US dollar falls after Federal Reserve cuts interest rates to near zero

Markets were set for another chaotic session on Monday after many of the world's major central banks joined in an emergency round of policy easing aimed at cushioning the impact of the coronavirus on economies. 

The dollar dropped 1.1% on the Japanese yen to 116.71 , while the euro climbed 0.8% to $1.1186.

The US Federal Reserve cut rates to a target range of 0% to 0.25% and said it would expand its balance sheet by at least $700 billion in coming weeks. Five other central banks also cut pricing on their swap lines to make it easier to provide dollars to their financial institutions facing stress in credit markets.

The Fed, the Bank of Canada, European Central Bank, Bank of England, Bank of Japan and Swiss National Bank set up swap lines in the financial crisis.

They also agreed to offer three-month credit in U.S. 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 U.S. dollars, which has surged in recent weeks as a coronavirus pandemic spooked investors.U.S. President Donald Trump called the move "terrific" and "very good news."

The Reserve Bank of New Zealand (RBNZ) joined in with a cut of 75 basis points to its rates, and speculation was rife the Reserve Bank of Australia (RBA) would also ease."Central banks around the world continue to react with emergency interest rate cuts to assist with the shock to demand arising from the spread of the COVID-19 virus, with necessary public health containment efforts coming at a substantial economic cost," NAB chief economist Alan Oster."Central banks are also appropriately providing additional liquidity to financial systems."Most market had yet to open in Asia, but currencies were active with the U.S. dollar falling given that the Fed had cut by more than its peers.