* Crown sinks after 50 bps rate cut
* Dollar index holds above recent 8-week low
* Solid U.S. private-sector jobs data points to strong
* Aussie dollar falls after RBA's Stevens warns on currency
(Refiles, dropping extraneous word 'chief' from headline)
By Anirban Nag
LONDON, July 3 The Swedish crown fell to a
3-1/2-year low against the euro on Thursday as the central bank
cut rates more than expected, while the Australian dollar lost
ground after the head of its central bank warned the currency
The 50-basis-point-cut by Stockholm's Riksbank was double
what was expected and kept the market focus on the crown in an
otherwise quiet session, with investors awaiting U.S. jobs data
and the outcome of a European Central Bank policy meeting.
Strong figures from payrolls processor ADP on Wednesday
supported the view that the U.S. economy has bounced back after
a first-quarter slump.
That helped drive benchmark U.S. Treasury yields
to their highest in over a week at 2.63 percent on Wednesday,
which in turned supported the dollar against a basket of major
U.S. yields could rise further if Thursday's jobs data also
The euro was flat against the dollar at $1.3660 with
investors cautious before European Central Bank President Mario
Draghi's post-meeting news conference, which is due to start
just as the U.S. jobs numbers are released.
After last month cutting interest rates to record lows and
revealing a 400 billion-euro loan programme, the ECB is not
expected to take fresh policy action this time.
"Yet with inflation so low at 0.5 percent, year-on-year, we
find it unlikely President Draghi will be happy to say nothing
and allow euro/dollar to stage another assault on $1.40 again,"
said Chris Turner, head of currency strategy at ING.
"Short-term rate spreads suggest euro/dollar should be
trading closer to $1.34 than $1.37."
The dollar was up 0.15 percent against the yen at 101.92 yen
SWEDISH CROWN, AUSSIE STUNG
The Riksbank surprised a market that was expecting only a 25
bps cut in the repo rate, and the Swedish crown fell to its
lowest since November 2010 against the euro.
The euro was up 2 percent, rising to 9.39 crowns
, from around 9.1950 crowns before the rate decision.
Another big mover was the Australian dollar which
extended losses to trade 0.8 percent lower $0.9370.
It retreated further from the eight-month peak of $0.9505
set on Tuesday after Reserve Bank of Australia Governor Glenn
Stevens warned investors were underestimating the risk of a
significant fall in the currency.
A weak reading on Australian retail sales added to the
already soft tone of the Aussie dollar, which had retreated on
Wednesday on profit-taking in the wake of disappointing trade
The Aussie's drop below $0.9400 triggered stop-loss selling,
said Jeffrey Halley, FX trader for Saxo Capital Markets in
"Governor Stevens timed his talking down of the Australian
dollar perfectly to coincide with a soft market," Halley said.
While the Aussie may find some support at levels around
$0.9370 and $0.9355, a drop to $0.9300 was now on the cards, he
(Additional reporting Masayuki Kitano in SINGAPORE, editing by