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FOREX-Swiss franc set for biggest jump in a month vs dollar after rate decision

Thu, 19th Sep 2019 10:45

* BoJ signals more easing later this year

* Dollar struggles to gain on Fed's mixed messages

* Norway's crown briefly rallies after cbank hikes rates

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh(Adds details after Norges bank meeting, latest prices)

By Tommy Wilkes and Saikat Chatterjee

LONDON, Sept 19 (Reuters) - The Swiss franc rallied againstits major peers on Thursday and is on track to post its biggestdaily jump versus the greenback in a month after the SwissNational Bank declined to match the European Central Bank andthe U.S. Fed in easing policy.

The SNB kept its policy rate unchanged at -0.75%, asexpected by most analysts in a Reuters poll. It maintained therate it charges on the excess cash it holds for commercial banksat -0.75%, though it raised the threshold at which the negativerate charges kick in.

"The SNB was a surprise and they will focus on FXintervention," said Kenneth Broux, a strategist at SocieteGenerale based in London.

"The announcement on the threshold indicates a greatereffort to offset the negative rate impact on bankprofitability."

The franc jumped half a percent against the greenback to$0.9908 and rallied more than 1% versus the Australian dollar, acurrency pair typically favoured by hedge funds.

Even the Norwegian crown briefly rallied after the centralbank raised its main interest rate by a quarter percentage pointas expected but said further policy tightening had become lesslikely amid a global slowdown.

Against the dollar, the crown which had gained 0.2%after the decision, erased gains and was broadly flat on the dayat 8.94 crowns per dollar.

Elsewhere, the Japanese yen held on to earlier gains afterthe Bank of Japan kept interest rates on hold, while the dollarstruggled to move higher despite the Federal Reserve offeringmixed signals about the path for further easing.

The Bank of Japan kept monetary policy steady - as expected- and signalled the chance of expanding stimulus as early as itsnext policy meeting in October by issuing a stronger warningover the risks threatening the economy.

The yen rose to as high as 107.79 yen per dollar beforesettling at 108.06, up 0.4% on the day.

The dollar dipped slightly against a basket of currencies,as it struggled to gain despite a more hawkish than forecasttone from Wednesday's Federal Reserve meeting.

The U.S. central bank, on a 7-3 vote, lowered the Fed fundstarget rate to a range of 1.75% to 2.00% "in light of theimplications of global developments for the economic outlook".

The Australian dollar had its worst day in a monthas expectations for more central bank rate cuts leapt afterjoblessness hit a one-year high.

The Aussie dropped 0.7% to a two-week low of $0.6782.

(Reporting by Tommy Wilkes and Saikat Chatterjee; Editing byAlex Richardson)

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