Dollar dumped after Fed cut, ball in BOJ's court for next coronavirus move

The dollar fell against a broad range of currencies on Monday after the US Federal Reserve made another surprise interest rate cut and major central banks took steps to relieve a shortage of dollars and provide extra liquidity.

Pressure has been building on central banks to do something to restore calm to financial markets roiled by the deepening coronavirus crisis.

The US Federal Reserve cut rates to a target range of 0% to 0.25% on Sunday, US time, and said it would expand its balance sheet by at least $700 billion in coming weeks.

The Bank of Japan said it will hold an emergency policy meeting on Monday at 12 noon Japan time (0300 GMT), joining a step up in the global response to the flu-like virus that has spread from China to dozens of countries and claimed more than 5,800 lives.

Five other central banks cut pricing on their swap lines to make it easier to provide dollars to their financial institutions facing stress in credit markets.

"It's a modest negative reaction for the US dollar. The Fed moved a little sooner and a little more aggressive that some thought," said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.

"This cannot prevent the economic fallout from social distancing," he said, referring to a method being used by many countries to try slow the spread of the virus. "That will require some fiscal spending and something from the government to make sure small companies are funded."

The dollar fell 0.6% to 106.85 yen JPY=EBS on Monday, trimming some of its losses as traders braced for the BOJ.

The greenback also fell 0.3% to $1.2330 per British pound.

Against the euro, the dollar slid 0.1% to $1.1104.

The dollar was little changed at 0.9516 Swiss franc.

The Fed, the Bank of Canada, European Central Bank, the Bank of England, the Bank of Japan (BOJ) and Swiss National Bank all agreed to offer three-month credit in US dollars on a regular basis and at a rate cheaper than usual.

The move was designed to bring down the price banks and companies pay to access US dollars, which has surged in recent weeks as the coronavirus outbreak spooked investors.

The Fed had already cut interest rates by half a percentage point on March 3 at an emergency meeting, the first emergency cut since the financial crisis in 2008, but that move failed to stem market volatility.

In the onshore market, the yuan strengthened slightly to 6.9996 per dollar.