FOREX-Swedish crown climbs after central bank holds 0% rates steady

(Updates prices)
* Crown jumps to 6-week high vs euro and 2-week high vs
dollar
* Riksbank leaves rates unchanged at 0%
* Dollar falls 0.5% against major currencies ahead of Fed,
ECB
* Oil price drop weighs on sentiment
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Wilson
LONDON, April 28 (Reuters) - The Swedish crown jumped
against the dollar and euro on Tuesday after the central bank
held interest rates steady and maintained stimulus measures
designed to support an economy battered by the coronavirus
pandemic.
The crown SEK=D3 rose 1.2% against the dollar to 9.911, a
two-week high, and 0.6% against the euro to 10.7905, its highest
since mid-March. EURSEK=D3
With Sweden facing its worst downturn since World War Two,
investors had watched closely for any sign the Riksbank would
push rates back below zero after it became the first central
bank to ditch a negative interest rate policy late last year.
But the Riksbank left its benchmark rate at 0%, as expected,
with its governor saying a rate cut would not solve Sweden's
economic problems. Unlike the majority of central banks around the world during
the coronavirus pandemic, it has argued it is better to focus on
credit supply and counteract a rise in interest rates to
households and companies. "It's hard not to see this as a bit hawkish - you'd think
that if they didn't cut rates now, when would they cut?" said
Morten Lund, FX strategist at Nordea, adding that he expected
rates to remain steady this year and next.
EYES ON FED, ECB
The Swedish currency was the major mover on Tuesday, with
investors turning their attention to policy meetings by the U.S.
Federal Reserve and European Central Bank later this week.
Appetite for riskier currencies, earlier subdued by a fresh
fall in oil prices, picked up through morning trading.
By shortly before noon, the greenback was softer against a
basket of currencies =USD , falling 0.5% to 99.970 - its lowest
in a week. It was also down by a similar amount against the yen
JPY= at 106.705 yen per dollar.
As oil steadied somewhat from its latest plunge - Brent
crude LCOc1 turned positive after dropping 5% and U.S. crude
CLc1 regained over half of a 20% plunge - the euro gained 0.5%
EUR=EBS to $1.08805.
Markets are looking for any forward guidance from the Fed,
which meets later on Tuesday and is due to issue a statement on
Wednesday. The European Central Bank meets on Thursday.
The Fed has led the global monetary policy response to the
coronavirus pandemic by cutting interest rates to zero and
aggressively buying bonds and corporate credit - a program it
extended overnight to include municipal debt of smaller U.S.
cities. Still, the Fed begins its two-day meeting with no control
over employment or price stability, and little ability even to
judge where an economy battered by the coronavirus is headed.
Analysts said it was unlikely the Fed or other central banks
would make further major policy moves, given the scope and depth
of recent action.
"All of them have beefed up asset purchases as much as they
could. All of them are close to or even at the minimum lower
interest rate bound," wrote Thu Lan Nguyen, an analyst at
Commerzbank.
"They are likely to remain there for the foreseeable future,
which would point towards relatively stable exchange rates."
The ECB has had less room to manoeuvre on rates and
announced an enormous bond-buying program. Still, bickering and
indecision over a eurozone rescue package has some in the market
expecting deeper action still, perhaps as soon as Thursday.
That has seen the euro left behind as expectations for an
economic recovery from the pandemic has pressured the U.S.
dollar and driven a rally in riskier currencies such as the
Australian dollar.

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Swedish crown rallies as central bank holds 0% interest rate
IMAGE https://tmsnrt.rs/3aLM8le
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