The U.S. Dollar firmed versus the common currency Euro, stabilizing after the greenback edged lower following the release of unexpectedly disappointing economic reports which lowered the yields on U.S. Treasuries. Ahead, markets will focus on the Federal Reserve which is about to begin a 2-day policy meeting to decide the fate of U.S. interest rates; current expectations are that the Fed will show a dovish bias given the recent data, and hint at the postponement of a rate hike far into next year. What investors are keen to determine is how the Fed will acknowledge foreign risks, including a Eurozone struggling to grow and on the brink of additional easing.
As reported at 10:19 a.m. (GMT) in London, the EUR/USD was trading at $1.2705, rising from Monday’s trough at $1.2665. The USD/JPY gained 0.1% to trade at 107.95 Yen, still within striking distance of yesterday’s high at 108.38 Yen.
Sweden’s Central Bank Surprises
In Sweden, the Swedish Crown fell to a 4-month low versus the Euro and a 4-year trough against the U.S. Dollar after the central bank cut interest rates to zero percent, a move which surprised markets and analysts alike. Like its neighbor and trading partner, inflation in Sweden has been exceptionally low and the Riksbank is hopeful that a cut in rates will bring inflation close to its 2% target and help improve trade with a now less expensive Krona. The USD/SEK is trading higher at 7.3583 Krona while the EUR/SEK is higher at 9.3456 Krona.