Swedish krona growing after central bank’s statement on rate
2023.02.09 08:42
Swedish krona growing after central bank’s statement on rate
By Ray Johnson
Budrigannews.com – The Swedish crown appreciated on Thursday as a result of the country’s central bank raising interest rates and predicting further tightening, as well as positive market sentiment and a weaker dollar against most other currencies.
The dollar was last down 1.4% against the crown at 10.45 crowns and the euro was down 1.16% at 11.21, after the Riksbank raised its loan cost by 50 premise focuses to 3%, and gauge more expansions in the spring.
Simon Harvey, head of FX analysis at Monex Europe, stated, “From first impressions it (the Riksbank) guided markets to a higher terminal rate, stated it’s desirable to have a stronger SEK (the crown), and sped up their quantitative tightening program.”
“All this is very good news for SEK, but if it’s met with a correspondingly hawkish ECB, it won’t change the situation too much.”
Markets bet that the Swedish central bank will raise rates less aggressively than the European Central Bank due to domestic economic conditions. As a result, the Swedish krona has been under pressure, reaching its weakest level since 2009 against the euro earlier this week.
In other markets, the euro rose 0.47 percent to $1.076 on the back of German inflation data that came in slightly below expectations. The pound rose 0.46 percent to $1.2132 as traders focused on Britain awaited Bank of England governor Andrew Bailey’s remarks to lawmakers.
As the safe-haven U.S. currency dipped in line with a rally in equities and other so-called “risk friendly” assets, helped by strong company earnings, the Australian dollar, which is frequently regarded as a proxy for sentiment, rose 0.77 percent to $0.6977.
Additionally, the dollar lost 0.4% against the Japanese yen.
After Friday’s stronger-than-expected jobs data and ahead of the closely watched inflation numbers next week, markets are also digesting a series of comments from Federal Reserve policymakers regarding the U.S. interest rate plans.
According to traders in the futures market, the Fed funds rate will reach a peak just above 5.1 percent by July and then fall to 4.8 percent by the end of the year.
At a Wall Street Journal event, New York Fed President John Williams stated that moving to a federal funds rate of between 5% and 5.25 percent “seems a very reasonable view of what we’ll need to do this year in order to get the supply and demand imbalances down.”
Williams’ remarks came after Chair Jerome Powell reiterated on Tuesday that a process of “disinflation” was underway and maintained his outlook for interest rates.
OCBC currency strategist Christopher Wong stated, “On the one hand, Powell’s comments at the Economic Club of Washington the night before were less hawkish but on the other hand, Fed officials such as Williams (and Fed Governor) Lisa Cook took the opportunity to turn up the hawkish rhetoric.”
