Mubasher: The US dollar struggled against its peers on Monday, as some investors took profits after strong gains in recent weeks despite positive US data kept a lid on emerging market currencies.
Earlier in the day, the US dollar index, a tracker of the greenback against six major rivals, was generally flat at 95.36, after recording the largest rise in three weeks, with a 0.23% increase last week.
By 11:47 am GMT, the index inched 0.4% to 95.3290.
The losses of the US dollar were notably against the Swedish krona (SEK) and the Norwegian krona (NOK), against which the greenback shed 0.1% and 0.6%, respectively.
The Swedish currency strengthened on the back of smaller-than-expected gains for the nationalist party Sweden Democrats.
“Sweden’s election has left political gridlock in its wake, but the Sweden Democrats party made less progress than some had expected and that has triggered a relief rally,” London-based Société Générale strategist Kit Juckes told Thomson Reuters.
The Norwegian krona surged following data pertaining to inflation in August, which firmed expectations for an interest rate hike in the coming week.
By 12:06 pm GMT, the USD/SEK pair declined 0.11% to SEK 9.0484, while the USD/NOK pair dropped 0.77% to 8.3876.
By 12:08 pm GMT, the USD/EUR pair fell 0.15% to EUR 0.8643, while USD/GBP pair went down 0.14% to GBP 0.7728.
However, an index measuring emerging market currencies dropped 0.4%, hovering near one-week troughs. These included the Indian (INR) which plunged to a record low.
“We have had strong US jobs data which has cemented market expectations of at least 2 more rate hikes this year and that doesn’t bode well for emerging markets,” London-based Rabobank markets strategist Piotr Matys told Reuters.
US jobs growth gained momentum in August, with the largest annual increase in wages since over nine years.
However, investors are still anticipating any new development in the trade dispute between the US and China, after the end of the period for public commentary on proposed US duties on a $200 billion raft of Chinese imports.
