The U.S. dollar surged by the fastest pace in a month after nonfarm payrolls grew faster than expected, boosting speculation that the Federal Reserve may bring closer the day it hikes interest rates.
The greenback jumped to a two-week high against the yen as investors weighed on the fact the U.S. is one of the few countries that are looking to raise interest rates and cut down stimulus to propel economic growth. The dollar rose 0.4 percent to 102.21 yen. The euro advanced 0.4 percent to $1.3608.
The Federal Reserve has reduced monthly asset purchases to $35 billion, down from $85 billion in 2013 while at the same time retaining the benchmark interest rate between zero percent to 0.25 percent since 2008. U.S. businesses hired 288,000 employees in June, compared to the average economists’ estimate of 215,000 workers in a Bloomberg News survey.
The Swedish krona nosedived after the central bank slashed interest rates more than expected. The krona plunged 1.4 percent to trade at 9.2840 per euro, its steepest depreciation since November 2013. The Swedish currency hit 9.3887, its lowest level in nearly three years, and fell 1.7 percent to 6.8202 per dollar.
The Riksbank cut down the key rate by 0.5 percentage point to a new level of 0.25 percent, more than the 0.25 percentage point cut expected by analysts. Sweden’s central bank also forecasted no interest rate increases until end of 2015.
The Australian dollar fell after the Reserve Bank of Australia Governor noted that the currency is overvalued. The Aussie plunged 0.9 percent to 93.56 U.S. cents, far below the 95.05 level that it touched on July 1 that was its highest since November 7. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Yashu Gola at email@example.com