While the FX world awaits news from the Federal Reserve to assess future Dollar direction, another world bank went and surprised markets earlier today with by leaving interest rates at current levels rather than announcing the highly expected rate cut. The Swedish Riksbank left the repo rate unchanged although it did expand its asset purchase program, surprising markets and the consensus of analysts of a recent poll who predicted a rate cut of at least 10 basis points. The appreciation of the Swedish Crown as a result of previous rate reductions led to expectations that a rate cut was in order.
As reported at 9:23 am (BDT) in London, the USD/SEK was trading lower at 1-month high at 8.4162 Crowns, a loss of 1.23% and moving off the day’s low of 8.4018 Crowns; the session high was set at 8.5371 Crowns. The EUR/SEK fell to 9.2516 Crowns, a loss of 0.94%, recovering from a session low of 9.2436 Crowns.
Fed Assessment Key to Dollar Direction
In the US, as investors wait for a Fed announcement that has FX traders positioning themselves for the possibility of a more dovish US central bank, the US Dollar Index earlier struck a 2-month low. The Index is used by investors to assess the dollar’s value relative to a weighted basket of its major peers. The US Dollar Index was trading at 95.892 .DXY, a level last seen in early March. Expectations are high that the Fed will maintain existing policy but what is critical will be its assessment on the US economy and whether or not the recent soft patch is dismissed.