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Dollar surges against Swedish crown on Riksbank, gains against yen

Dan Kitwood | Getty Images

The U.S. dollar hit its highest in more than seven and a half years against the Swedish crown after dovish comments from Sweden's central bank, and hit a three-month high against the yen on expectations of a December Federal Reserve rate hike.

Sweden's Riksbank said the chances of another interest rate cut had increased and it was ready to expand its quantitative easing program further. The Riksbank has already slashed rates to negative 0.5 percent, and is on track to buy 40 percent of the stock of outstanding government bonds by year end.

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The dollar was last up 1.22 percent against the at 9.0164 crowns after touching 9.0424 crowns, its highest level since early March 2009.

"You sort of expect the central bank to say something like, 'policy is easy, just the way we like it,'" said Steven Englander, managing director and global head of G10 FX strategy at Citigroup in New York. "To take a step further and endorse further weakness ... conveys to the market that you're supremely dovish."

The hit a three-month high against the yen of 105.00 yen, and was last up 0.47 percent against the Japanese currency at 104.95 yen. Analysts said a rise in U.S. Treasury yields on expectations that the Federal Reserve will increase interest rates in December were behind the move.

"The market is getting more and more comfortable with the idea that the Fed will pull the trigger in December," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.

Schlossberg said U.S. economic data on Thursday showing an upward revision in U.S. durable goods orders for August and stronger-than-expected U.S. pending home sales for September supported prevailing expectations for a December rate increase.

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Traders last saw a more than 78 percent chance that the Fed would hike rates in December, up slightly from Wednesday's probability, according to data from CME Group's FedWatch program.

The was up 0.25 percent against the dollar at $1.0934. Schlossberg of BK Asset Management said traders were likely taking profits in short bets against the euro after its recent slide. The currency has fallen about 2.7 percent this month against the greenback.

, which measures the greenback against a basket of six major currencies, was last mostly flat at 98.652. The dollar was down 0.13 percent against the Swiss franc at 0.9919 franc.