The U.S. dollar fell against a basket of currencies on Tuesday, dropping by 0.5% to 99.970, its lowest point in a week. It lowered versus the Japanese currency as well, trading at 106.705 yen.
Traders have a lot to watch for this week, the EU meeting’s outcome is probably the most important of all. European leaders are trying to decide how to help the global economy recover from the coronavirus pandemic. The U.S. Federal Reserve and European Central Bank plan to announce their final decisions on Thursday.
Meanwhile, the demand for riskier currencies grew, but the moves are still subdued so far. Investors are trying not to make rash decisions until they have more information.
Unlike the greenback, the euro climbed up by 0.5% to $1.08805 as oil steadied after its latest downfall. The ECB issued an enormous bond-buying program recently.
However, some investors expect more profound action as European leaders continue to argue about the Eurozone rescue package. Uncertainty about those possible measures influenced the euro negatively.
Expectations for economic recovery from the crisis has pressured the greenback as well and caused the rally of riskier currencies.
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The Swedish crown rose significantly. What caused its rally?
The Swedish crown hit high against the U.S. dollar and euro on Tuesday. The currency soared by 1.2% versus the greenback to 9.911, and it climbed up by 0.6% against the euro to 10.7905.
The stimulus measures issued to support an economy during the pandemic crisis, as well the central bank holding interest rates steadily boosted the crown.
Traders had watched closely for any sign the Riksbank would push rates back below zero. But the governor announced that a rate cut would not solve Sweden’s economic problems. Instead, the Riksbank left its benchmark rate at 0%.
The Swedish central bank stated that it’s better to focus on credit supply and counteract a rise in interest rates to companies and households. Morten Lund, the FX strategist at Nordea, expects rates to remain steady for the following two years.