Greece In Focus, Switzerland
Swissquote Bank Ltd | Jun 19, 2015 06:32AM ET
SNB left monetary policy unchanged
Unsurprisingly, the Swiss National Bank left unchanged its monetary policy by maintaining the 3-month Libor target range at between -1.25% and -0.25% and interest on sight deposit at -0.75%. Thomas Jordan reiterated the SNB’s view that the Swiss franc is overvalued and repeated that the SNB is willing to take an active role in the foreign exchange market, leaving unchanged the negative interest rate exemption rule.
On the data front, the SECO (State Secretariat for Economic Affairs) released its summer economics forecast a few days ago. The report indicates that the Swiss economy will expand 0.8% in the first quarter compared to March’s estimates of 0.9%. The trade balance of good and service had a strong negative impact on the economy as the CHF appreciated almost 8% on a trade-weighted basis over the first three months of the year. However, the SNB is confident that the global economy will gather pace again but warns that future development is highly uncertain.
However at the bottom line, the levels of the exchange rates between the Swiss franc and the euro, or even the dollar, has little to do with the state of the Swiss economy but more with economic development in the US and Europe. Switzerland is therefore doomed to wait that growth starts to pick up in those countries before seeing EUR/CHF rises again. Therefore, we think that the SNB won’t risk to intervene massively in the foreign exchange market as the Bank simply lacks the firepower required to maintain a decent EUR/CHF exchange rate and is also not willing to expand further its balance sheet.
Greece: No deal at the moment (by Yann Quelenn)
It has been weeks that discussions around the Greek Bailout have taken place. So far, it went nowhere. Greek Prime Minister Alexis Tsipras, who has been elected under the promise to end austerity, refuses to cut pensions or raise taxes as it is demanded by its creditors to get emergency funds. The IMF repayment is now approaching and unless there is an unexpected final twist, we are likely to see Greece defaulting.
The important issue is that Greece must obtain an agreement in order to unlock bailout funds to repay the €1.6 billion to the IMF and €3.46 billion to the ECB in July. In other words, Greece can default to the IMF on June 30th but this would mean that no additional funds will be unlocked and therefore, we anticipate that Greece will default also on the ECB.
This Friday, Tsipras is visiting Russia in order to meet President Vladimir Putin. We hear talks that Greece is looking for Russian loans. It seems that it is the last card Greece can play.
Greece can now default at any moment. The Greek default may add also some relief to the Eurozone which will be finally rid of the never-ending Greek issue. In the Hellenic country, the bank run has started with other €2 billion that came out of the Greek System for the first three days of the week. “I don’t know if Greek banks will open on Monday” stated Benoit Coeuré before ECB published an official denial.
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USD/CHF: Bearish Momentum
Yann Quelenn
EUR/USD has broken the resistance at 1.1386 (10/06/2015 high). Hourly resistance lies at 1.1436 (18/06/2015 high). Stronger resistance is given at 1.1459 (15/05/2015 high). Hourly support can be found at 1.1151 (12/06/2015 low). The short-term technical structure suggests an upside momentum. In the longer term, the symmetrical triangle from 2010-2014 favors further weakness towards parity. As a result, we view the recent sideways moves as a pause in an underlying declining trend. Key supports can be found at 1.0504 (21/03/2003 low) and 1.0000 (psychological support). Break to the upside would suggest a test of resistance at 1.1534 (03/02/2015 reaction high).
GBP/USD has increased sharply for three weeks. The pair is now consolidating. There is still a strong upside momentum. Hourly resistance is given at 1.5930 (18/06/2015 high). Hourly support is given at 1.5422 (11/06/2015 low). In the longer term, the technical structure looks like a recovery bottom whose maximum upside potential is given by the strong resistance at 1.6189 (Fibo 61% entrancement).
USD/JPY has declined toward the hourly support at 122.46 (10/06/2015 low) before bouncing. We expect the pair to test again this support. The pair is gaining bearish momentum on the short term. Key resistance lies at 135.15 (14-year high). A long-term bullish bias is favored as long as the strong support at 115.57 (16/12/2014 low) holds. A gradual rise towards the major resistance at 135.15 (01/02/2002 high) is favored. A key support can be found at 118.18 (16/02/2015 low).
USD/CHF is now decreasing toward the support at 0.9072 (10/06/2015 low). Hourly resistance can be found at 0.9408 (11/06/2015 high). Hourly support is given at 0.9151 (18/06/2015 low) and stronger resistance can be found at 0.9573 (29/05/2015 high). In the shortterm, the pair is setting lower highs, therefore we remain bearish over the next few weeks. In the long-term, there is no sign to suggest the end of the current downtrend. After failure to break above 0.9448 and reinstate bullish trend. As a result, the current weakness is seen as a counter-trend move. Key support can be found 0.8986 (30/01/2015 low)./h3
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