The euro rose as the dollar weakened and the Swedish crown plunged to a 10-year low against the euro as fade for US-Sino trade deal
The euro rose as the dollar weakened and the Swedish crown plunged to a 10-year low against the euro as hopes waned for a breakthrough in U.S-China trade talks.
Sweden’s open economy makes the crown vulnerable to global growth dynamics and therefore to the trade dispute between the world’s two biggest economies, which has hurt growth in the two years since U.S. President Donald Trump ignited the trade war.
The Trump administration imposed visa restrictions on Chinese officials and blacklisted Chinese companies, casting a shadow over trade discussions scheduled in Washington. The resulting risk aversion had bolstered the dollar, which is considered a safe haven, but after it began to fall against the euro in the early trading in Europe.
Investors also took into account remarks by Federal Reserve Chairman Jerome Powell that he was open to further interest rate cuts and bond purchases.
The euro was up 0.2% at $1.09785. The index that tracks the dollar against a basket of six other currencies was down 0.1% at 99.007.
The Swedish crown was steady, after earlier falling to a 10-year low of 10.9195 against the euro and a 17-year low of 9.9639 against the dollar.
It’s a remarkable move, said Stephen Gallo, European head of FX strategy at BMO Capital Markets. You cannot get a clearer trend here, he said.
The fall reflects deepening worsening global outlook, Gallo said. He expects the crown to fall to 11 against the common currency, close to levels not seen since the financial crisis. Sweden’s competitiveness as an exporter led to the crown’s decline, he said.
The euro was a sell against the dollar, though, since it’s likely to maintain its status as a safe-haven currency and U.S. investors are likely to keep their dollars at home, Gallo added.
Chinese Vice Premier Liu He is due to arrive this week in Washington for trade talks. He is expected to meet U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Thursday.
Elsewhere, the pound was slightly higher, though not far from the one-month low it reached the day before. Sterling was up 0.2% at $1.2237 and flat against the euro at 89.78 pence.