FOREX-Dollar at two-week lows, Swedish crown hits 1-month high vs euro

* Dollar at two-week lows
* Sterling crosses $1.38
* Swedish crown hits 1-month high vs. euro
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Ritvik Carvalho
Feb 10 - The dollar traded near two-week lows on Wednesday
as demand for safe-haven assets ebbed, while Sweden's crown hit
its highest levels in a month against the euro.
The dollar index =USD drifted to a two-week low of 90.299
for the first time this month and set for a third day of losses.
It last traded 0.05% lower at 90.386.
Bitcoin BTC=BTSP consolidated around $46,500 after
reaching a new high of $48,216 overnight following Tesla's
disclosure of a $1.5 billion investment in the leading
cryptocurrency. Rival virtual currency ethereum, which often moves in tandem
with bitcoin, reached a record $1,826 on Wednesday before
pulling back slightly. It was trading 1.1% higher at $1,791.
Sweden's crown strengthened to a one-month high of 10.0406
crowns per euro ahead of the central bank's interest rate
decision, then pared some of those gains after the bank kept
monetary policy unchanged as expected.
Traditionally viewed as a safe-haven, the dollar has sunk
against major peers as optimism over monetary and fiscal
support, robust corporate earnings and coronavirus vaccines
bolstered risk sentiment.
U.S. consumer price inflation numbers for January are due at
1330 GMT, and along with a speech by Federal Reserve Chair
Jerome Powell will be key events for the future direction of the
dollar.
"The mix of clear upside price pressures, the risk of an
overshoot and CPI staying higher for longer, along with a
cautious Fed sticking to its Average Inflation Targeting
framework to make up for past inflation undershoots, should lead
to a lower USD as U.S. real rates remain deeply negative," ING
strategists wrote in a note to clients.
There has been a tug-of-war among traders over the impact on
the dollar of U.S. President Joe Biden's planned $1.9 trillion
fiscal stimulus package.
On the one hand, it is expected to speed up a U.S. recovery
relative to other countries, bolstering the currency. But on the
other, it is a major driver in a global reflation narrative that
should lift riskier assets at the dollar's expense.
After a strong start to the year for the greenback, the
latter view appears to be regaining sway, with last week's U.S.
jobs data providing the turning point, according to Westpac
analysts.
Kristoffer Kjær Lomholt, chief analyst for forex and rates
strategy at Danske Bank, said: "The key question remains if the
US will be at full employment in 6 months and pricing of US real
rates on the back of that."
"We continue to see downside risk for EUR/USD (targeting
1.16 on 12M) and though s/t risks are probably more balanced
after the correction, we do see a situation where an open dollar
position could amplify investor returns this year."
The dollar gained 0.2% to 104.70 yen JPY=EBS . The Japanese
currency earlier hit its highest against the greenback since
Jan. 29.
The euro EUR=EBS edged up to $1.2129, adding to a
three-day gain and hitting its highest since the start of
February.
The British pound GBP= set fresh three-year highs of
$1.3855.

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