NEW YORK (Reuters) - The dollar fell for a third day on Friday against a basket of currencies as traders booked gains on its recent run-up spurred by the widening interest rate gaps in favor of the United States and signs of cooling growth in the rest of the world.
The Swedish crown continued its rally, as more traders exited their bearish bets on hints that some Riksbank officials are open to raising interest rates despite worries about low inflation.
The euro rose for a second day as the greenback retreated further from a 2018 peak reached earlier this week. The single currency, however, was still on track for a loss for a fourth straight week against the dollar.
“People are taking profits. The move is losing some steam,” Chuck Tomes, senior investment analyst at Manulife Asset Management in Boston, said of the dollar’s rise, which started in mid-April, and Friday’s profit-taking.
An index that tracks the dollar versus six currencies .DXY rose initially before selling re-emerged. It was down 0.15 percent at 92.603, below its strongest level of the year at 93.416 on Wednesday.
The dollar index posted a slim 0.04 percent loss on the week in late trading, following three straight weeks of gains.
The euro scored a 0.3 percent gain at $1.1946 EUR= and a 0.2 percent rise against the Japanese currency at 130.55 yen EURJPY=.
On the week, the common currency fell 0.1 percent against the greenback and to eke out about a 0.05 percent gain versus the yen.
A loss of economic momentum in Europe has made policymakers in Europe and Britain more cautious about ending 2008 financial crisis-era policies.
On Friday, European Central Bank President Mario Draghi said the euro zone needs a new “fiscal instrument” to help weaker member nations if they are being overly penalized by investors during a debt crisis.
Traders pushed out expectations of a UK rate hike to end-2018 and the ECB boosting interest rates in the second half of 2019.
U.S. interest rates futures implied traders expect the U.S. Federal Reserve to raise key borrowing costs at least twice more in 2018 FFM8 FFN8.
Not all European central bankers seemed willing to keep policy loose.
Earlier this week, several Riksbank policymakers in the central bank’s minutes signaled the possibility of higher interest rates in the fall amid a surging economy, helping to spark the rally in the Swedish crown.
The Swedish currency SEK= gained 0.6 percent at 9.5941 crowns per dollar for the best weekly gain versus the greenback since late June 2017. It recorded its strongest weekly increase versus the euro EURSEK= since February 2010, Reuters data showed.
Currency bid prices at 3:21PM (1921 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Euro/Dollar EUR= $1.1945 $1.1913 +0.27% -0.43% +1.1968 +1.1892
Dollar/Yen JPY= 109.2800 109.3800 -0.09% -3.01% +109.5600 +109.1600
Euro/Yen EURJPY= 130.53 130.34 +0.15% -3.44% +130.6800 +130.0100
Dollar/Swiss CHF= 1.0007 1.0031 -0.24% +2.71% +1.0039 +0.9977
Sterling/Dollar GBP= 1.3545 1.3516 +0.21% +0.24% +1.3595 +1.3502
Dollar/Canadian CAD= 1.2788 1.2765 +0.18% +1.68% +1.2799 +1.2729
Australian/Doll AUD= 0.7544 0.7532 +0.16% -3.29% +0.7566 +0.7523
Euro/Swiss EURCHF= 1.1955 1.1951 +0.03% +2.28% +1.1958 +1.1925
Euro/Sterling EURGBP= 0.8817 0.8811 +0.07% -0.74% +0.8826 +0.8789
NZ Dollar/Dolar NZD= 0.6967 0.6961 +0.09% -1.68% +0.6986 +0.6955
Dollar/Norway NOK= 8.0040 8.0012 +0.03% -2.47% +8.0178 +7.9720
Euro/Norway EURNOK= 9.5599 9.5353 +0.26% -2.93% +9.5665 +9.5102
Dollar/Sweden SEK= 8.5957 8.6495 -0.36% +4.80% +8.6625 +8.5693
Euro/Sweden EURSEK= 10.2706 10.3077 -0.36% +4.39% +10.3130 +10.2460
Reporting by Richard Leong; additional reporting by Saikat Chatterjee, Tommy Wilkes in London and Hideyuki Sano in Tokyo; editing by Louise Irelandk Dan Grebler and Jonathan Oatis