Norwegian Crown Fell Thursday Along with Riskier Currencies
The U.S. currency gained strength on Thursday. Broad optimism about coronavirus vaccines ran into concerns about surging infection numbers. However, risks to the fragile global economic recovery remain. Euro/dollar pair shaved off 0.2% and at last traded at $1.1833 on Thursday.
The greenback was caught between two opposing forces. New speculation over monetary easing to bolster the economy held it back. On the other hand, a safety bid supported the U.S. currency.
Traders speculate that the Federal Reserve may loosen monetary policy in December. As fiscal stimulus plans are falling by the wayside with President Donald Trump’s refusal to concede electoral defeat, it’s a valid possibility.
The Fed on Wednesday
On Wednesday, two top Fed officials considered the option of doing more, while Treasuries have skyrocketed as investors anticipated a possible expansion of Fed bond buying.
The dollar index was flat against a basket of currencies at 92.55. However, it remained close to the weakest it has been since August.
Despite the dollar’s weakness, the Scandinavian currencies and the Australian dollar lost strength as well. The Norwegian crown plummeted down by 0.3% versus both the U.S. currency and the euro. It traded against them at 9.0535 and 10.7165, respectively. Meanwhile, the Swedish crown tumbled down by the same extent versus both currencies. The Australian dollar dropped down by 0.4% at 0.7278 as well.
Charalambos Pissouros, the senior market analyst at JFD Group, stated that it seems that forex market participants are confused. Traders don’t know where to place more emphasis – on the surge of the infections from the pandemic or on the positive Covid-19 vaccine headlines?
However, Pissouros added that he was sticking to his guns, as he believes that any declines in risk-on assets will probably stay limited. Traders expect corrective moves to eventually resume, so they would treat current moves, as such within the broader uptrend – noted the analyst.
How did the Japanese currency fare?
The safe-haven Japanese yen plummeted down by 0.2% against the dollar to 103.96. Before that, the currency has rallied by 1.6% during the week since Pfizer reported promising trial results on its coronavirus vaccine.
In Europe, the sterling also tumbled down 0.4% to $1.3210, also losing 0.2% at 89.53 pence against the euro. The Times newspaper stated that European leaders plan to urge the European Commission to publish a no-deal Brexit plan. The year-end deadline approaches and traders were concerned with this news.
Investors are waiting for U.S. jobs figures due on Thursday to anticipate the Fed’s next moves. Furthermore, the European Central Bank’s President Christine Lagarde plans to appear at a European Parliament Committee hearing in Frankfurt soon.
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