 107.61.
Factory activity dropped sharply across most of Asia in March, according to the latest Purchasing Managers' Index surveys, with regional economic powerhouses Japan and South Korea, posting their biggest contractions in about a decade.
Limiting the greenback’s gains was the news that the U.S. Federal Reserve late Tuesday broadened the ability of dozens of foreign central banks to access dollars during the coronavirus crisis by allowing them to exchange their holdings of U.S. Treasury securities for overnight dollar loans.
“The Fed clearly wants to do everything it can to ensure dollar liquidity, which puts downward pressure on the dollar," said Kyle Rodda, an analyst at broker IG Markets.
"But by the same token there is still this very structural push to buy dollars right now because liquidity is coming at an absolute premium with so much risk in the market."
One of the regions hardest hit has been Central and Eastern Europe, an area trying to cope with the economic downturn while also facing political uncertainty.
On Monday Hungary’s Prime Minister Viktor Orban received the right to rule by decree indefinitely, undermining the principles of a democracy, while in Poland the ruling party is pressing ahead with May’s presidential election despite opposition given the coronavirus pandemic.
At 3:10 AM ET, EUR/HUF traded 0.4% higher at 362.44, EUR/PLN was up 0.5% at 4.5796 and EUR/CZK rose 0.5% to 27.459.