Wednesday, August 3, 2011

Swiss National Bank's try to weaken the CHF

Previous session overview
The focus of the currency market right now is on soft US economic data, say dealers. That's why the euro is rising strongly against the dollar, rising as much as 1% in the midst of worries about Italy and Spain. 

The euro is also up 1.4% against the Swiss franc on the Swiss National Bank's move to try and weaken the safe-haven currency. The prospect of a dismal jobs number Friday allows for more QE3 conversation.

The USDCHF soared hours ago and rallied from CHF0.7660 to CHF0.7786 in a few minutes after the Swiss National Bank announced measures to curb the Swiss Franc strength. Despite the impulse, the pair was unable to rise above 0.7800 and lost upside momentum, retreating to levels under 0.7700.

Also, the dollar is getting pressured from the Challenger layoff-announcement report. It was quite a shock to see the 60% jump when other companies are not hiring. The euro was recently at USD1.4316, up 0.8%.

The Canadian dollar was stronger Wednesday, in line with improved risk sentiment, as investors regained their appetite for higher-yielding currencies. 

The U.S. dollar was at CAD0.9570 from CAD0.9612 late Tuesday, as oil climbed back up and equities futures point to a higher open.
Market expectation
So far the EURCHF is trading as high as CHF1.1140 where upside momentum begins to run into slight headwinds. The next resistance levels to be aware of are listed at CHF1.1205 (Daily High Aug 2), CHF1.1297 (Daily High Aug 29) and CHF1.1370 (Hourly High Aug 1). Below, support is placed at CHF1.0900 (Psychological Level), CHF1.0801 (Hourly Low Aug 3) and CHF1.0795 Historic Low Aug 3).

Regarding the SNB´s move to curb the franc´s unprecedented strength as of late, the analysts said that Today, the SNB decided to lower the three-month Libor interbank rate to a range between 0.00-0.25 percent compared with the prior 0.00-0.75 percent range, and mentioned it would increase the supply of francs in the market over the next few days.