The dollar rose on Thursday, while the Swiss franc fell and the pound fell, as a busy day of central bank meetings kept currency traders on alert.
The dollar index, which tracks the currency against six peers, rose 0.28% to 105.49, after 10 volatile days that saw mixed signals from the U.S. economy and European markets rocked by uncertainty French politics.
Helping the rise of the US currency was the decline of the Swiss franc after the
Swiss National Bank
it lowered interest rates to 1.25%, following the cut in March.
The dollar rose 0.64% to 0.8901 francs, while the Swiss currency fell from around a three-month high on the back of the rate cut, which came with expectations of a further decline in inflation to 1.1% in 2025.
“Given the appreciation of the franc in the context of French political turmoil, we expected a dovish message, but not a cut,” said Christian Schulz, deputy chief European economist at Citi.
“This cut could be premature if French politics stabilize and weaken the franc,” he added. The franc is seen as a safe haven and has risen in the last week.
The pound slipped on Thursday ahead of a
Bank of England
(BoE) at 1100 GMT, where the central bank is expected to keep borrowing costs at a 16-year high of 5.25%.
Sterling fell 0.14% on Thursday to $1.2701, but up from a one-month low of $1.2658 on Friday.
“FX’s focus today shifts to central bank meetings in Europe,” said Chris Turner, global head of markets at lender ING.
“We believe the risks of a dovish Bank of England are underestimated,” he said, using a term that typically means policymakers favor interest rate cuts.
Elsewhere, the Norwegian krone rose to a four-month high against the euro after the
Bank of Norges
held rates at a 16-year high of 4.25%.
The euro fell to its lowest since late January against the crown at 11.286, down about 0.6%.
Volatility in currency markets has increased over the past 10 days as political uncertainty in Europe combined with long-standing guessing games over central bank rate cuts to cause fresh problems for investors.
The US dollar rose last week, while the euro fell to its lowest since May 1 as markets worried about central bank rate cuts.
the markets feared
that French President Emmanuel Macron’s gamble to hold parliamentary elections could pave the way for the far right or far left, who spend a lot, to come to power.
Markets have been calmer this week. The dollar fell after Tuesday’s data showed
US retail sales
were lower than expected in May, adding to some signs of an economic slowdown that could allow the Federal Reserve to cut interest rates in September. However, separate data showed manufacturing production increased last month.
The euro began to lose ground again on Thursday, falling 0.24% to $1.0716, but still above the six-week low of $1.0667 hit on Friday.
Eurozone bond markets
take a test
Thursday, when France will auction the debt amid political uncertainty.
The Japanese yen fell to its lowest level since April 29, when Japanese authorities launched their latest round of interventions.
intervention
to support him. The dollar rose to 158.45 yen, up about 0.25%.
The country’s top currency diplomat
Masato Kanda said
that there is no limit to the resources available for exchange rate interventions, according to the Jiji news agency.
