Norges Bank sends Norwegian crown higher as dollar seeks direction

investing.com:

By Joice Alves and Rae Wee

LONDON/SINGAPORE (Reuters) — The Norwegian crown rose from six-week lows against the dollar and the euro on Thursday after Norges Bank raised interest rates, as expected, and said it was likely to hike again in September.

The dollar hovered around a two month-high after Federal Reserve meeting minutes left the door open for more rate hikes and data this week indicated a resilient U.S. economy.

Against the dollar, the Norwegian crown was last up 0.2% to 10.59, having fallen as low as 10.66 earlier in the session. It rose 0.3% against the euro to 11.51, after touching its lowest since July 10.

«We do not see the Norges Bank as finished hiking yet and a September rate hike seems all but certain,» said Nick Rees, FX Market Analyst at Monex Europe. Inflation, at 6.4% year-on-year in July, remains too hot for comfort, he added.

The U.S. dollar index was 0.15% lower on the day at 103.32, after hitting a two-month high of 103.59.

The greenback has drawn support from a recent run of U.S. economic data reinforcing the view that interest rates will remain high for some time.

Data on Wednesday showed that U.S. single-family home building surged in July and permits for future construction rose, while a separate report said production at U.S. factories unexpectedly rebounded last month.

«We've got the U.S. staying really resilient still, under the weight of high interest rates,» said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY) (CBA).

In the meantime, inflation — which is stubbornly above the 2% target — will encourage the Fed to «maintain monetary policy at a restrictive level», she added.

Minutes of the Fed's July policy meeting showed officials were divided over the