Dollar Rises, Swiss franc drops amid central bank activity
Published: 01:06 PM,Jun 20,2024 | EDITED : 05:06 PM,Jun 20,2024
Illustration shows US Dollar banknotes_ REUTERS
LONDON: The dollar strengthened on Thursday, while the Swiss franc declined and the pound softened amidst a flurry of central bank meetings that kept currency markets on edge.
The dollar index, which measures the greenback against six major currencies, rose 0.28 per cent to 105.49, following a volatile period marked by mixed signals from the US economy and European instability due to French political uncertainty.
Boosting the dollar was a decrease in the Swiss franc after the Swiss National Bank cut interest rates to 1.25 per cent , extending a reduction initiated in March. The dollar gained 0.64 per cent against the franc to 0.8901, as the Swiss currency retreated from a three-month high post-rate cut, amid forecasts predicting a decline in inflation to 1.1 per cent by 2025.
'We anticipated a dovish stance given the franc's appreciation during French political turbulence, but not a rate cut,' said Christian Schulz, Deputy Chief European Economist at Citi. 'This cut may prove premature if French politics stabilize and weaken the franc,' he added, noting the franc's safe-haven status.
Ahead of a Bank of England interest rate decision at 1100 GMT, the pound edged down 0.14 per cent to $1.2701, recovering from a recent low of $1.2658.
'The FX market's focus today is on European central bank meetings,' noted Chris Turner, Global Head of Markets at ING. 'We believe there's an underpricing of dovish expectations from the Bank of England,' he commented, signaling potential interest rate cut sentiments.
Elsewhere, the Norwegian crown climbed to a four-month high against the euro following the Norges Bank's decision to maintain rates at 4.25 per cent , a 16-year peak. The euro slipped to its lowest since late January against the crown at 11.286, down approximately 0.6 per cent .
Currency markets have seen heightened volatility amid European political uncertainty and speculation about central bank rate adjustments. Last week, the US dollar rallied while the euro fell to its lowest since May 1, driven by concerns that French political developments could lead to fiscal policy shifts.
While recent US retail sales data hinted at economic slowdown, contrasting reports showed robust manufacturing production last month, possibly influencing Federal Reserve rate cut expectations for September. __Reuters
The dollar index, which measures the greenback against six major currencies, rose 0.28 per cent to 105.49, following a volatile period marked by mixed signals from the US economy and European instability due to French political uncertainty.
Boosting the dollar was a decrease in the Swiss franc after the Swiss National Bank cut interest rates to 1.25 per cent , extending a reduction initiated in March. The dollar gained 0.64 per cent against the franc to 0.8901, as the Swiss currency retreated from a three-month high post-rate cut, amid forecasts predicting a decline in inflation to 1.1 per cent by 2025.
'We anticipated a dovish stance given the franc's appreciation during French political turbulence, but not a rate cut,' said Christian Schulz, Deputy Chief European Economist at Citi. 'This cut may prove premature if French politics stabilize and weaken the franc,' he added, noting the franc's safe-haven status.
Ahead of a Bank of England interest rate decision at 1100 GMT, the pound edged down 0.14 per cent to $1.2701, recovering from a recent low of $1.2658.
'The FX market's focus today is on European central bank meetings,' noted Chris Turner, Global Head of Markets at ING. 'We believe there's an underpricing of dovish expectations from the Bank of England,' he commented, signaling potential interest rate cut sentiments.
Elsewhere, the Norwegian crown climbed to a four-month high against the euro following the Norges Bank's decision to maintain rates at 4.25 per cent , a 16-year peak. The euro slipped to its lowest since late January against the crown at 11.286, down approximately 0.6 per cent .
Currency markets have seen heightened volatility amid European political uncertainty and speculation about central bank rate adjustments. Last week, the US dollar rallied while the euro fell to its lowest since May 1, driven by concerns that French political developments could lead to fiscal policy shifts.
While recent US retail sales data hinted at economic slowdown, contrasting reports showed robust manufacturing production last month, possibly influencing Federal Reserve rate cut expectations for September. __Reuters