2020.03.1720:35:00UTC+00Dollar Rebounds, Scores Strong Gains Against Peers

The U.S. dollar rallied sharply on Tuesday as traders rushed to pick up the currency despite recent sharp reductions in interest rates.

The fact that other central banks too have come out with rate cuts appears to be tilting the balance in favor of the greenback.

The Federal Reserve announced that it has established a commercial-paper funding facility to improve liquidity to provide short-term funding for U.S. corporations to roll over short-term debt and to provide credit "that will support families, businesses and jobs across the economy."

According to reports, the government is backing a fiscal stimulus package of about $850 billion that involves payroll tax cut and aid for airlines.

The dollar index rose to 99.83 by early afternoon, and was last seen at 99.58, up 1.54% from previous close.

In economic news, industrial production in the U.S. rebounded by more than anticipated in the month of February, according to a report released by the Federal Reserve on Tuesday.

The Fed said industrial production climbed by 0.6% in February after falling by a downwardly revised 0.5% in January. Economists had expected industrial production to increase by 0.4% compared to the 0.3% drop originally reported for the previous month.

A report from the Commerce Department said retail sales fell by 0.5% in February after climbing by an upwardly revised 0.6% in January.

Meanwhile, homebuilder confidence in the U.S. has deteriorated by slightly more than anticipated in the month of March, according to a report released by the National Association of Home Builders. The report said the NAHB/Wells Fargo Housing Market Index fell to 72 in March after edging down to 74 in February. Economists had expected the index to dip to 73.

Against the Euro, the dollar strengthened to $1.1009, from $1.1182, gaining nearly 1.6%.

German economic confidence plunged to its lowest level since December 2011 amid fears about the economic fallout from the coronavirus outbreak.

Survey results from the ZEW - Leibniz Centre for European Economic Research showed that the economic sentiment index plunged 58.2 points to -49.5 in March

This was the biggest fall since the survey began in 1991 and reached its lowest level since December 2011. The score was also worse than the economists' forecast of -27.2.

At the same time, the index measuring current economic situation declined 27.4 points to -43.1 in March. The expected reading was -30.0.

Against Pound Sterling, the dollar firmed up to $1.2088, rising nearly 1.5% from previous close of $1.2271.

Data from the Office of National Statistics showed the jobless rate in the U.K. increased by 0.2 percentage points from the preceding quarter to 3.9%. The rate was largely unchanged from a year earlier, the ONS said. This was above the forecast of 3.8%.

At the same time, the employment rate rose 0.3 percentage points from the previous quarter to a joint record high of 76.5%.

The Japanese yen weakened to 107.66 a dollar, losing about 1.66% from Monday's 105.90 yen a dollar.

With the Aussie-Dollar pair trading at 0.5994, the dollar was up more than 2%.

The dollar was up nearly 1.5% against both Swiss franc and the loonie, at 0.9604 and 1.4219, respectively.