ONLINE FOREX BROKER
2021-08-11 • Updated
1. USD/CHF and EUR/CHF are on the bullish rally for over a week.
2. Swiss National Bank (SNB) assessed the franc to be “highly valued” in June, but it affected the price faintly.
We had already seen Gold Flash Crash several days before, and now it’s time to look at the EUR/CHF and USD/CHF pairs. In August Swiss franc has risen against the euro to a nine-month high of 1.072. As for now, it was the lowest point of the EUR/CHF downtrend. Yet the USD/CHF pair shows more flat movements.
The reason is that franc is considered by the majority of traders and investors as a safe-haven asset, putting it on the same level as gold and JPY. Because of low inflation and negative interest rates, CHF is strongly associated with slow but steady growth against all currencies. Investors keep buying CHF and JPY in attempts to hide from Delta’s impact on global economic growth.
Swiss National Bank paid attention to the “unstoppable” growth of franc and assessed it to be “highly valued” in June. However, this statement didn’t stop CHF rise and the currency has only strengthened 1.5% since then. The plunge in bond yields from Treasuries to bunds has also boosted the currencies’ appeal. All this raises the risks of (Swiss) Central Bank intervention with its monetary policy, including negative interest rates, and a pledge to wage currency market interventions if needed.
The question now is at what level the Swiss National Bank might intervene. It could be last year’s low at around 1.05 per euro or a little bit further at 1.03 if the SNB used a real trade-weighted measure as a guide. One thing is for sure, this kind of intervention to the natural order of things will affect badly on Swiss economy.
Maybe there won't be any intervention at all. The Swiss franc has lost about 2.5% over the last week against the dollar to trade at 0.9235 CHF and has weakened against the euro to 1.082 per EUR.
After a strong US NFP report (943K actual vs. 870K forecast) the US Federal Reserve could soon start tapering its massive coronavirus-driven stimulus. The prospect of the Fed's reduced bond-buying pushed down US bond prices, lifting their yields and hitting other safe-haven assets that had benefited from low returns from bonds, such as the Swiss franc and gold.
BofA Global Research says that CHF is the most vulnerable among major currencies to a recovery in U.S. bond yields. That’s because Switzerland has the lowest official cash rate in the world and some of the lowest bond yields as well. Look at the Switzerland Interest Rate hereunder.
Source: https://tradingeconomics.com/switzerland/interest-rate
Risks are rising for CHF, and yet they are limited. The European Central Bank’s latest strategy review supports the view that policy in the euro area will remain expansionary for a long time after the pandemic. Expansionary monetary policy works by expanding the money supply faster than usual or lowering short-term interest rates. In a nutshell, that means that the upside potential for the euro against the franc could therefore be limited even once Covid cases start subsiding.
The Swiss Franc is having a major week-long reversal in EUR/CHF pair, with resistances at 1.08184 and in 1.0842-1.08505 area. Beneath there is a strong support line at 1.0721.
Anyway, EUR/CHF downtrend is unlikely to change, with the “death-cross” bearish pattern have occurred a week ago. The main resistance, for now, is 1.0864 and support is at 1.0721.
As for the greenback, in the long-term CHF is rising again USD with resistance in 0.9273-0.9366 area and support at 0.896 level.
The EU plans to intervene in markets directly to curb rising energy costs, threatening to push the Euro area's economy into a deep recession.
The past two years have seen the biggest swings in oil prices in 14 years, which have baffled markets, investors, and traders due to geopolitical tensions and the shift towards clean energy.
The oil prices rally and world central banks’ dovish monetary policy caused by the Covid-19 pandemic were the main reasons for current inflation growth…
For those who may be unfamiliar with Price Action trading, the horizontal arrows represent areas where the market structure was broken. As you can see in the scenario above, price broke below the previous low at the two marked instances
Let's start off with a look at the Daily timeframe on Bitcoin. We currently see price reacting to the rally-base-rally demand zone between the 15,600 - 14,300 price area. Price also seems to have found support off the trendline support as marked in the image above. Interestingly, this means the overall bias on BTCUSD is Bullish.
Central Bank Digital Currencies (CBDCs) are virtual national money. The idea of creating such currencies came to the authorities after the success of cryptocurrencies, which also exist only in digital form.
FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.
Your request is accepted.
A manager will call you shortly.
Next callback request for this phone number
will be available in
If you have an urgent issue please contact us via
Live chat
Internal error. Please try again later
Don’t waste your time – keep track of how NFP affects the US dollar and profit!
Beginner Forex book will guide you through the world of trading.
We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.
|
