|Day's Range||0.968 - 0.973|
|52 Week Range||0.9613 - 1.0229|
The U.S. dollar edged lower on Wednesday and the Japanese yen and the Swiss franc slipped amid muted demand for safe haven units as updates from China about the spread of a new flu-like coronavirus raised hopes the outbreak would be contained. Deaths from China's new flu-like virus rose to nine on Wednesday, with more than 470 confirmed cases, heightening global fears of contagion from an infection suspected to have come from animals. "The virus concern is settling down a bit overnight as the market is getting a little more transparency around the issue from China and other nations than they did with SARS for example," Brad Bechtel, managing director, Jefferies in New York, said in a note.
Dear Traders, The GBP/CHF is still bearish, despite the retracement. If the market manages to stay below 1.2680 we should see a continuation down.
(Bloomberg) -- Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.The Swiss National Bank appears to have resisted taking dramatic action in the past week to curb the franc’s appreciation to the strongest in almost three years.Sight deposits at the SNB, considered an early indicator of activity, increased about 1.3 billion francs ($1.3 billion) to 585.9 billion francs in the week ending Jan. 17. That’s a gain of 0.2%, and analysts said it suggests no intervention.The figures come as the franc pushes higher against the euro, something the Swiss central bank has been battling against for a decade. The currency rallied 0.7% last week after the U.S. Treasury added Switzerland back onto its currency watch list.Yet the sight deposit data suggest the SNB didn’t do much to counter the rally, with Credit Suisse economist Maxime Botteron considering the figures in line with seasonal fluctuations. A spokeswoman for the SNB declined to comment on the data.The SNB has used interventions on-and-off for years, and the franc’s recent appreciation had raised speculation it might have done so again recently. To help control the currency, which investors typically buy at times of market stress, the SNB also has a deposit rate at a record low of -0.75%.Just days after the U.S. decision to monitor Switzerland, Alternate SNB Governing Board Member Martin Schlegel stressed that if policy needs to be eased, there’s room to expand the balance sheet.Swiss central bank officials don’t usually comment on intervention and they they publish statistics once a year.According to St. Galler Kantonalbank Chief Investment Officer Thomas Stucki, the SNB will continue to selectively intervene. An average franc appreciation of 1.5%-2% annually is manageable for the country, he said.“Our base case is that the pace of franc strength wears off -- but in the event of a deteriorating euro-zone outlook the franc appreciation drift could resume,” said Christin Tuxen, Danske Bank’s head of currency research.(Updates with comments starting in fourth paragraph)\--With assistance from Jan Dahinten and Love Liman.To contact the reporters on this story: Catherine Bosley in Zurich at email@example.com;William Shaw in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Fergal O'Brien at email@example.com, William ShawFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The glass of economic data is half full if we estimate the reaction to the macroeconomic data. This applies to both last Friday’s U.S. employment report, and China’s GDP figures released this morning. The published data for the 4th quarter of 2019 showed that the economy slowed down to 30-year lows.
“Expanding trade.” is the meat of the matter, but other than that, I think we’re chasing stories of ghosts of handshake trade truces past interjected with opinions on narratives that haven’t even evolved yet, so maybe time to let the dust settle before diving in
One-month implied volatility in the Euro/Franc Forex pair climbed to its highest level in nearly two months on Wednesday, up by as much as 11 basis points to 4.27%, according to Bloomberg.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.The U.S. government’s complaints over Switzerland’s currency policy may actually make it harder for the central bank to stay out of the foreign-exchange market.The Swiss franc strengthened beyond 1.075 per euro for the first time since April 2017 after Washington put the nation back on its currency watch list and urged the country to adjust its macroeconomic policies.Strategists say Switzerland’s growth and inflation data may leave the Swiss National Bank no choice but to buy foreign currency in an effort to curtail the franc’s advance.“We know from the SNB’s intervention activity that the franc is already at critical levels, i.e. at levels at which it has intervened before last year,” said Thu Lan Nguyen, a strategist at Commerzbank AG. “There is a high likelihood that it will step into the market, or is already active.”SNB data in August suggested the bank had pumped billions of francs into markets, buying foreign currency in an effort to curb the franc’s strength. A stronger franc can make it harder for Swiss companies to export their products.The SNB said Tuesday that its interventions were designed only to offset the ill effects of too strong a currency. The interventions, which aren’t aimed at giving the nation a competitive advantage, are disclosed in an annual report, the SNB said in a statement.Five years since the SNB jolted markets by scrapping a cap on the franc and introducing negative interest rates, the currency’s strength means there’s little chance it will be able to end the policy any time soon.In the aftermath of the U.S. decision on Monday, traders are braced for swings in the franc in the weeks ahead. One-month implied volatility in the euro-franc pair rose to its highest in nearly two months on Wednesday, up by as much as 11bps to 4.27%. Meanwhile, Manuel Oliveri, a strategist at Credit Agricole SA, advises against chasing the franc higher.The U.S. decision “encouraged market participants to test the SNB’s appetite to keep intervening to dampen Swiss franc strength,” said Lee Hardman, a strategist at MUFG Bank Ltd. in London. “We still think the SNB will continue to intervene after the U.S. Treasury announcement, but it has created some additional uncertainty in the near-term which the market is testing now.”The franc traded at 1.07613 per euro at 11:17 a.m. in London. The currency was up 0.2% against the dollar to 0.9651.Here’s what strategists are saying:Credit Agricole (Avoid chasing franc higher)“We advise against chasing the CHF higher from current levels. The currency benefitted from the notion that the SNB was under pressure to turn less dovish on monetary policy, says strategist Manuel Oliveri.“We see low risk for that to happen with current EUR/CHF levels potentially offering good risk reward for long-term longs.”Societe Generale (Strong franc may become tougher challenge for SNB)“We suggest that EUR/CHF moving below 1.10 might be the intervention trigger, making the SNB active again and raising U.S. scrutiny,” says strategist Olivier Korber.“A strong CHF might thus become a tougher challenge for the SNB. The central bank now faces the risk of seeing markets testing its capacity to defend further appreciation. As the U.S. economy slows, the market’s appetite for safe havens looks set to grow. The JPY and CHF should be the main beneficiaries of these flows, mostly at the expense of the USD.”\--With assistance from Vassilis Karamanis.To contact the reporters on this story: William Shaw in London at firstname.lastname@example.org;Greg Ritchie in London at email@example.comTo contact the editors responsible for this story: Dana El Baltaji at firstname.lastname@example.org, William Shaw, Michael HunterFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Stocks are climbing up; Gold is undergoing a bearish correction so it looks that risk associated with the Middle East tension is gone. Maybe yes, but there still is one instrument from the safe heaven group, which is showing a great strength – Swiss Franc.
China is expected to toe the line on any weakness in the RMB as we move forward to negotiating Phase Two. No impulse for gold from the US CPI data as the inflation trend was broadly neutral for gold.
(Bloomberg) -- Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.Swiss National Bank President Thomas Jordan is finding it’s hard to revert to normal monetary policy without risking an unwanted appreciation of the franc.Five years since Jordan jolted markets by scrapping a cap on the franc and introducing negative interest rates, the currency’s strength means there’s little chance he’ll be able to end the controversial policy any time soon. At home, the subzero rates are frustrating banks, while the SNB’s interventions in currency markets have put Switzerland in the crosshairs of U.S. authorities.The unexpected decision -- five years ago this week -- sent global financial markets into a tailspin. While at home Jordan was hailed for taking a brave step, the situation has since shifted. In addition to the financial industry, labor unions say the SNB’s -0.75% rate is blowing a hole in social funding.“When you try and be very critical, you conclude -- what else could they have done?” said Gianluigi Mandruzzato, an economist at EFG Asset Management Switzerland. “After five years, we’re still there with a prospect of keeping rates at rock bottom for some years.”Yet even with negative rates plus a pledge to intervene in currency markets, the franc is at its highest since April 2017 versus the euro.Data suggest the SNB stepped up interventions in the latter half of last year, prompting the U.S. Treasury to put Switzerland back on its currency watch list this week. The SNB responded on Tuesday by saying its interventions were designed only to offset the ill effects of too strong a currency and not to give the country a competitive edge.Public OpinionEconomists surveyed by Bloomberg expect the SNB’s deposit rate to remain at a record low for the rest of this year.The dam of Swiss public opinion would probably burst if the man or woman on the street saw their bank account hit with negative rates. So far that hasn’t happened, though banks are increasingly targeting the cash holdings of the rich.As was the case five years ago, Switzerland’s fate is tied to that of the global economy. The franc cap was scrapped in anticipation of European Central Bank quantitative easing, and the absence of any meaningful reversal in the euro area’s fortunes leaves the SNB with no room to move.Unilateral SNB tightening could add to upward pressure on the currency, which would depress prices, and hurt exporters and the economy.The central bank said in early 2015 that the franc would depreciate over time, but hasn’t happened. In 2018, it briefly touched 1.20 francs per euro -- the level of the cap -- but has since appreciated.“I fault the ECB,” said Thomas Matter, chairman of Helvetische Bank and member of parliament for the Swiss People’s Party, who proposed some SNB profits be used to top up the public old-age insurance. “The SNB cannot scrap the negative rates. That would generate huge appreciation pressure.”Read More:Swiss Get Creative to Dodge ‘Big Pain’ of Negative RatesSNB Can’t Get the Banks Off Its Back About Negative Rates (Updates with SNB comment in sixth paragraph.)\--With assistance from Harumi Ichikura, Paul Dobson and Richard Jones.To contact the reporter on this story: Catherine Bosley in Zurich at email@example.comTo contact the editors responsible for this story: Fergal O'Brien at firstname.lastname@example.org, Jan DahintenFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.
(Bloomberg) -- Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.The Swiss franc hovered near its strongest levels since 2018 as the U.S. Treasury Department added Switzerland back to its currency watch list.The U.S. Treasury urged Switzerland “to adjust its macroeconomic policies to more forcefully support domestic economic activity,” according to a report released late Monday in Washington. “Despite borrowing costs for the Swiss government being among the lowest in the world, fiscal policy remains underutilized, even within the constraints of Switzerland’s existing fiscal rules.”The franc held steady at 0.9706 per dollar in early Asian trading on Tuesday following publication of the report, having climbed 0.2% on Monday. The Swiss currency is less than 1% away from the 15-month high it reached in late December as global unease helped spur investor demand for the haven currency.The other countries on the Treasury’s monitoring list are China, Japan, South Korea, Germany, Italy, Ireland, Singapore, Malaysia and Vietnam. It removed the tag of currency manipulator from China.The Swiss franc joins the Canadian dollar and British pound as one of just three Group-of-10 currencies to gain versus the U.S. dollar in the past year. It has climbed more than 1%.Switzerland met two of the three criteria in the Treasury’s report, having a material current account surplus and a significant bilateral trade surplus with the U.S. Switzerland previously was included on the list between October 2016 and October 2018.To contact the reporter on this story: Vivien Lou Chen in San Francisco at email@example.comTo contact the editors responsible for this story: Benjamin Purvis at firstname.lastname@example.org, Mark TannenbaumFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.
Last week was week of comebacks. It was a week of small, mid-term corrections, going against the main long-term trend. Corrections are useful, they create an occasion to jump in into a trade for those who were initially late. Thanks to corrections, they can open trades with more desirable prices.
The technicals indicated high likelihood of an upswing, and the pair obliged by moving higher recently. Great, but with quite a move behind us already, let’s assess further appreciation potential as it stands right now.
Keep calm less than 24 hours to go in a week wholly dominated by developments in the middle east. With that in mind, we’re starting with a bang again this morning as a powerful explosion was heard at the Syria -Iraq border.
The U.S. dollar edged lower from four-week highs against the safe-haven Japanese yen and slipped versus the Swiss franc on Friday as possible renewed U.S.-Iran tensions weighed on market sentiment. The yen and Swiss franc had fallen from highs hit last week after the United States and Iran, in recent comments, moved away from an all-out conflict. Concerns grew, however, after the United States imposed more sanctions on Iran on Friday in response to its retaliatory missile attack on U.S. forces in Iraq and vowed to tighten the screws further on the Iranian economy if Tehran continued to engage in what it described as terrorist acts.
The Swiss National Bank plans to pay out 2 billion Swiss francs (1.57 billion pounds) -- and possibly more -- to Switzerland's federal and cantonal governments after swinging to a big 2019 profit, it said on Thursday. The SNB expects an annual profit of 49 billion Swiss francs (38.36 billion pounds) , helped by gains on foreign securities it bought to weaken the Swiss franc.
Investing.com - Crisis, what crisis? Markets look to have turned a new page after comments from U.S. President Donald Trump overnight seemed to point to an end to the rising U.S.-Iran tensions. U.S. stock futures are pointing to a higher open on Wall Street, continuing Wednesday’s gains which saw the Nasdaq notch a record close. Oil prices remain firm after a surprise build in weekly crude supplies, but gold has fallen back sharply from its elevated levels. Here’s what you need to know to start your day
The safe-haven yen fell to two-week lows against the dollar on Thursday, as the United States and Iran moved away from an all-out conflict, prompting investors to take on more risk and shift focus to an upcoming U.S.-China trade deal and a U.S. non-farm payrolls report. Iran offered no immediate signal it would retaliate further against a Jan. 3 U.S. drone strike that killed its senior military commander. "After yesterday's press conference and after it looked like Iran was not trying to escalate things, we are now getting back to the status quo that we saw before the Iran situation," said John Doyle, vice president of dealing and trading, at Tempus Inc in Washington.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.For anyone who thinks political risk is taking a back seat for currency markets, take a look at the Swiss franc’s rally.Following an escalation in Middle East tensions and the risks around Britain’s departure from the European Union, the currency has advanced to its strongest level against the euro since April 2017. Back then, worries that France could elect a euroskeptic president boosted the franc.The currency’s latest ascent coincides with gold prices surging above $1,600 an ounce for the first time since 2013 and fellow haven the Japanese yen hitting its strongest level in three months against the dollar. While those other assets took a step back on Wednesday as the chances of further conflict between Iran and the U.S. seemed to be contained, the franc’s moves reflect investors are still on edge.“The Swissie is the regional safe haven, so it benefits more compared to the yen if it is a European risk,” said Thu Lan Nguyen, a currency strategist at Commerzbank AG. “If the U.K. sticks to its stance of not allowing for an extension of trade talks, this would mean a hard Brexit after all by year-end.”European Commission President Ursula von der Leyen warned on Wednesday it will be “impossible” to get a full deal before Boris Johnson’s end-2020 deadline, ahead of a meeting with the British prime minister.Eyes on SNBThe Swiss currency traded up 0.3% to 1.0791 per euro, taking its gains in the past month to 1.6%. That has outpaced the yen, which has fallen against the common currency over the same period.“I suspect that the flare up of risk aversion on the back of the standoff between the U.S. and Iran likely burnished the franc’s credentials as a safe haven in part because the risk-off move triggered the unwinding of some carry trades funded in francs,” said Valentin Marinov, the head of G-10 currency research at Credit Agricole SA.The franc has breached the 1.08 per euro level, which is seen as key to whether the Swiss National Bank could step in to try to weaken its currency. It was around this level that the central bank was thought to have intervened in markets to limit the franc’s ascent in 2019.Sight deposits, the cash commercial banks hold with the SNB, are considered to be an early indicator of policy makers’ moves in foreign-exchange markets.The near-1.08 level touched last year coincided with sight deposits “picking up quite noticeably,” according to Marinov. That level could be “a floor under the Swiss franc-crosses.”To contact the reporter on this story: Anooja Debnath in London at email@example.comTo contact the editors responsible for this story: Dana El Baltaji at firstname.lastname@example.org, Neil Chatterjee, William ShawFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.
Invesing.com – The U.S. dollar climbed Wednesday as risk appetite bounced back after President Donald Trump signaled de-escalation in conflict with Iran despite the Islamic Republic launching several attacks on U.S. forces in Iraq.
The safe-haven yen slid from three-month highs against the dollar on Wednesday, as U.S.-Iran tensions eased after President Donald Trump signaled there would be no further military action, for now, with Tehran appearing to have pulled back from its threats. Another safe haven, the Swiss franc, also fell. Trump backed away on Wednesday from days of angry rhetoric against Iran as the two countries tried to defuse a crisis over the American killing of Iranian military commander Qassem Soleimani.
It seems that today is time to cool down a little and correct the recent movements. The main sentiment remains the same – it’s a risk off mode, where those victorious assets are safe heaven ones.
The safe-haven Japanese yen and Swiss franc pulled back from recent highs against the dollar on Tuesday as financial markets stabilized, with investors turning more hopeful that U.S.-Iran tensions would not escalate into an all-out war. Better-than-expected U.S. non-manufacturing sector and factory orders data also lifted the dollar. The yen fell from a three-month high versus the dollar, although sentiment remains fragile amid nagging worries about the impact of the deterioration in U.S.-Iran relations.