Greenback higher vs Swedish krona after Riksbank move

Greenback higher vs Swedish krona after Riksbank move

18 March 2015, 15:15

On Wednesday the euro was almost unchanged vs its US counterpart before FOMC statement which is expected to provide insight into the timing of an interest rate increase. 

The dollar surged against its Swedish counterpart after Sweden's central bank slashed rates further into the negative territory.

EUR/USD traded steadily at 1.0601, having rebounded from the 12-year lows of 1.0461 struck on Friday.

Investors expect the Fed to start lifting interest rates around mid-year and consider the U.S. central bank will drop its reference to being “patient” on the timing of a rate hike in its policy statement.

The dollar was stronger on the back of the diverging monetary policy stance between the Fed and central banks in Europe and Japan.

The common currency was more vulnerable after the European Central Bank started asset purchases under its trillion-euro quantitative easing program earlier this month, pushing euro area bond yields to new lows. The Bank of Japan expanded it stimulus program in late October amid concerns that falling oil prices could lower the inflation outlook.

The dollar jumped against the Swedish krona after Sweden’s central bank cut rates further into negative territory and expended its asset purchase program in a bid to stem the appreciation of the krona.

The Riksbank slashed its benchmark interest rates to minus 0.25% from minus 0.1% previously and said it would buy government bonds worth 30 billion krona.

USD/SEK was up 1.08% to 8.8057, from around 8.6549 ahead of the decision, while EUR/SEK rose to 9.33 from 9.17 earlier.

The greenback was slightly lower against the yen, with USD/JPY slipping 0.16% to 121.17, holding below last week’s eight year peaks of 122.02.

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