FOREX US Dollar Gains Pre-Fed; Swedish Krona Falls After Hike – Nasdaq | Jewelry Dukan

By Alun John and Gertrude Chavez-Dreyfuss

LONDON/NEW YORK, Sept 20 (Reuters)The dollar rose on Tuesday, trading near a two-decade high as investors held on in anticipation of another aggressive Federal Reserve rate hike, the centerpiece of a week of central bank meetings.

The Fed begins a two-day meeting on Tuesday, with rate futures traders pricing in an 81% chance of a 75 basis point hike and a 19% chance of a 100 basis point hike. FEDWACH

The dollar index was on course for its fifth weekly gain in six weeks, last up 0.5% to 110.04 = US dollars. It’s not far from 110.79, a level hit earlier this month for the first time since June 2002.

“Traders and investors are running for cover, aware that the dollar is acting like a force of nature and unwilling to face its wrath,” said Karl Schamotta, chief market strategist at Corpay in Toronto.

“That means the greenback — without slowing it down until Wednesday — is likely following Newton’s first law: A moving object stays in motion until an outside force acts on it.”

The market was also rocked on Tuesday by Sweden’s central bank, which hiked interest rates by a full percentage point. The Riksbank’s rate hike was larger than analysts had expected, causing the Swedish krona to briefly rise against the euro and the dollar.

He failed to hold on to that strength. The euro extended recent gains to hit a fresh six-month high of 10.8590 kroner. The euro was last up 0.6% to 10.8643 EURSEK=D3. The dollar was also up 0.6% to 10.8764 kroner. SEC=D3

“In a way, this was an attempt by the Riksbank to hike the krone, but it failed and it’s not surprising,” said Francesco Pesole, currency strategist at ING.

He said the relationship between European currencies and central bank policies had broken down as markets increasingly traded on Europe’s energy and growth prospects.

Added support for the dollar, the US 2-year Treasury yield US2YT=RRwhich is sensitive to interest rate policy expectations, rose as high as 3.992%, its highest level since November 2007.

The Euro EUR=EBS slipped 0.4% to $0.9981 after falling to $0.9864 for the first time in two decades on September 6, while sterling weakened EUR=D3 fell 0.2% to $1.1402.

The Bank of England is due to decide policy on Thursday and investors are split on whether a 50 basis point hike or a 75 basis point hike is imminent.

The Bank of Japan also meets this week, but is widely expected to keep its ultra-loose stimulus settings unchanged – including setting the 10-year yield near zero – to support a fragile economic recovery.

The yen has suffered a setback on this policy and the dollar was last up 0.4% against the Japanese currency to 143.78, continuing a week-long consolidation after falling to 144 for the first time in 24 years on September 7th .99 had risen.

The dollar-yen currency pair generally follows the long-term yield spread between US and Japanese government bonds and was therefore little affected by data showing that inflation was high, at least by Japanese standards.

=============================================== === ===

Currency bid prices at 10:39 (1439 GMT)

description

R.I.C

Last

US Close previous session

change percent

YTD percent change

highest bid

low bid

dollar index

= US dollars

110.1300

109.5400

+0.56%

15.123%

+110.2600

+109.3500

euro dollar

EUR=EBS

$0.9977

$1.0025

-0.48%

-12.24%

+$1.0051

+$0.9956

dollars/yen

JPY=EBS

143.8350

143.2000

+0.45%

+24.96%

+143.9150

+142.9350

euro/yen

EURJPY=

143.50

143.52

-0.01%

+10.13%

+144.0300

+143.0300

dollars/Switzerland

CHF=EBS

0.9671

0.9647

+0.21%

+5.98%

+0.9682

+0.9624

sterling/dollars

EUR=D3

$1.1393

$1.1434

-0.35%

-15.75%

+$1.1460

+$1.1383

Dollars/Canadian

CAD=D3

1.3352

1.3251

+0.77%

+5.61%

+1.3353

+1.3228

Aussie/dollar

CHF=D3

$0.6685

$0.6727

-0.62%

-8.03%

+$0.6747

+$0.6685

Euro/Switzerland

EURCHF=

0.9647

0.9667

-0.21%

-6.96%

+0.9682

+0.9631

euros/pounds

EURGBP=

0.8756

0.8765

-0.10%

+4.24%

+0.8784

+0.8725

NZ Dollars/Dollars

NZD=D3

$0.5891

$0.5957

-1.05%

-13.88%

+$0.5975

+$0.5887

dollars/Norway

NOK=D3

10.3280

10.2285

+0.93%

+17.19%

+10.3305

+10.2035

Euro/Norway

EURNOK=

10.3056

10.2043

+0.99%

+2.88%

+10.3079

+10.2296

dollars/Sweden

SEC=

10.8905

10.7623

+0.61%

+20.77%

+10.8979

+10.6828

Euro/Sweden

EURSEK=

10.8610

10.7955

+0.61%

+6.13%

+10.8689

+10.7572

GRAPHIC- World FX Rateshttps://tmsnrt.rs/2RBWI5E

GRAPHIC Central banks intensify fight against inflationhttps://tmsnrt.rs/3QWnMdN

(Reporting by Alun John in London and Gertrude Chavez-Dreyfuss in New York; Additional reporting by Kevin Buckland in Tokyo; Editing by Chizu Nomiyama and Lisa Shumaker)

((gertrude.chavez@thomsonreuters.com; 646-301-4124; Reuters Messaging: gertrude.chavez.reuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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