FOREX-Swiss franc drops to 2-month low, dollar bounces to 2-week high

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* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Ritvik Carvalho
LONDON, Feb 1 (Reuters) - The Swiss franc fell out of recent
trading ranges against the dollar on Monday, dropping to its
lowest levels in two months while the U.S. currency bounced to a
2-week high.
A weaker euro EUR= , which lost half a percent against the
dollar by 1147 GMT, helped the index that measures the
greenback's broader strength gain 0.2% on the day.
The Japanese yen weakened to a fresh 11-week low of 104.95
yen per dollar. JPY=
Initially on the backfoot as stock markets rallied, the
dollar clawed back into positive territory by late morning trade
in London.
The Swiss franc broke lower from recent ranges to drop more
than half a percent to its lowest against the buck since Dec. 2,
at 0.8964 francs per dollar. CHF=EBS
"If you look at the breakdown of franc performance since the
start of the year, it is clear that franc underperformance has
been concentrated versus the high beta currencies and sterling
in particular," said Kamal Sharma, director of G10 FX strategy
at BofA Merrill Lynch Global Research, noting that some nerves
around Italian politics appear to have dissipated.
Sharma also said the dollar may be more resilient in the
near-term as "both growth and vaccination favour the U.S."
The pound traded 0.15% higher on the day at $1.3711.
GBP=D3
The Australian and New Zealand dollars gave up early gains,
falling 0.1% each. AUD= NZD=
Elsewhere, the Norwegian crown fell as much as 0.9% against
the dollar to 8.6208 crowns per dollar. NOK=
Jens Naervig Pedersen, chief analyst for FX and rates
strategy at Danske Bank, noted the Norway central bank's Friday
announcement of a substantial increase in the daily pace of its
fiscal Norwegian crown buying from 800 million crowns in January
to 1,700 million in February.
While an increase was expected, its size was a surprise, he
said, with the implications of the announcement two-fold.
"First, it means the Norges Bank will buy 18 billion more
NOK in February than in January, which adds a flow supportive
argument to NOK after a week where the stagnating reflation
theme weighed," he said.
"Secondly, the larger NOK buying pace will drain liquidity
from the interbank market, which puts upward pressure on NOK
FRA/OIS spreads. By extension, this will improve the carry case
of a long NOK position."

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World FX rates https://tmsnrt.rs/2RBWI5E
Dollar hits 2-week high https://tmsnrt.rs/39BR4Ms
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