Market Brief
The SNB introduced negative interest rate (-0.25%) on sight deposits at European open today amid persisting pressure on EUR/CHF’ 1.20 floor, said ready to take more measures if needed. EUR/CHF spiked to 1.20974 post-announcement. We believe that the policy action will temporary ease the selling pressures on EUR/CHF, however more steps will certainly be needed to defend the floor if the ECB moves toward a full-blown QE by the first quarter of 2015. USD/CHF hit fresh year high of 0.9848. The MACD should step in the bullish zone for a daily close above 0.9810, suggest extension of October-December bull-trend.
The FOMC dropped the “considerable time” rhetoric as mostly expected, yet maintained its cautious stance regarding the timing of the first FF rate hike. FOMC Chair Yellen said “the committee considers it unlikely to begin the normalization process for at least the next couple of meetings”, therefore giving itself the flexibility needed before taking any action in hurry. The Asian equity markets traded in green post-FOMC. The US 10-year yields did little, still below 2.15% in Asia.
EUR/USD sold-off to 1.2321 post-FOMC, to 1.2278 post-SNB. The positive trend got a clear hit over the past two sessions. Option barriers trail below 1.2300 for today expiry, a close below 1.2242/47 (MACD pivot & Dec 8th low) should confirm fresh wave of EUR sell-off. EUR/GBP steps back below 0.79000. First line of support stand at 0.78325 (October-December ascending base).
JPY-crosses were mostly better bid in Tokyo amid the GPIF and other public pension funds announced net sell of 2.8 trillion yen JGBs in Q3 and purchase of 600.5 billion Yen equities and 2.2 trillion yen of foreign securities. USD/JPY advanced to 119.01. The sentiment remains skeptical with attempt to cross over the Ichimoku conversion line (118.71). Option bets are supportive above 117.55.
GBP/USD fell to 1.5541 (fresh year low) post-FOMC amid failure to pick-up momentum after slower CPI (1.0%), slight deterioration in jobless rate (6%) and the BoE minutes. Due today, the UK retail sales are expected to have soften in November, which may be the final push back to Cable’s broad bear market. Option barriers trail below 1.5615/40 for today expiry.
Else, the USD/RUB 1-month implied volatility advanced to 67.80%, the pair dropped back to 58.1249 before President Putin’s conference today.
Today traders focus on Swiss November Trade Balance, export & Imports m/m, Swedish Consumer and Manufacturing Confidence, IFO’s December Business Climate, Current Assessment and Expectations in Germany, UK November Retail Sales m/m & y/Y, Euro-zone October Construction Output m/m & y/y, Italian October Current Account Balance, US December 13th Initial Jobless Claims & December 6th Continuing Claims, US December (Prelim) Services & Composite PMI, US December Philadelphia Fed Business Outlook and US November Leading Index.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800, as traders lack directional impetus amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.