Major currencies rallied versus the USD. Why’s that?
Risk sentiment improved across the forex markets on Thursday. As a result, most currencies rallied against the U.S. dollar. The euro jumped by 0.43% to $1.076 during this session. Sterling also soared by 0.63%, exchanging hands at $1.215.
Moreover, the Swedish crown surged forward today. The country’s central bank hiked its interest rates and promised further increases in the coming months. The bank raised its benchmark interest rate by 50 basis points to 3%, announcing that it wanted to boost the crown. The Riksbank also added that the stronger currency would help the country to hinder inflation.
The greenback plummeted by 2% versus the crown, trading at 10.39. The common currency also shaved off 1.5% at 11.7 crown. It seemed set for its biggest daily percentage plunge since 2015. Earlier this week, the Swedish currency hit its lowest level since 2009 against the Euro, trading under pressure. Investors thought that the Riksbank would deliver a lower hike compared to the European Central Bank. Such sentiment sent the crown in the red.
Simon Harvey, the head of FX analysis at Monex Europe, stated that while today’s news supported the crown, if the ECB continues its aggressive policy, it will ultimately be enough.
On Thursday, the dollar plummeted by 0.4% versus the Japanese yen. It exchanged hands at 130.9 Yen at last. The Japanese authorities aim to present the new BOJ governor nominee to parliament on February 14. Traders are looking out for this news, as the new governor will influence the central bank’s ultra-easy policy.
Meanwhile, the Australian dollar climbed by 0.77% to $0.6977. Other riskier currencies traded in the green, as well. Investors are waiting for the U.S. jobless data. The latter is due on Thursday.
How are the EM currencies faring?
Emerging market currencies gained on Thursday, trading in the green. South Africa’s rand rallied. Market participants are waiting for President Cyril Ramaphosa’s speech. His comments will likely influence the currency’s price. Overall, the rand soared by 0.4% to 17.69 in early trading on Thursday.
At the same time, in Central and Eastern Europe, currencies increased versus the Euro. The Romanian leu jumped by 0.2%. Investors expect its central bank to keep its benchmark rate unchanged in its impending meeting. According to some forecasts, the leu might decline by 2.5% to 5.02 over the year. On the other hand, the Hungarian forint and Polish zloty will likely climb higher over the next 12 months. The Russian rouble tumbled against the dollar today. The currency briefly plunged to its lowest level since late April.
