Euro rises above $1.10 in Europe

The euro rose above $1.10 for the first time in three weeks on Wednesday, buoyed by data that showed a euro zone recovery was gathering pace and as investors cut long dollar bets ahead of US growth data and a Federal Reserve statement. In the European session, the Swedish crown soared to a one-month peak against the dollar and hit its highest level in nearly two weeks against the euro after Sweden's central bank surprised investors by leaving interest rates unchanged.
The euro's push above $1.10 in Europe also grabbed attention, rising to a three-week high of $1.10145, buoyed by data that showed lending to euro zone households and firms rose for the first time in three years in March. News that Greece was expected to present draft reform legislation to international lenders on Wednesday in a bid to show it is serious about acting on pledges to secure aid also helped shore up sentiment. German bund yields inched higher, as a result, lifting the euro.
"There is a repricing in the eurozone bond yield curve and along with expectations of a dovish Fed and chances that US growth data could undershoot, we could see the euro squeeze higher, maybe to $1.1150," said Peter Kinsella, currency strategist at Commerzbank. The dollar hit a two-month low against a basket of major currencies, dropping to 95.823, on expectations the Federal Reserve might adopt a more dovish tone in statements on Wednesday after a two-day meeting.
The Fed is widely expected to keep policy unchanged and the focus will be on its economic assessment. The meeting comes at a time when the US economy has hit a soft patch, blamed largely on harsh winter weather, a strong dollar and disruptions at West Coast ports. Just hours before the Fed releases its statement, the market will get an early read of how the US economy fared in the first quarter. Economists expect the annualised pace of growth to have slowed to 1 percent, from 2.2 percent.
The dollar slid more than one percent against the Swedish crown to 8.4031 crowns. The euro fell to around 9.2410 crowns after the decision from 9.36 crowns, before recovering to trade at 9.25, still down 1 percent on the day. While the Riksbank expanded its bond-buying programme and significantly lowered its repo rate guidance, it left the repo rate unchanged. A Reuters poll showed most analysts expected the Riksbank to cut rates by 10 basis points to -0.35 percent. "The decision to leave rates unchanged was a surprise," SEB currency strategist Richard Falkenhall said. "The crown has appreciated and we expect it to maintain its gains into the rest of the day."