FOREX-Dollar weak across board; Swedish crown falls after Riksbank QE expansion
LONDON, Nov 26- The euro rose to a nearly three-month high on Thursday as the dollar went on the defensive on downbeat U.S. economic data and optimism about coronavirus vaccines. Investors sought riskier assets tied to global commodities and emerging markets, with the British pound close to a three-month high against the dollar as traders also awaited details…
* Euro/dollar hits 3-month high, last up 0.1%
* Australian dollar falls a tad after reaching 3-month high
* Sterling down, but close to 3-month high
* Norwegian crown falls 0.4% after reaching 3-month high
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Olga Cotaga
LONDON, Nov 26 (Reuters) – The euro rose to a nearlythree-month high on Thursday as the dollar went on the defensiveon downbeat U.S. economic data and optimism about coronavirusvaccines
Investors sought riskier assets tied to global commoditiesand emerging markets, with the British pound close to athree-month high against the dollar as traders also awaiteddetails on trade talks between Britain and the European Unionthis week.
The Swedish crown fell on Thursday, both against the euroand the dollar, after Riksbank expanded its quantitative easingprogramme.
Pressure mounted on the U.S. currency also after FederalReserve minutes on Wednesday signalled the central bank islikely to strengthen their quantitative easing program at thenext meeting in December.
Although a few Fed policymakers were hesitant to makenear-term changes to the guidance because of the uncertainoutlook, “many participants judged that the Committee might wantto enhance its guidance for asset purchases fairly soon,”according to the minutes released Wednesday from the Fed’s Nov.4-5 meeting.
Lee Hardman, currency analyst at MUFG, estimated that thenew guidance could see the Fed commit to continue purchasing atleast $120 billion per month of securities until it judges thatit has made substantial progress towards its goals.
However, the size of the QE programme might not necessarilybe increased, Hardman said.
Still, “the developments support our view that loose Fedpolicy will remain a weight on the U.S. dollar next year.”
“We are wary in the near-term though that the market isalready very short U.S. dollars which slows downward momentumand poses the risk of short squeezes,” he said.
Trading was was subdued on Thursday because U.S. financialmarkets are closed later on Thursday for the Thanksgivingholiday.
Euro/dollar was last trading up 0.1% at $1.1924after rising to $1.1941, its highest since Sept. 1. An indexwhich tracks the U.S. dollar against a basket of currencies wasflat at 91.99, though earlier it had achieved a near three-monthlow of 91.84
Restrictive measures designed to slow the spread of thecoronavirus in Germany will be in place until at least the endof December and possibly longer, Chancellor Angela Merkel toldparliament on Thursday.
Scandinavian currencies were falling, with the Swedish crowndown 0.4% against the dollar at 8.52 and by the sameextent against the euro at 10.1585.
Sweden’s central bank said on Thursday it would expand andextend its asset purchase programme to support the economythrough a second wave of the coronavirus pandemic as it kept itsbenchmark rate on hold at 0% as expected.
The Norwegian crown was also down 0.4% at 8.8515 against theU.S. dollar, after rising earlier to a three-month highof 8.8160, also falling by 0.4% at 10.5545 versus the euro.
The Australian dollar was down 0.1% at 0.7358,though earlier it rose to a near three-month high of 0.7374, andthe Canadian dollar was neutral at 1.3007 against theU.S. dollar.
“A China-led recovery in the global economy and commoditiesshould benefit commodity currencies,” said Masafumi Yamamoto,chief currency strategist at Mizuho Securities in Tokyo.
“The outlook is good, but we are reaching levels whereauthorities might feel some concern. Other emerging marketcurrencies with good fundamentals should benefit.”
Sterling fell 0.2% at $1.3355 after rising to athree-month high of $1.3399, and was also down by 0.3% againstthe euro at 89.22 pence.(Reporting by Olga Cotaga; Additional reporting by StanleyWhite in Tokyo; Editing by Angus MacSwan)