The Swiss Franc seemed to be the more determined mover today, not the USD, as you may expect because of Bernanke’s leaving out QE3. Perhaps after the media has talked about this possibility for the past couple of days already, the market just does not find it surprising and is back to wondering where the USD should go with no new clues. The CHF market however, was a determined mover today. The USD/CHF rallied sharply out of its range. We also observe breakouts in EUR/CHF, GBP/CHF, and CHF/JPY for further correction of Swissie-strength.
EUR/CHF was ranging, and saw quieter price action as it ranged below 1.1550. T Read more…
August 24th, 2011 in
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The commodity currencies, most notably the Canadian Dollar and the New Zealand Dollar, were among the strongest major currencies in the pre-North American trade as rate hike expectations rose for the Bank of Canada, and the Reserve Bank of New Zealand hinted at a rate hike in the near future following Wednesday’s meeting. Rising energy costs have added increased inflationary pressures on the Canadian economy, which in turn have raised rate hike expectations for the world’s eleventh largest economy. Currently, there are 49.5-basis points priced into the Loonie over the next 12-months, while there are 111.0 priced into the Kiwi for the same time frame.
Kiwi-Dollar 10-minute Chart: July 26 to 27, 2011
Charts created using Strategy Trader– Prepared by Christopher Vecchio
The Swiss Franc was also particularly strong in the overnight session, though had fallen back towards its opening price level against the U.S. Dolla Read more…
Ongoing fears surrounding the U.S. debt ceiling weighed on the greenback throughout the overnight trade, but the greenback may regain its footing during the North American session as the economic docket is expected to show an improved outlook for the world’s largest economy. A rebound in new home sales paired with a rise in the Richmond Fed Manufacturing index should help to boost the prospects for future growth, but the pullback in consumer confidence could spark a mixed reaction amongst currency traders as private sector consumption accounts for more than two-thirds of the economy. Beyond the event risk scheduled for Tuesday, the stalemate amongst U.S. p Read more…
July 27th, 2011 in
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Czech Republic
In contrast to other European countries the Czech Republic does not have a problem with the assessment of major rating agencies. This was confirmed by yesterday’s comments of rating agency Fitch, which affirmed the Czech Republic A+ rating with a positive outlook. The agency nevertheless warned against risks of political tensions, which might jeopardize budget cuts and structural reforms. While we think that political tension will prevail, we doubt that they are currently a threat to ongoing fiscal consolidation, which evidently priced in the Czech bonds, which offer only very low credit risk premium.
Hungary
The Hungarian forint weakened yesterday keeping its correlation with the Swiss franc in place. The CHF was well-supported by continued uncertainty around the debate on the increase of the debt ceiling in the US, but also in the euro zone Italian and Spanish bonds came again under pressure. N Read more…
July 26th, 2011 in
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Trading the News: Reserve Bank of New Zealand Interest Rate Decision
What’s Expected:
Time of release: 07/27/2011 21:00 GMT, 17:00 EST
Primary Pair Impact: NZDUSD
Expected: 2.50%
Previous: 2.50%
DailyFX Forecast: 2.50%
Why Is This Event Important:
Although the Reserve Bank of New Zealand is widely expected to keep the benchmark interest rate at 2.50% in July, the comments following the policy meeting could spark a bullish reaction in the kiwi should the central bank show an increased willingness to raise borrowing costs over the coming months. According to Credit Suisse overnight index swaps, market participants see the RBNZ increasing the cash rate by nearly 100bp over the next 12-months, and Governor Alan Bollard may continue to talk up speculation for higher rates as growth and inflation pickup. H
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Sentiment is on the upswing after yesterday’s EU leaders’ summit outlined a powerful bailout for Greece, effectively meeting the country’s funding needs for the foreseeable future (contingent on its ability to meet austerity requirements). S&P 500 stock index futures – a proxy for risk appetite at large – are firmly in positive territory in late overnight trade, pointing to losses for the safe-haven US Dollar and Swiss Franc as well as the Japanese Yen as chipper investors reinstate carry trades funded in the perennially low-yielding currency. The German IFO Survey of business confidence headlines the economic calendar and is expected to show sentiment soured for the fifth consecutive month, but the outcome is unlikely to garner much attention amid broader market-wide relief in the now apparently more stable macro environment.
However, a deeper look at the implications of what the Brussels meeting produced points to long-term downward pressure on the Euro. In our pr Read more…