Dollar drops on Trump’s impeachment; Riksbank and BOE eyed

By: Andia Rispah
Andia Rispah
Andia Rispah is a Personal Finance & Investment Writer who helps Financial Advisors to create valuable content to help… read more.
on Dec 19, 2019
  • The dollar fell after the Bank of Japan kicked off a busy day of central bank meetings, signaling a no imminent change to its monetary policy.
  • The focus now shifts to Scandinavia, where two of the only central banks in the world to consider tightening monetary policy have regular meetings.
  • The dollar had weakened in reaction to the House of Representatives' vote to impeach President Donald Trump, who will now face trial in the Senate.

In Europe during the early morning trade, the dollar fell after the Bank of Japan kicked off a busy day of central bank meetings. A series of meetings signaled a no imminent change to its monetary policy.

By 3:05 0805 GMT, the dollar index was down 0.1% from late Wednesday at 96.88.

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As widely expected, the BoJ maintained its short-term interest rate target at -0.1% and that for 10-year government bond yields around 0%.

Focus shift to Riksbank and BoE

The focus now shifts to Scandinavia, where two of the only central banks in the world to consider tightening monetary policy have regular meetings.

The Swedish Riksbank will end its experiment with negative rates and raise its key rate to 0% from -0.25%- mainly on concerns about financial stability. 

The krona rose 2% against the euro in the last month in anticipation. But, was effectively flat at 10.4658 by 3:05 AM ET.

Norway’s central bank is expected to leave its key rate unchanged.

The pound is also in focus after a volatile week in the wake of the general election. 

The BoE’s monetary policy committee meets later and is expected to vote 7-2 again in favor of keeping interest rates unchanged. However, some have raised bets on a rate cut after weak economic data and Britain’s PM Boris Johnson’s revival of the specter of a no-deal Brexit scenario. Both increase the pressure for monetary support.

The pound was recovering some momentum again in early trading, rising 0.3% against the dollar to $1.3117 and rising 0.2% against the euro to 1.1727. 

EUR/GBP fell to 0.8484.

Overnight, the dollar had weakened in reaction to the House of Representatives’ vote to impeach President Donald Trump, who will now face trial in the Senate. 

The biggest gainer was the Aussie, which rose in response to stronger-than-expected employment data for November.

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