© Reuters. FILE PHOTO: U.S. Dollar and Euro banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration
By Joice Alves and Rae Wee
LONDON/SINGAPORE (Reuters) – The Norwegian crown rose from six-week lows against the dollar and the euro on Thursday after Norges Bank raised interest rates, as expected, and said it was likely to hike again in September.
The dollar hovered around a two month-high after Federal Reserve meeting minutes left the door open for more rate hikes and data this week indicated a resilient U.S. economy.
Against the dollar, the Norwegian crown was last up 0.2% to 10.59, having fallen as low as 10.66 earlier in the session. It rose 0.3% against the euro to 11.51, after touching its lowest since July 10.
“We do not see the Norges Bank as finished hiking yet and a September rate hike seems all but certain,” said Nick Rees, FX Market Analyst at Monex Europe. Inflation, at 6.4% year-on-year in July, remains too hot for comfort, he added.
The was 0.15% lower on the day at 103.32, after hitting a two-month high of 103.59.
The greenback has drawn support from a recent run of U.S. economic data reinforcing the view that interest rates will remain high for some time.
Data on Wednesday showed that U.S. single-family home building surged in July and permits for future construction rose, while a separate report said production at U.S. factories unexpectedly rebounded last month.
“We’ve got the U.S. staying really resilient still, under the weight of high interest rates,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:) (CBA).
In the meantime, inflation – which is stubbornly above the 2% target – will encourage the Fed to “maintain monetary policy at a restrictive level”, she added.
Minutes of the Fed’s July policy meeting showed officials were divided over the need for more rate hikes last month, citing the risks to the economy if rates were pushed too far.
AUSTRALIAN DOLLAR
The Australian dollar steadied after sinking to a nine-month low, taking its New Zealand counterpart along with it, on data showing that Australia’s employment unexpectedly fell in July while the jobless rate ticked higher.
The Australian dollar was last 0.15% higher at $0.6434, having tumbled more than 0.9% to a trough of $0.6365 following the employment data release.
The softer reading stoked speculation the Reserve Bank of Australia (RBA) might be done hiking interest rates.
“They’re done at 4.1% as far as I’m concerned now, with persistently weak data from China and easing from the (People’s Bank of China) adding to the case of a peak rate,” said Matt Simpson, senior market analyst at City Index.
The rose 0.2% to $0.5948 after touching its lowest level since November.
The two antipodean currencies, often used as liquid proxies for the yuan, have also taken a beating over the past few sessions as a result of the darkening outlook over China’s economy.
The hit a nine-month low of 7.3490 per dollar, while its onshore counterpart similarly weakened to a nine-month trough of 7.3180 per dollar.
Elsewhere, the yen edged 0.28% higher to 145.95 after weakening to 146.56 per dollar, its lowest level since November, having come under renewed pressure as a result of interest rate differentials between the United States and Japan’s ultra-low rate environment.
The Japanese currency is being closely watched since it touched the key 145 level for the first time in about nine months last Friday, crossing into a zone that sparked an intervention by Japanese authorities in September and October last year.
The euro was 0.07% higher at $1.0885, after falling to a six-week low at $1.0862. Sterling was 0.1% higher against the euro at 85.35 pence, after surging to a one-month high on Wednesday on British inflation data.
Despite a sharp drop in Britain’s headline inflation rate, key measures of price growth monitored by the Bank of England (BoE) failed to ease in July, boosting bets the BoE will keep rates higher for longer.
