EUR/CHF Tests 1.08 Amid Jordan’s Speech
Swissquote Bank Ltd | Oct 25, 2016 05:22AM ET
After surging more than 0.50% last week, the US dollar has been trading sideways since yesterday as the single currency kept moving lower on speculations that the ECB will somehow increase its stimulus against the backdrop of subdued inflation and anaemic growth, while the pound sterling remained under substantial pressure as investors continued to expect harsh consequences amid the UK decision to leave the European Union.
Yesterday, the dollar index climbed to a nine-month high at 98.846 as EUR/USD tumbled to 1.0860 and the cable traded at around 1.22. We believe that the market has now almost completely priced in a December interest rate hike by the Federal Reserve. Therefore, we believe that further dollar gains are unlikely.
During the Asian session, EUR/USD treaded water at around 1.0870, edging down 0.04%. GBP/USD took a small hit as it slid 0.15% to 1.2220. In Switzerland, EUR/CHF’s response to Thomas Jordan’s speech was muted. The currency pair has consolidated at around 1.0810 over the last 24 hours as Mr. Jordan reiterated the necessity for negative interest rate but underlined that negative interest rates are a temporary solution and that side-effects have to be closely monitored.
Over the last two weeks, the Swiss franc strengthened substantially as the market sent the single currency to multi-month lows. The odds are pretty goods that the SNB will have to intervene - once again - in the FX market to weaken the CHF as the currency pair tested again the 1.08 level. This level is now broadly seen as an implicit floor as the Swiss National Bank systematically stepped in when EUR/CHF got closer to 1.08.
In the equity market, Asian regional returns were mostly trading higher. In Japan, both the Nikkei and Topix index extended gains, climbing 0.76% and 0.71% respectively. In China, the Shanghai Composite and Shenzhen Composite rose 0.05% and 0.29%, while offshore the Hang Seng slid 0.11%.
Further South, Australian shares were up 0.63%, while in New Zealand the NZX 50 was up 0.64%. US futures were blinking green on the screen. Finally, European futures were trading higher across the board with the Footsie up 0.22% and the DAX surging 0.14%.
Today traders will be watching PPI from Spain and Sweden; IFO survey from Germany; industrial orders from Italy; current account balance, FDI and COPOM monetary policy meeting minutes from Brazil; consumer confidence index and Richmond Fed manufacturing index from the US. On the central bank side, Draghi will address in Berlin, BoE’s Carney will speak before the economic committee, while in the US, Fed’s Lockhart will also speak.
Get The News You Want
Currency Tech
EUR/USD
R 2: 1.1352
R 1: 1.1058
CURRENT: 1.0878
S 1: 1.0822
S 2: 1.0711
GBP/USD
R 2: 1.2857
R 1: 1.2477
CURRENT: 1.2224
S 1: 1.2090
S 2: 1.1841
USD/JPY
R 2: 111.45
R 1: 107.49
CURRENT: 104.40
S 1: 102.80
S 2: 100.09
USD/CHF
R 2: 1.0328
R 1: 1.0093
CURRENT: 0.9948
S 1: 0.9632
S 2: 0.9522
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.