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 In the European session, the Norwegian crown was in the limelight,
falling sharply after Norway's central bank cut rates and left the
door open for another reduction in September. The euro rose 1.5
percent to a six-day high of 8.8360 crowns, and even the much
unloved dollar rose 1 percent to trade at 7.73 crowns.
The Swiss franc inched up after the Swiss National Bank kept
interest rates unchanged at -0.75 percent and slightly tweaked its
inflation forecasts. The Swiss central bank added that the franc was
significantly overvalued and should continue to weaken over time.
The euro, which was trading 0.2 percent lower against the Swiss
franc before the SNB statement, weakened and turned flat on the day.
It was at 1.0450 francs, compared with $1.0465 just before the SNB
rate decision and economic forecasts. The dollar was down 0.6
percent at 0.9170 francs, compared with 0.9213 francs beforehand.
"The SNB did not move, but surprisingly they upgraded inflation
forecasts for this year and next. Some were expecting a dovish bias
but that has not happened," said Petr Krpata, FX strategist at ING.
"If the Greece uncertainty continues, then we expect the SNB to take
more action and lower interest rates. Our call is for a modest
downward bias for euro/Swiss franc."
The dollar index <.DXY> fell 0.6 percent to 93.616 - its lowest in a
month - after Fed Chair Janet Yellen on Wednesday emphasized that a
rate hike was still up in the air and rested squarely on further
improvement in the labor market.
In their projections, Fed officials also saw slightly lower rates at
the end of 2016 and 2017 than forecast in March and more
policymakers were now in favor of raising rates only once or not all
this year.
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Overall, the projections for interest rates and the remarks by
Yellen were interpreted as dovish, analysts said.
"Leaving the dots (projection for interest rates) for this year
unchanged but seeing an increasing number of policy-makers
advocating only one move leaves the market guessing if the Fed may
start hiking in September or December," Morgan Stanley analysts said
in a note.
The Fed was signaling it would increase rates less than previously
indicated, they said, undermining the dollar.
The dollar fell 0.7 percent to 122.55 yen, down from Wednesday's
high of 124.465.
The dollar's weakness pushed up the euro despite the risk of a debt
default by Greece, which is still unable to strike an agreement with
its creditors on a deal to unlock fresh funds. The euro rose 0.7
percent to a one-month high of $1.1420.
(Editing by Larry King)
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