Australian bank notes and coin.
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The dollar dropped against a basket of other currencies for the second day on Tuesday as investors rebalanced portfolios for month-end.
Stock investors were cheered by better than expected corporate earnings and economic optimism after several countries and U.S. states laid out plans to reopen businesses that were shut to stem the spread of the novel coronavirus.
Month-end rebalancing is also negative for the greenback with the U.S. dollar likely to be sold against the euro, sterling, the Japanese yen and the Australian dollar, according to Mark McCormick, global head of FX strategy at TD Securities in Toronto.
These flows, in combination with a number of central bank meetings this week, make it difficult to read too much into market moves, he said.
“We wouldn’t draw too many conclusions about the state of the currency market over the next few sessions given the mingling of policy and technical drivers,” McCormick said.
The dollar index fell 0.16% to 99.88. It has risen from 99.00 at the end of March.
The Swedish crown jumped against the dollar and euro on Tuesday after the central bank held interest rates steady and maintained stimulus measures designed to support an economy battered by the coronavirus pandemic.
The greenback fell 0.92% to 9.911 crowns, after earlier getting as low as 9.853, the lowest since March 30.
With Sweden facing its worst downturn since World War Two, investors had watched closely for any sign the Riksbank would push rates back below zero after it became the first central bank to ditch a negative interest rate policy late last year.
But the Riksbank left its benchmark rate at 0%, as expected, with its governor saying a rate cut would not solve Sweden’s economic problems.
“It’s hard not to see this as a bit hawkish – you’d think that if they didn’t cut rates now, when would they cut?” said Morten Lund, FX strategist at Nordea, adding that he expected rates to remain steady this year and next.
Traders are next focused on a U.S. Federal Reserve meeting that will end on Wednesday and a European Central Bank (ECB) meeting on Thursday.
The Fed has led the global monetary policy response to the coronavirus pandemic by cutting interest rates to zero and aggressively buying bonds and corporate credit – a program it extended on Monday to include municipal debt of smaller U.S. cities.
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