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Dollar weak across board; Swedish crown falls after Riksbank QE expansion

Thursday,   26-Nov-2020   02:49 PM (IST)

The euro rose to a nearly three-month high on Thursday as the dollar went on the defensive on downbeat U.S. economic data and optimism about coronavirus vaccines. Investors sought riskier assets tied to global commodities and emerging markets, with the British pound close to a three-month high against the dollar as traders also awaited details on trade talks between Britain and the European Union this week. The Swedish crown fell on Thursday, both against the euro and the dollar, after Riksbank expanded its quantitative easing programme. Pressure mounted on the U.S. currency also after Federal Reserve minutes on Wednesday signalled the central bank is likely to strengthen their quantitative easing program at the next meeting in December. Although a few Fed policymakers were hesitant to make near-term changes to the guidance because of the uncertain outlook, “many participants judged that the Committee might want to enhance its guidance for asset purchases fairly soon,” according to the minutes released Wednesday from the Fed’s Nov. 4-5 meeting. Still, “the developments support our view that loose Fed policy will remain a weight on the U.S. dollar next year.” Trading was was subdued on Thursday because U.S. financial markets are closed later on Thursday for the Thanksgiving holiday. Euro/dollar was last trading up 0.1% at $1.1924 after rising to $1.1941, its highest since Sept. 1. An index which tracks the U.S. dollar against a basket of currencies was flat at 91.99, though earlier it had achieved a near three-month low of 91.84. Restrictive measures designed to slow the spread of the coronavirus in Germany will be in place until at least the end of December and possibly longer, Chancellor Angela Merkel told parliament on Thursday. Scandinavian currencies were falling, with the Swedish crown down 0.4% against the dollar at 8.52 and by the same extent against the euro at 10.1585. Sweden’s central bank said on Thursday it would expand and extend its asset purchase programme to support the economy through a second wave of the coronavirus pandemic as it kept its benchmark rate on hold at 0% as expected. The Norwegian crown was also down 0.4% at 8.8515 against the U.S. dollar, after rising earlier to a three-month high of 8.8160, also falling by 0.4% at 10.5545 versus the euro. The Australian dollar was down 0.1% at 0.7358, though earlier it rose to a near three-month high of 0.7374, and the Canadian dollar was neutral at 1.3007 against the U.S. dollar. Sterling fell 0.2% at $1.3355 after rising to a three-month high of $1.3399, and was also down by 0.3% against the euro at 89.22 pence.