|Day's range||0.968 - 0.968|
|52-week range||0.9613 - 1.0229|
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.
The Swiss franc nudged up to a near three-year high against the euro on Tuesday as markets anticipated the move would limit the Swiss National Bank’s appetite for aggressive action to try to hold down its currency in future. “The report is a warning shot to the SNB,” said George Saravelos, global co-head of currency research at Deutsche Bank, adding that the franc is likely to push higher from here.
(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.
(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.
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 Swiss franc has been trading around the green support zone recently, until it broke down earlier today. Is it a one-day event where the dollar bulls can be expected to step in shortly? Or is there some dollar-selling still ahead?
(Bloomberg) -- The West African Economic and Monetary Union has agreed with France to a number of changes to the CFA franc currency, including a new name, Ivory Coast’s President Alassane Ouattara said Saturday, as the West African bloc inches closer to a split from the French-backed currency.The monetary union will keep its euro peg while moving its currency reserve from France, the former colonial power, Outtara said Saturday in Ivory Coast’s commercial capital Abidjan. France will no longer have a representative on the board of the central bank, Ouattara told reporters during a two-day visit by French President Emmanuel Macron.“This decision shows our determination to create an integrated and dynamic regional market, a source of prosperity for us and for future generations,“ Ouattara said.The reforms constitute a key step in the modernization of long-standing arrangements between the West African Economic and Monetary Union and France. For the countries who have used the CFA franc since independence almost 60 years ago, the changes mark a significant shift in economic outlook from one focused on France to seeking regional opportunities for growth.“These reforms put an end to a system that has maybe played out its role and will hopefully lead to greater regional economic mobility and stability,” Macron said.New CurrencyThe CFA franc is used in two African monetary zones, one for eight West African countries and the other for six, mostly petro-states, in Central Africa. In return, the states have to keep half of their reserves in France, on which the French Treasury pays a 0.75% interest rate. That requirement will be scrapped for the West African zone when it transitions to the new currency, to be dubbed the eco, Ouattara said.A strong supporter of the French-backed currency, Ouattara said he hoped the reforms would allow the countries to “consolidate our dynamic growth, increase the buying power of the population and address issues including introducing a single currency” for the West African region.The Ivorian leader also flew to the Nigerian capital, Abuja, on Saturday where he briefed a meeting of presidents of member nations of the Economic Community of West African States on the agreement with France. Nigerian President Muhammadu Buhari welcomed Macron’s decision not to oppose the creation of the new regional currency, according to an emailed presidency statement.The reforms maintain “key elements of stability” that have served the region well, including the fixed exchange rate with the euro and the guarantee of unlimited convertibility provided by France,” Kristalina Georgieva, the International Monetary Fund’s managing director, said in a statement on its website.The system is facing questions about France’s ongoing role in Africa with opponents saying it prevents countries from devaluing to counter external shocks, managing inflation and hampering trade.Benin’s President Patrice Talon in November called for Francophone nations in West Africa to move some reserves from France in order to have more control over the management of their currency.“Psychologically, with regards to the vision of sovereignty and managing your own money, it’s not good that this model continues,” Talon said.(Updates with regional leaders meeting in third paragraph after subheading)\--With assistance from Baudelaire Mieu.To contact the reporter on this story: Katarina Hoije in Abidjan at email@example.comTo contact the editors responsible for this story: Andre Janse van Vuuren at firstname.lastname@example.org, Dulue Mbachu, Paul AbelskyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
In the week to December 10 speculators sold dollars for the first time in five weeks. This due to emerging short-covering in the major currencies of EUR, CHF, JPY and not least GBP
It’s a busy day ahead on the economic calendar with GDP numbers out of the Eurozone likely to set the tone for Lagarde, who takes over as ECB President.
CHF Solutions' (CHFS) Aquadex system to be used for the outpatient study on heart failure, conducted by James A. Haley Veterans' Hospital and Clinics. The study receives final approval.
Switzerland’s central bank and the SIX stock exchange will study using a central bank digital currency to settle trades of tokenized assets.