The dollar was down 0.1% in early London trading on Thursday, little changed by U.S. President Donald Trump’s impeachment, while the Swedish crown edged higher when the Riksbank became the first central bank to exit negative rates territory.
Reaction to the Riksbank’s decision to bring interest rates up to 0% was limited because the action was already priced into the market. Versus the euro, the crown was last up 0.2% EURSEK=D3.
“The Riksbank is the prime example of a central bank flying the white flag after years of expansionary monetary policy and to have thrown in the towel in a state of exasperation,” Commerzbank FX strategist Ulrich Leuchtmann wrote in a note to clients.
Fritz Louw, FX strategist at MUFG, said that the rate hike was interesting because the Swedish financial sector had not been particularly damaged by Sweden’s negative rate policy.
Although Sweden’s inflation has risen recently, it is still below the Riksbank’s target.
The dollar was down 0.1%. Trump’s impeachment had limited impact on currency markets.
Trump became the third U.S. president to be impeached. The House of Representatives formally charged him with abuse of power and obstruction of congress.
The news did not affect risk appetite – the safe-haven Japanese yen was flat against the dollar JPY=EBS – because the Republican-controlled Senate is widely expected to acquit Trump, leaving him in office.
“It’s been relatively priced in that Trump was going to get impeached in the House,” said MUFG’s Louw. “If the Senate doesn’t uphold it, I don’t think there is any real reason for the dollar to react massively to it.”
The Australian dollar was up 0.4%, still boosted by a surprise fall in unemployment, which is seen as reducing the likelihood of further interest rate cuts AUD=D3.
The Norwegian crown was up 0.2% versus the euro EURNOK=D3, before the Norges Bank monetary policy decision due at 9.00 GMT. The rate is expected to remain unchanged at 1.5%……..read more
Source: Reuters
