Fri, 18 Jun 2010 00:00:00 +0200

Swissie Strengthens After Swiss Bank Policy Shift

The Swiss franc was in the spotlight yesterday following an announcement by Swiss National Bank (SNB) Chairman Phillipp Hildebrand that the current expansionary monetary policy in not feasible over the long term horizon without compromising long term price stability. Deflationary risks have all but dissipated and growth forecasts have risen to 2.0% from 1.5%. This effectively ends the intervention in the currency markets by the SNB. The SNB has been artificially weakening the Swissie by buying euros on the inter-bank market. This has been done to support export activity Switzerland. Following the announcement, the USD/CHF tumbled below its most recent rising trend line, falling to a low of 1.1094. The EUR/CHF also fell sharply yesterday but the decline in the pair was held in check at the 1.3740 support level, close to the pair's all-time low. The euro was supported by yesterday's successful auction of Spanish debentures. Strong demand was seen for the 10-year and 30-year bonds, but the sale was accompanied with significantly higher yields. This is due to the fiscal crisis in the euro zone. The successful bond auction helped to boost the euro yesterday as the currency continues to recover from its lowest level versus the dollar in 4 years. Despite the recent appreciation of the euro, the currency remains fundamentally weak in the long term.

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading. ForexYard

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading. ForexYard