# Dollar edges down from six-week peak, Swedish crown jumps
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-02-20
Category: TRADING
Category URL: https://financedigest.com/category/trading
Meta Title: Dollar edges lower on Monday but remains close to six-week
Meta Description: Stay informed with the latest updates on the U.S. dollar's movements and economic data impacting global currencies. Read more on Reuters today!
URL: https://financedigest.com/dollar-edges-down-from-six-week-peak-swedish-crown-jumpshtml

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By Samuel Indyk

LONDON (Reuters) – The dollar edged lower on Monday but kept close to Friday’s six-week high, after a flurry of economic data reinforced market expectations of tighter monetary policy from the Federal Reserve.

The U.S. [dollar index, which measures the dollar against six other major currencies](https://www.financedigest.com/u-s-dollar-advances-vs-major-currencies-as-risk-appetite-fades.html "U.S. dollar advances vs major currencies as risk appetite fades"), slipped 0.2% to 103.81. It is still up almost 1.8% for the month, on track for its first monthly [gain since](https://www.financedigest.com/dollar-heads-for-first-weekly-gain-since-february.html "Dollar heads for first weekly gain since February") September. It [hit a six-week](https://www.financedigest.com/european-stocks-hit-six-week-high-on-hopes-for-rate-hike-slowdown.html "European stocks hit six-week high on hopes for rate hike slowdown") high of 104.67 on Friday.

Liquidity is expected to remain thin on Monday, with U.S. markets closed for [Presidents’ Day](https://www.financedigest.com/over-a-third-of-uk-people-think-thomas-whitmore-from-independence-day-will-be-joined-by-donald-trump-in-disneys-hall-of-presidents.html "Over a third of UK people think Thomas Whitmore from Independence Day will be joined by Donald Trump in Disney’s Hall of Presidents").

[Data from the world’s largest economy in recent weeks](https://www.financedigest.com/dollar-dips-ahead-of-inflation-data-later-this-week.html "Dollar dips ahead of inflation data later this week") has pointed to a still-tight labour market, sticky consumer prices, robust retail sales and higher producer prices, raising expectations the U.S. central [bank has more to do to tame inflation](https://www.financedigest.com/be-really-really-careful-on-inflation-bank-of-englands-haskel.html "Be ‘really, really careful’ on inflation – Bank of England’s Haskel"), and that interest rates will rise.

But with markets expecting the Fed [funds rate to peak just under 5.3% by July](https://www.financedigest.com/in-renewed-push-spain-to-tender-eu-funds-for-evs-batteries-in-july.html "In renewed push, Spain to tender EU funds for EVs, batteries in July"), analysts said the move in the dollar may have run its course.

The [dollar has had quite a big move this month](https://www.financedigest.com/european-shares-hit-nine-month-high-dollar-wobbles-after-powell-remarks.html "European shares hit nine month high, dollar wobbles after Powell remarks") on the back of rates repricing and the question is how much further that’s going to run,” Chris Turner, global head of markets at ING said.

I’d say the majority of what we’re calling a ‘corrective [rally’ in the dollar](https://www.financedigest.com/dollar-jumps-u-s-stocks-buck-global-rally.html "Dollar jumps, U.S. stocks buck global rally") has been seen,” Turner added.

[Hawkish comments](https://www.financedigest.com/hawkish-ecb-comments-push-up-rate-hike-expectations.html "Hawkish ECB comments push up rate-hike expectations") from Fed officials have also underpinned the U.S. dollar, as they signalled interest [rates would need to rise to quash inflation](https://www.financedigest.com/german-inflation-rate-to-ease-over-course-of-2023-econ-minister.html "German inflation rate to ease over course of 2023 – econ minister").

Sweden’s crown outperformed after core inflation ticked up in January, while minutes from the central bank’s last meeting showed policymakers [backed more rate hikes](https://www.financedigest.com/uks-bellway-to-buy-back-shares-hike-social-housing-output.html "UK’s Bellway to buy back shares, hike social housing output") to bring inflation under control.

The [euro fell 1.1% against the Swedish crown to 11.05 crowns while the dollar](https://www.financedigest.com/pound-hits-10-month-peak-euro-up-as-dollar-under-pressure.html "Pound hits 10-month peak, euro up as dollar under pressure") was down 1% to 10.3405.

We now [see the Riksbank hiking](https://www.financedigest.com/analysis-weary-investors-see-little-respite-to-fed-hike-gloom.html "Analysis-Weary investors see little respite to Fed hike gloom") by 50 basis points in April and 25 basis points in June,” said Torbjörn Isaksson, chief analyst at Nordea, who previously saw one more 25 basis point rise in April.

This should support the crown and we are seeing it stronger today,” Isaksson added, while noting the [European Central Bank](https://www.financedigest.com/dollar-outshines-euro-sterling-amid-european-bank-jitters.html "Dollar outshines euro, sterling amid European bank jitters") (ECB) and Fed have also sounded hawkish.

Two ECB policymakers said on Friday that interest rates in the euro zone have some way to rise, [pushing up market pricing for the peak ECB rate](https://www.financedigest.com/powells-warning-on-higher-u-s-rates-pushes-dollar-to-3-mth-high.html "Powell’s warning on higher U.S. rates pushes dollar to 3-mth high").

The [euro was little changed against the dollar](https://www.financedigest.com/dollar-trims-gains-vs-euro-after-u-s-inflation-data.html "Dollar trims gains vs euro after U.S. inflation data") at $1.0690, just above Friday’s six-week low of $1.06125.

“We think the U.S. disinflation process will have another leg in the [second quarter](https://www.financedigest.com/workday-announces-fiscal-2018-second-quarter-financial-results.html "Workday Announces Fiscal 2018 Second Quarter Financial Results"), while in Europe, inflation is likely to be stickier,” ING’s Turner said.

Euro [rates are probably likely to stay at higher](https://www.financedigest.com/dollar-jumps-as-powell-flags-higher-terminal-rate.html "Dollar jumps as Powell flags higher terminal rate") levels, whereas we think dollar rates will more easily turn lower,” Turner added, which he said could support the euro in the first half of the year.

The [dollar was down 0.2% against the yen](https://www.financedigest.com/aussie-dollar-firm-as-bonds-tumble-yen-looks-past-boj.html "Aussie dollar firm as bonds tumble, yen looks past BOJ") to 133.94. It [hit a two-month high of 135.12 yen](https://www.financedigest.com/asia-shares-weigh-china-risks-yen-hits-6-month-high.html "Asia shares weigh China risks, yen hits 6-month high") on Friday.

The Australian [dollar rose 0.6% to $0.6918 ahead](https://www.financedigest.com/shares-steady-dollar-gains-ahead-of-u-s-inflation-data.html "Shares steady, dollar gains ahead of U.S. inflation data") of minutes from the Reserve Bank of Australia’s latest policy meeting on Tuesday.

The kiwi rose 0.1% to $0.6249, ahead of a Reserve Bank of New Zealand [rate decision](https://www.financedigest.com/wage-data-dents-dollar-recovery-before-fed-rate-decision.html "Wage data dents dollar recovery before Fed rate decision") on Wednesday, at which the bank is expected to scale down to a half-point interest rate increase.

(Reporting by Samuel Indyk and Rae Wee; Editing by Shri Navaratnam, Sam Holmes, Barbara Lewis and Christina Fincher)


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