LONDON (Reuters) - The dollar struggled against its rivals on Monday, especially against the Scandinavian currencies, as some investors took profits after a strong rally in recent weeks although strong U.S. data kept the pressure on emerging market currencies.
A waitress poses with some coins in front of a cash-box of Danish crowns in a pub in Copenhagen, January 22, 2015. REUTERS/Fabian Bimmer
Against a basket of its rivals, the dollar was broadly flat at 95.36 .DXY after rising 0.23 percent last week, its biggest rise in three weeks.
Its losses were more pronounced against the Swedish crown and the Norwegian crown against which it lost 0.1 and 0.6 percent respectively.
The Swedish crown SEK=D3 strengthened after gains for the nationalist and anti-immigration party Sweden Democrats party were smaller than some polls had predicted.
A big negative driver for the Swedish crown before the election has been hedging activity against a strong showing by the Sweden Democrats, but the outcome avoided the worst of the market’s fears even as the nation headed for a hung parliament.
“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,” said Kit Juckes, a strategist at London’s Societe Generale.
The Norwegian crown NOK=D3 surged after August inflation data firmed expectations for a central bank rate hike next week.
FILE PHOTO: A woman counts U.S. dollar bills at her home in Buenos Aires, Argentina August 28, 2018. Picture taken August 28, 2018. REUTERS/Marcos Brindicci/File Photo
Against the euro EURNOK=D3, the crown rose 0.8 percent and was set for its biggest daily rise in more than four months at 9.70.
Overall dollar positions saw their biggest drop in nearly six months as investors took some profits from a rally that has seen the greenback gain more than 6 percent since trade concerns shot into the spotlight.
USD positions: reut.rs/2Czgrjk
EM PRESSURES
However, an index for emerging market currencies .MIEM00000CUS fell 0.4 percent to near one-week lows. The Indian rupee fell to a record low while the Hong Kong dollar hit the lower end of a trading band.
“We have had strong U.S. 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,” said Piotr Matys, a markets strategist at Rabobank in London.
U.S. jobs growth accelerated in August and wages notched their largest annual increase in more than nine years, boosting the prospect of faster interest rate rises by the Federal Reserve.
Investors are waiting for any fresh salvo to be fired in the Sino-U.S. trade war after a public comment period for proposed U.S. tariffs on a list of $200 billion worth of Chinese imports, ended last week.
Reporting by Saikat Chatterjee; Additional reporting by Daniel Leussink in TOKYO; Editing by Alison Williams
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