Currencies: Swedes Take the Crown - TheStreet

Currencies: Swedes Take the Crown

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A central bank's unexpected intervention in the currency markets this morning surprised traders and market-watchers.

The Swedish central bank -- the

Riksbank

-- jumped into the foreign exchange this morning and bought Swedish crowns in bulk, causing it to jump to new two-week highs against the dollar, at 10.55 crowns per dollar.

While the bank would not comment on which currencies were sold in trade for crowns, nor at which rates of exchange, traders suspected dollars were heavily sold.

The chatter in recent weeks has been that the

European Central Bank

would intervene to support the single-currency euro; no one expected an individual central bank to move to support its own coin. Of course, the possibility of the ECB intervening to support the euro still exists.

The euro rode the coattails of the rising Swedish crown, jumping a full quarter-cent on the news and peaking at new three-week highs against the dollar. The euro traded recently for $0.8655, up from yesterday's closing price of $0.8621.

Meanwhile, Japan's government last night downgraded the country's economy for the fifth straight month. With worries of entering another recession at the forefront of discussion, government officials finally publicly admitted that their economy is deteriorating. The

Bank of Japan

held fast though, and left monetary policy unchanged at yesterday's meeting, as market-watchers had predicted.

The yen was down slightly in recent trade, at 121.13 yen per dollar from 121.32 yen per dollar at last night's market close. The euro, though, gained on the combination of the Swedish intervention and a weaker yen, climbing to 104.84 yen per euro from 104.55 yen per euro at last close.

The British pound, recently knocked down to 16-year lows after the

Labour Party's

re-election, continued to make heady gains against the dollar as it clawed its way out of the hole it's been in. The pound traded up for $1.4062 most recently from $1.4015 at yesterday's close. The pound has risen over 3 cents, almost 2.5% since Monday.

The Australian dollar was barely changed in trade today after failing to break through a key technical barrier at 53 cents per Aussie dollar yesterday. The Aussie buck lately was trading for $0.5275, virtually unchanged from yesterday's closing price of $0.5273.

The U.S. currency gained slightly on the Canadian dollar this morning, moving up to C$1.5216 from C$1.5200 at last close.