Littlefish FX | Nov 30, 2015 05:59AM ET
Heading into the final weeks of the year, battle-lines are drawn across FX markets with investor expectations geared towards a rate hike by the Fed and further easing to be introduced by the ECB. This stark policy divergence which drives the US dollar higher and weighs on the euro is also weighing heavily on the Swiss Franc. The SNB, who determinedly endeavour to halt the appreciation of the franc, were forced to abandon their currency peg against the euro in January of this year as the ECB unleashed its huge quantitative easing program. In the face of yet further ECB easing, there is speculation that the SNB have intervened to orchestrate the CHF weakness we are currently seeing though nothing has been confirmed. What has been confirmed, as ever, is the SNB’s preparedness to take steps to weaken CHF, reiterated again last week in comments by SNB chair Jordan where he warned investors to steer clear of the “significantly overvalued” CHF. Speculation is mounting regarding further SNB actions in the wake of yet another round of easing by the ECB with expectations for yet further reduction of negative Swiss rates moving to the forefront.
The US dollar however continues to remain strong heading into the December FOMC with markets now pricing a 78% probability in favour of a hike. Recent data has been strong enough to keep USD on an even keel and heading into the November NFPs on Friday, USD bulls will be looking for another win on the back of last month’s bumper NFP print. Retail markets are as much as 85% short USD/CHF signalling clear room for further upside in this pair.
h2 Trade Idea/h2
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.