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The U.S. dollar fell across the board on Thursday, moving in line with lower Treasury yields, as investors stuck to their views that the Federal Reserve does not need to raise interest rates any more than it should as inflation is starting to get under control.
The Swedish crown, on the other hand, soared after the country's central bank raised rates, forecast further hikes and said it wanted a stronger currency, adding to the dollar's woes.
A higher-than expected U.S. jobless claims number further compounded the dollar's losses, as the report suggested labor market weakness that can help bring down inflation.
Initial claims
for state unemployment benefits rose 13,000 to a seasonally adjusted 196,000 for the week ended Feb. 4, data showed. Economists polled by Reuters had forecast 190,000 claims for the latest week.
"We had a big buildup in dollar shorts and lot of that has been unwound. Then (Fed Chair Jerome) Powell and other Fed officials spoke and there was some relief in the sense that they repeated the upside risks, but they did not signal any imminent increase in the terminal rate," said Vassili Serebriakov, FX strategist at UBS in New York, referring to the peak federal funds rate.
"Investors are still hesitant to go back into dollar shorts before the CPI (consumer price index) report. There's a lot of focus on CPI to see whether Powell's disinflation story holds."
Powell had said on Tuesday and last week that disinflation, or a deceleration in the rise of overall prices, has started.
In late morning trading, the dollar index fell 0.7% to 102.74 =USD . The euro EUR=EBS , the biggest component in the dollar index, climbed 0.6% to $1.078, while sterling rose 0.9% to $1.2179 GBP=D3 , with both boosted by improving risk sentiment across markets.
The dollar was last down 2% against the Swedish crown at 10.31 while the euro dropped 2% as well to 11.11, set for its biggest daily percentage fall since 2009, after the Riksbank raised its benchmark interest rate by 50 basis points to 3%, and forecast more increases in the spring. SEK=D3 EURSEK=D3
The central bank also said a stronger currency would be desirable to bring down inflation. Elsewhere, the Australian dollar AUD=D3 , often seen as a proxy for risk sentiment, rose 0.8% to US$0.6973 as the safe-haven U.S. currency dipped in line with a rally in equities and other so-called "risk-friendly" assets, helped by strong company earnings.
The dollar fell 0.4% against the Japanese yen to 130.92 JPY=EBS . Japan's government is planning to present the new Bank of Japan governor nominee to parliament on Feb. 14, broadcaster TBS reported on Thursday. Markets are closely watching the appointment, as the new governor's agenda will be scrutinized as to how quickly the central bank could phase out its massive stimulus.
======================================================== Currency bid prices at 10:52AM (1552 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index =USD 102.8800 103.4500 -0.54% -0.589% +103.5600 +102.6300 Euro/Dollar EUR=EBS $1.0765 $1.0714 +0.48% +0.47% +$1.0791 +$1.0707 Dollar/Yen JPY=EBS 130.8850 131.4550 -0.43% -0.17% +131.8200 +130.3400 Euro/Yen EURJPY= 140.90 140.79 +0.08% +0.43% +141.3200 +140.6300 Dollar/Swiss CHF=EBS 0.9190 0.9209 -0.20% -0.60% +0.9218 +0.9160 Sterling/Dollar GBP=D3 $1.2165 $1.2074 +0.77% +0.60% +$1.2194 +$1.2064 Dollar/Canadian CAD=D3 1.3413 1.3447 -0.25% -1.00% +1.3459 +1.3373 Aussie/Dollar AUD=D3 $0.6968 $0.6924 +0.62% +2.21% +$0.7011 +$0.6922 Euro/Swiss EURCHF= 0.9894 0.9866 +0.28% -0.01% +0.9902 +0.9862 Euro/Sterling EURGBP= 0.8847 0.8874 -0.30% +0.03% +0.8886 +0.8847 NZ NZD=D3 $0.6355 $0.6307 +0.75% +0.08% +$0.6389 +$0.6304 Dollar/DollarDollar/Norway NOK=D3 10.1145 10.3115 -1.91% +3.07% +10.3165 +10.0990 Euro/Norway EURNOK= 10.8899 11.0674 -1.60% +3.78% +11.0712 +10.8852 Dollar/Sweden SEK= 10.3037 10.5869 -2.20% -1.00% +10.6155 +10.2958 Euro/Sweden EURSEK= 11.0933 11.3430 -2.20% -0.51% +11.3510 +11.0870 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates https://tmsnrt.rs/2RBWI5E^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
