CURRENCIES: Dollar Keeps Sliding In Fed Aftermath
December 20 2018 - 12:21PM
Dow Jones News
By Anneken Tappe, MarketWatch
Central bank-heavy week has Swedish krona come out on top
The U.S. dollar extended a weakening trend on Thursday, unable
to shake the risk-averse aftertaste of this week's Federal Reserve
policy decision and outlook.
On Wednesday, the Fed completed an expected fourth interest-rate
hike of the year
(http://www.marketwatch.com/story/defying-trump-fed-hikes-interest-rates-by-a-quarter-point-2018-12-19),
bumping the benchmark rate to 2.25%-2.50%, but lowered its median
expectations for next year's increases to two from three.
Don't miss:Why it may be time to shine for emerging-market
currencies in 2019
(http://www.marketwatch.com/story/why-it-may-be-time-to-shine-for-emerging-market-currencies-in-2019-2018-12-19)
"But the kicker for markets was Fed Chair Powell revealing what
keeps him awake at night in his presser. He spent a lot of time
talking about downside economic risks, particularly international
economic challenges and financial conditions, without ever
mentioning upside risks," wrote Sue Trinh, head of Asia FX strategy
at RBC.
The ICE U.S. Dollar Index , which measures the buck against a
basket of six rivals, was down 0.5% at 96.604, having clawed back
some ground from its session lows. The gauge is on track for a 0.9%
drop for the week, which would make it its worst late August,
according to FactSet.
The euro carries the most weight in the popular dollar gauge.
The shared currency climbed to $1.1429, compared with $1.1379 late
Wednesday, earlier touching a two-month high.
But the Fed wasn't the only central bank holding a policy
meeting this week.
The Bank of Japan left interest rates unchanged in its policy
decision late Wednesday, or Thursday in Asian markets. Similarly,
the Bank of England also kept rates on hold Thursday
(http://www.marketwatch.com/story/bank-of-england-votes-unanimously-to-keep-rates-on-hold-warns-of-global-growth-and-brexit-risks-2018-12-20),
while also warning of global growth and Brexit risks, as well as
the oil price drop's impact on U.K. inflation.
Both the Japanese yen and British pound were driven by the stark
dollar weakness in Thursday trading. The buck last bought
Yen111.40-- its lowest level since mid-September -- compared with
Yen112.48 late Wednesday in New York. Sterling was at $1.2649,
versus $1.2610.
The Swedish krona was the best performer among G-10 currencies,
after Riksbank -- Sweden's central bank -- went for an unexpected
first interest rate hike in seven years
(http://www.marketwatch.com/story/swedish-krona-climbs-after-first-interest-rate-hike-in-seven-years-2018-12-20)earlier
in the session. The benchmark repo rate was raised by 25 basis
points to -0.25% from -0.5% before, though given the language in
its policy statement, the central bank appeared in no rush to get
rates into positive territory.
As the krona rallied, the greenback last bought 8.9955, roughly
a two-month low, compared with 9.0975 krona late Wednesday in New
York. One euro meanwhile bought 10.2807 krona, down 0.7%, according
to FactSet data.
(END) Dow Jones Newswires
December 20, 2018 12:06 ET (17:06 GMT)
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