Home News FOREX-Swedish crown plunges, dollar gains as central banks turn cautious – Kitco News

FOREX-Swedish crown plunges, dollar gains as central banks turn cautious – Kitco News

4 min read

* Euro on track for weekly loss of 1.5 percent

* Strong U.S. jobs data seen adding to pressure

* Graphic: World FX rates in 2019 (Adds context, updates prices)

By Tom Finn

LONDON, March 8 (Reuters) – The crown fell to a 16-year low
on Friday as the Swedish central bank joined its counterparts in
Europe and Canada in adopting a cautious outlook. The euro
nursed losses at a 20-month low.

Investors had expected broad-based weakness in the dollar
this year after an unlikely rally in 2018 on a consensus view
the U.S. Federal Reserve would put off raising interest rates.

The Fed did turn neutral earlier this year, but other
central banks followed suit, maintaining a difference in
interest rates that worked to the dollar’s advantage.

This week, the European Central Bank offered a fresh round
of cheap loans to banks, the Bank of Canada said the timing of
future rate increases was increasingly uncertain, and Sweden
played down expectations rates would rise.

"Yesterday the Riksbank suggested that its forecasts for
repo rate hikes were simply that – a forecast but not a
promise," HSBC strategists said in a daily note.

The crown fell to 9.4890 on Friday, its weakest
since August 2002, a day after Swedish Central Bank Governor
Stefan Ingves struck a dovish note in a statement to Parliament. Data showed Swedish house prices fell in the three
month ending in February. EURO
The ECB’s decision to push back its first post-crisis interest
rate increase to 2020 reverberated across financial markets,
pulling bond yields across the eurozone lower.

The euro was marginally higher on Friday at
$1.1209 but was headed for a 1.5 percent drop for the week, its
biggest weekly decline in over a year.

On the other hand, the dollar reached a 2019 high against a
basket of currencies overnight as traders bet the United
States would fare better than Europe in coming months despite
some soft patches in the U.S. economy.

That was reflected in the bond markets, where the yield gap
between 10-year U.S. government debt and comparable German bonds
widened to 258 basis points, its highest since December.

However, investors expect the dollar to drift before monthly
U.S. jobs data. Economists polled by Reuters forecast 180,000
jobs were added in the United States last month. The data is due
at 1330 GMT.

"Lower interest rate expectations in Europe mean a likely
rise in the U.S. dollar. For now, U.S. labour market data
decides how far this all goes," Societe Generale strategist Kit
Juckes said.

(Reporting by Tom Finn; editing by Andrew Cawthorne, larry

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