- Dollar index falls to one-month low
- Sweden's central bank raises rates, boosts crown
- U.S. repatriation flows slow, pressures dollar
- Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
(Recasts first paragraph, adds comment, updates prices)
The dollar fell to a more than three-month low against the yen on Thursday, after the Federal Reserve signaled fewer interest rate hikes over the next two years and expressed caution about the U.S. economic outlook.
The dollar index, a measure of the greenback's value against six major currencies, dropped to a one-month low.
Diminished U.S. rate hike expectations lessen the appeal of dollar-denominated assets.
Aside from lowering interest rate forecasts, the Fed also reduced growth and inflation expectations next year.
The Swedish crown SEK= , meanwhile, was one of the biggest gainers on Thursday, up 0.6 percent against the dollar after its central bank raised interest rates for the first time in more than seven years.
In the United States, the two-year/10-year note yield curve - widely considered an indicator of future recessions - flattened to 9 basis points. An inversion of this curve is widely considered a harbinger of recession.
"We think market sentiment will not improve amid a more cautious Fed," said Mazen Issa, senior FX strategist, at TD Securities in New York. "Unresolved trade disputes and an increasingly toxic U.S. political climate suggest further risk reduction is likely."
As result, Issa noted that the safe-haven yen will lead G10 currencies in gains against the U.S. dollar.
The dollar on Thursday fell to 110.82 yen JPY= against the dollar, its lowest since early September, declining for a fifth straight session. It was last down 1.4 percent at 111.13 yen.
In a widely-expected decision, the Bank of Japan on Thursday kept rates steady, maintaining its ultra-loose monetary settings.
The dollar also slid 0.8 percent .DXY against its rivals to 96.263, after earlier dropping to 96.042, its lowest in a month. The index posted its largest daily percentage drop in six weeks.
Diminishing repatriation flows have also dampened the dollar's outlook. They peaked at nearly $300 billion in the first quarter of 2018, but shrank more than two-thirds to $93 billion in the September quarter, according to latest U.S. data.
SWEDISH CROWN SHINES A rate hike by Sweden's Riksbank was not a consensus view in the foreign exchange markets, with a Reuters poll showing two-thirds of analysts expecting the Riksbank to keep rates unchanged. The remainder predicted a tightening.
In other currency pairs, the euro EUR= rose 0.8 percent to $1.1466 EUR= building on gains on Wednesday on news that Italy had struck a deal with the European Commission over its contested 2019 budget and some solid trade data this week.
The euro earlier rose to a six-week high versus the dollar.
======================================================== Currency bid prices at 3:06PM (2006 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1466 $1.1375 +0.80% -4.42% +1.1485 +1.1372 Dollar/Yen JPY= 111.1200 112.4700 -1.20% -1.38% +112.6000 +110.8200 Euro/Yen EURJPY= 127.45 127.95 -0.39% -5.72% +128.3700 +127.2300 Dollar/Swiss CHF= 0.9870 0.9944 -0.74% +1.30% +0.9954 +0.9841 Sterling/Dollar GBP= 1.2665 1.2607 +0.46% -6.27% +1.2706 +1.2610 Dollar/Canadian CAD= 1.3494 1.3483 +0.08% +7.29% +1.3530 +1.3446 Australian/Doll AUD= 0.7116 0.7107 +0.13% -8.78% +0.7148 +0.7087 arEuro/Swiss EURCHF= 1.1315 1.1313 +0.02% -3.20% +1.1349 +1.1299 Euro/Sterling EURGBP= 0.9052 0.9019 +0.37% +1.90% +0.9055 +0.9008 NZ NZD= 0.6774 0.6763 +0.16% -4.40% +0.6790 +0.6726 Dollar/DollarDollar/Norway NOK= 8.6723 8.7174 -0.52% +5.67% +8.7300 +8.6113 Euro/Norway EURNOK= 9.9457 9.9219 +0.24% +0.99% +9.9588 +9.8810 Dollar/Sweden SEK= 8.9706 9.0951 -0.56% +9.37% +9.0997 +8.9269 Euro/Sweden EURSEK= 10.2897 10.3480 -0.56% +4.57% +10.3690 +10.2400 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ US yield curve and recessions http//tmsnrt.rs/2R8aGixUS company repatriation flows http//tmsnrt.rs/2ScLjK3
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