On Thursday, the dollar strengthened against the Swiss franc and the pound fell as traders watched a full schedule of central bank meetings.
The dollar index, which measures the value of the dollar relative to six other currencies, was up 0.28% at 105.49 last week following a turbulent 10 days marked by conflicting news from the US economy and unrest in French politics that shook European markets. The decline in the value of the Swiss franc following the
The Swiss National Bank continued its downward trend in interest rates in March by cutting them to 1.25%.
Furthermore, the Swiss currency dropped from about a three-month high following the rate cut, which came with projections indicating a further decline in inflation to 1.1% in 2025. As a result, the dollar increased by 0.64% to 0.8901 francs.
Christian Schulz, deputy chief European economist at Citi, stated that they had expected a dovish message, but not a cut, given the appreciation of the franc in the context of the French political turbulence.
This cut could be premature if French politics stabilise and weakens the franc
Christian Schulz
The franc has increased during the past week and is regarded as a safe haven. On Thursday, Sterling declined ahead of an
Moreover, the Bank of England (BoE) is anticipated to maintain borrowing costs at a 16-year high of 5.25% when it makes its interest rate decision at 1100 GMT.
The pound was up from a one-month low of $1.2658 on Friday, but it was down 0.14% on Thursday at $1.2701. "Today's FX focus shifts to central bank meetings in Europe," stated ING lender Chris Turner, global head of markets.
Turner stated that they think that the risks associated with a dovish Bank of England are underpriced, employing a phrase that usually denotes support for interest rate reductions by policymakers. In other news, the Norwegian crown strengthened against the euro to a four-month high following the
Norges Bank kept rates at 4.25%, a 16-year high
At 11.286, down roughly 0.6%, the euro hit its lowest level against the crown since late January. Over the past ten days, there has been an increase in currency market volatility as investors have been faced with new challenges due to the combination of political unpredictability in Europe and the age-old guessing game surrounding central bank rate cuts.
As markets worried that French President Emmanuel Macron's risky decision to call parliamentary elections could open the door for the high-spending far right or far left to win power, the U.S. dollar strengthened last week while the euro fell to its lowest level since May 1. This week has seen a calmer market.
In addition to other indications that the economy is slowing and may enable the Federal Reserve to lower interest rates in September, data released on Tuesday revealed that U.S. retail sales in May were lower than anticipated.
This news caused the dollar to weaken. Separate data, however, revealed a spike in manufacturing output last month.
Additionally, the euro fell 0.24 percent to $1.0716 on Thursday, but it was still higher than the six-week low of $1.0667 that was reached on Friday. As France auctions debt amid the political unrest on Thursday, the bond markets in the euro zone will be put to the test.
The Japanese yen also dropped to its lowest level since April 29, the day the country's authorities initiated the most recent round of measures to support it. The dollar increased by about 0.25%, reaching a high of 158.45 yen. The nation's foremost currency diplomat
According to Jiji News Agency, Masato Kanda stated that the resources available for foreign exchange interventions are limitless.