* Chinese yuan jumps on US-China trade hopes
* Australian dollar, New Zealand dollar bounce on trade
optimism
* Pound holds earlier gains, but eases off slightly
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Recasts, adds context, new quote, chart and updates prices)
By Olga Cotaga
LONDON, Sept 5 (Reuters) - The Swedish crown rose strongly
on Thursday after the country's central bank said it still
expected to tighten monetary policy around the turn of the year,
surprising markets and sparking big gains in the long-suffering
currency.
After holding its benchmark interest rate unchanged at
-0.25% as expected, the Riksbank pointed to high resource
utilisation and inflation close to target as indications that
the economy would remain strong in the short term, supporting
plans to hike later this year or early 2020. Riksbank Governor Stefan Ingves said "it would not be
strange" if interest rates in Sweden were "a little higher than
in Europe." This contrasts with expectations of the European
Central Bank, which is forecast to cut interest rates on Sept.
12 and announce a new wave of quantitative easing.
The Swedish crown jumped to a two-week high of 10.6575
against the euro EURSEK=D3 , and also rallied 0.8% against the
dollar SEK=D3 . The crown has risen in the past few days,
having shed more than 4.5% of its value versus the euro this
year.
Elsewhere, the Japanese yen slipped and risky currencies
flourished on Thursday as investors turned more optimistic that
the United States will find common ground with China on trade
after agreeing to hold talks in October. This has pushed down the yen to a three-week low of 106.75
against the dollar JPY=EBS . The yen was last down 0.1% at
106.555, though overall the Japanese yen had been rising this
year.
The Australian dollar, a currency particularly sensitive to
global trade tensions, rose to a one-month high of 0.68255
against the U.S. dollar AUD=D3 and was last up 0.3% at
$0.6815. The New Zealand dollar rose to a nine-day high of
$0.6385 NZD=D3 .
The Chinese yuan rose to a two-week high of 7.1213 against
the dollar in the offshore market CNH=EBS , but was last
unchanged at 7.1486 yuan per dollar.
The U.S.-China agreement to hold talks in October should not
be seen as an incremental step towards resolving trade tensions,
said Stephen Gallo, European head of forex strategy at BMO
Capital Markets.
"It's toing and froing, that's all," Gallo said, as he
thinks that agreeing to hold talks is a manoeuvre from both
sides to calm investor nerves.
The dollar, seen by many as immune to Sino-U.S. trade spats,
was slightly higher against both the euro and five other major
currencies .DXY . Euro/dollar was last at $1.1052 EUR=EBS , up
0.2%.
Gallo said he would not add more euro/dollar positions and
that he would be looking to sell the euro if it reached $1.11 or
$1.1150.
The pound also gained ground, boosted by hopes that a
no-deal Brexit would be avoided. Sterling was last trading up
0.2% at $1.2274 GBP=D3 . Against the euro, the pound increased
0.1% to 89.94 pence EURGBP=D3 .
"An amazing day when sterling is the best performer and the
Japanese yen is the worst," said Marshal Gittler, a strategist
at ACLS Global.
British lawmakers approved legislation on Wednesday to
extend the Brexit deadline for the third time and rejected Prime
Minister Boris Johnson's motion to hold a snap election.
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Swedish crown rises on Riksbank forecasting higher rates https://tmsnrt.rs/2PHk5y3
Japanese yen loses ground as US-China return to negotiating
table https://tmsnrt.rs/2zStsjR
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