A surprise rate cut by Riksbank sent the Swedish Krona nearly 1% lower against its key rival, the common currency Euro. In a statement, Sweden’s central bank specifically cited Greek risks as the rationale for the interest rate cut, and warned investors that additional rate cuts, even further into negative territory, could be on the table if the situation in Greece doesn’t resolve soon. One FX strategist in Copenhagen noted that the central bank is intentionally moving to weaken the currency, which is generally viewed as a safe haven, in an effort to avoid deflation. A recent poll had predicted that the central bank would maintain current loose policy; the Riksbank lowered the rate from the existing -0.25% to -0.35%.
As reported at 11:22 am (BDT) in London, the EUR/SEK was trading at 9.3386 Krona, a gain of 1.09%; the session’s trading range was 9.2409 Krona at the low end to 9.3681 Krona at the high. The USD/SEK was trading at 8.4280 Krona, up 0.60% and off the session peak of 8.4740 Krona.
Dollar Bulls Wary Ahead of NFP
In the US, meanwhile, the US Dollar Index had edged up to a 3-week peak ahead of today’s release of US labor data. Investors use the Non-farms payroll report to gauge the possible direction of the Federal Reserve’s protocols. Besides the NFP, other labor-related data, including the unemployment rate and jobless claims, will be released. Expectations are that the unemployment rate will edge lower to 5.4% and June’s new private sector jobs will number between 230,000 and 250,000, slightly lower than May’s 280,000. Currently, the US Dollar Index is currently trading at 96.225 .DXY, down 0.9%.
