High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/26567580-d936-11e0-884e-00144feabdc0.html#ixzz1XGdA08Fd
The dollar lost ground on Wednesday as a rally in global stocks lifted risk appetite and weighed on haven demand for the US currency.
Some put the tentative improvement in sentiment down to the decision on Tuesday by the Swiss National Bank to enforce a ceiling of SFr1.20 against the euro.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/26567580-d936-11e0-884e-00144feabdc0.html#ixzz1XGdCr0a1
Analysts said the move might have encouraged risk taking, reflecting hopes that action could help financial markets stabilise by potentially adding significant additional liquidity to the system as the SNB flooded the market with francs.
On the subject of whether other central banks might follow the SNB and ease monetary policy in an attempt to boost their domestic economies in the face of increasing concerns over global growth, Steve Barrow at Standard Bank said: “We do not believe that the SNB’s action is the start of a co-ordinated round of monetary easing.”
“However, the SNB’s move may hint that policymakers around the world are extremely concerned right now and might respond with easier policy, even if it is not coordinated,” he added.
Sentiment was boosted by reports that Barack Obama, US president, might unveil a $300bn package to raise job numbers and news that Germany’s constitutional court rejected a series of challenges to the eurozone financial rescue packages agreed last year for Greece and other debt-strapped eurozone countries.
Better than expected second-quarter Australian growth figures also supported risk appetite.
The dollar fell 0.4 per cent to $1.4045 against the euro, dropped 1.1 per cent to $1.0605 against the Australian dollar, lost 0.2 per cent to $1.5978 against the pound and was 0.4 per cent weaker at Y77.22 against the yen.
The dollar also eased 0.4 per cent to SFr0.8583 against the Swiss franc.
The Swiss franc was little changed at SFr1.2050 against the euro, however, holding close to the SFr1.20 ceiling imposed by the SNB.
Scandinavian currencies were in demand from investors searching for an alternative haven from the Swiss franc after the SNB’s move to weaken its currency.
The Norwegian krone rose 0.4 per cent to NKr7.5160 against the euro and was up 0.9 per cent at NKr5.3453 against the dollar.
The Swedish krona performed even better, rising 0.9 per cent to SKr8.9702 against the euro and climbing 1.2 per cent to SKr6.3770 against the dollar after Sweden’s central bank indicated, following its policy meeting, that interest rates could rise further this year.
