Sterling and Swedish crown climb

Sterling rose on Wednesday after minutes from a Bank of England policy meeting were perceived by the market as pointing to a UK rate rise as early as next month, while the dollar crept lower against most major currencies.
With no US economic data to provide cues, the spotlight shifted toward sterling and the Swedish crown, which surged after the Riksbank lifted interest rates and unexpectedly telegraphed two more hikes this year.
Sweden's Riksbank lifted rates to 3.5 percent and surprised traders by raising its year-end rate forecast to 4 percent, pushing the crown up 1.5 percent against the dollar and putting it on track for its biggest daily gain against the euro in more than five years.
Sterling rose to $1.9941, a two-week high, and hit a fresh 15-year peak against the yen after BoE minutes revealed that officials fell one vote shy of lifting interest rates at a meeting earlier this month. Central bank governor Mervyn King, who favoured a hike at that meeting, was among the outvoted.
The yen, tethered to Japanese interest rates at just 0.5 percent, continued to suffer as investors borrow it cheaply to finance purchases of higher-yielding currencies and assets. Late afternoon, the euro was up 0.05 percent at 165.65 yen, still in sight of a record high above 166 yen.
The dollar was up 0.2 percent at 123.60 yen, near a 4-1/2-year peak of 123.76 yen hit earlier in the week. The Japanese currency also plumbed multiyear lows against the Australian and New Zealand dollars.
Bank of Japan Governor Toshihiko Fukui last week said officials wanted to be sure capital and consumer spending remained firm before pushing interest rates higher. Few analysts expect a BOJ rate rise before elections in late July.
Against a basket of six major currencies, the dollar was slightly down, extending losses into a fourth straight session. The dollar has stumbled this week after a two-month long rally driven by a series of solid US economic data that has led investors to wipe out expectations that the Federal Reserve will cut interest rates this year.
Just three months ago the market was pricing in at least two quarter-point rate cuts by the end of the year, but futures markets are now factoring in steady rates at 5.25 percent for this year.
Despite expectations for US rates, the European Central Bank and the Bank of England are both expected to deliver two more quarter-point rate increases this year, implying that the dollar could remain out of favour with investors hunting for rising yields.
"The dollar has lost upside momentum and looks a bit vulnerable," analysts at UBS wrote in a note to clients. The euro was down 0.2 percent at $1.3400. Elsewhere, the kiwi dollar rose 0.25 percent to US $0.7600 as interest rates of 8 percent continued to lure investors who shrugged off intervention by New Zealand's central bank earlier in the month to weaken the currency.