April 28, 2020 / 9:15 AM / a month ago

FOREX-Swedish crown jumps after central bank keeps rates unchanged

* Crown jumps to 6-week high vs euro and 2-week high vs dollar

* Riksbank keeps rates unchanged at 0%

* Dollar steady against major currencies ahead of Fed, ECB

* Oil price drop weighs on sentiment

* Aussie slips, other majors rangebound

* Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E (Releads, updates prices, adds comment)

By Tom Wilson

LONDON, April 28 (Reuters) - The Swedish crown gained against the dollar and euro on Tuesday after its central bank held interest rates steady and maintained stimulus measures designed to support an economy battered by the coronavirus pandemic.

The crown rose 0.4% against the euro to 10.7905, its highest since mid-March. Against the dollar it jumped to a two-week high, and was last trading 0.7% higher at 9.9450.

With Sweden facing its worst downturn since World War Two, investors had watched closely for any sign the Riksbank would push rates back below zero after it became the first central bank to ditch a negative interest rate policy late last year.

But the Riksbank left its benchmark rate at 0%, as expected. Unlike the majority of central banks around the world, it has argued it is better to focus on credit supply and counteract a rise in interest rates to households and companies.

“It’s hard not to see this as a bit hawkish - you’d think that if they didn’t cut rates now, when would they cut?” said Morten Lund, FX strategist at Nordea, adding that he expected rates to remain steady this year and next.

EYES ON FED, ECB

The Swedish currency was the major mover on Tuesday as investors bided time ahead of policy meetings by the U.S. Federal Reserve and European Central Bank later this week, with a fresh fall in oil prices also subduing riskier bets.

The greenback was softer against a basket of currencies , falling 0.3% to 99.970 - its lowest in a week. It was also weaker against the yen at 107.055 yen per dollar.

A 5% drop in benchmark Brent crude and a 20% drop in U.S. crude were ill omens for global demand.

The euro gained 0.2% to $1.08652.

Markets are looking for any forward guidance from the Fed, which meets later on Tuesday and is due to issue a statement on Wednesday. The European Central Bank meets on Thursday.

The Fed has led the global monetary policy response to the coronavirus pandemic by cutting interest rates to zero and aggressively buying bonds and corporate credit - a program it extended overnight to include municipal debt of smaller U.S. cities.

Yet analysts said it was unlikely the Fed and other central banks would make further major policy moves, given the scope of recent action.

“All of them have beefed up asset purchases as much as they could. All of them are close to or even at the minimum lower interest rate bound,” wrote Thu Lan Nguyen, an analyst at Commerzbank.

“They are likely to remain there for the foreseeable future, which would point towards relatively stable exchange rates.”

The ECB has had less room to manoeuvre on rates and announced an enormous bond-buying program. Still, bickering and indecision over a eurozone rescue package has some in the market expecting deeper action still, perhaps as soon as Thursday.

That has seen the euro left behind as expectations for an economic recovery from the pandemic has pressured the U.S. dollar and driven a rally in riskier currencies such as the Australian dollar. (Reporting by Tom Wilson; Additional reporting by Sujata Rao in London; Editing by Kirsten Donovan)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below